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It may also impact the desire for existing homeowners to sell their homes as they may potentially be forfeiting a substantially lower interest rate on their existing home for a higher interest rate mortgage on a new home.
−Removed: While interest rates have stabilized, they are still elevated.
+Added: While interest rates have stabilized, they are still elevated from previously historically low levels.
We may have the ability to offset the impact of rising interest rates on affordability by purchasing interest rate locks;
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A homebuyer's ability to obtain a mortgage loan is largely subject to prevailing interest rates, lenders’ credit standards and appraisals, and the availability of government-supported programs, such as those from the FHA, the VA, Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac").
−Removed: Although no material changes are currently anticipated, if credit standards or appraisal guidelines are tightened, or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing.
+Added: If credit standards or appraisal guidelines are tightened, or mortgage loan programs are curtailed, potential buyers of our homes may not be able to obtain necessary mortgage financing.
There can be no assurance that these programs will continue to be available or that they will be as accommodating as they currently are.
−Removed: Continued legislative and regulatory actions and more stringent underwriting standards could have a material adverse effect on our business if certain buyers are unable to obtain mortgage financing.
+Added: Continued legislative and regulatory actions or more stringent underwriting standards could have a material adverse effect on our business if certain buyers are unable to obtain mortgage financing.
A prolonged tightening of the financial markets could also negatively impact our business.
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Inflation could increase our cost of financing, materials and labor and could cause our financial results and profitability to decline.
−Removed: Traditionally, we have attempted to pass cost increases on to our customers through higher sales prices, although in recent years we have had to absorb higher material and labor costs, which have negatively impacted our profitability.
+Added: Traditionally, we have attempted to pass cost increases on to our customers through higher sales prices, although in recent years we have had to absorb higher land development and labor costs, which have negatively impacted our profitability.
Alternatively, a significant period of deflation could cause a decrease in overall spending and borrowing levels if it is driven by deteriorating economic conditions, including an increase in the rate of unemployment.
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These, or other factors that increase the risk of significant deflation, could have a negative impact on our business or financial results.
−Removed: High cancellation rates may negatively impact our business.
−Removed: Our backlog reflects the number and value of homes for which we have entered into non-contingent sales contracts with customers but have not yet delivered those homes.
−Removed: In connection with the sale of a home, our policy is to generally collect a deposit from our customers, although typically this deposit reflects a small percentage of the total purchase price, and due to local regulations, the deposit may, in certain circumstances, be fully or partially refundable prior to closing.
−Removed: If the prices for our homes in a given community decline, our neighboring competitors reduce their sales prices (or increase their sales incentives), interest rates increase, the availability of mortgage financing tightens or there is a downturn in local, regional or national economies, homebuyers may elect to cancel their home purchase contracts with us.
−Removed: Although cancellations are currently at normal levels, significant cancellations in the future could have a material adverse effect on our business, which could result in lost sales revenue and the accumulation of unsold housing inventory.
−Removed: Supply shortages and other risks could materially disrupt our operations and increase costs.
−Removed: Our ability to timely construct our homes may be significantly impacted by circumstances beyond our control, such as work stoppages, shortages of qualified trades people or municipal employees, lack of utility infrastructure and services, our need to rely on local subcontractors, and shortages or delays in availability of building materials.
−Removed: Constraints on the availability of raw materials and finished goods or in the distribution channels of our construction inputs can delay delivery of our homes to customers and can increase our building costs or lead to sales orders cancellations.
−Removed: These delays impact the timing of our expected home closings and may also result in cost increases that we may not be able to pass to our current or future customers.
−Removed: Sustained increases in construction costs may, over time, erode our margins, and impact our total order and closing volumes.
−Removed: Over the last several years, supply chain and labor constraints related to sustained demand amid the backdrop of a global pandemic caused our construction cycle times to lengthen, although the supply chain and labor capacity are currently at normal levels.
Shortages in the availability of subcontract labor may delay construction schedules and increase our costs.
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Although we continually strive to be a partner of choice with our trades, we cannot be assured that in the future there will be a sufficient supply of, or satisfactory performance by, these unaffiliated third-party subcontractors and consultants, which could have a material adverse effect on our business.
+Added: Legislation related to tariffs could increase the cost to construct our homes.
+Added: The cost of certain building materials is influenced by changes in local and global commodity prices as well as government regulation, such as government-imposed tariffs on building supplies.
+Added: Such cost increases limit our ability to control costs, potentially reducing margins on the homes we build if we are not able to successfully offset the increased costs through higher sales prices.
+Added: Additionally, tariffs pose a risk to our supply chain availability if we are forced to use alternative materials or products.
+Added: High cancellation rates may negatively impact our business.
+Added: Our backlog reflects the number and value of homes for which we have entered into non-contingent sales contracts with customers but have not yet delivered those homes.
+Added: In connection with the sale of a home, our policy is to generally collect a deposit from our customers, although typically this deposit reflects a small percentage of the total purchase price, and due to local regulations or other considerations, the deposit may, in certain circumstances, be fully or partially refundable prior to closing.
+Added: While our 60-day closing ready guarantee shortens the time between order and closing, if the prices for our homes in a given community decline, our neighboring competitors reduce their sales prices (or increase their sales incentives), interest rates increase, the availability of mortgage financing tightens or there is a downturn in local, regional or national economies, homebuyers may elect to cancel their home purchase contracts with us.
+Added: Although cancellations are currently at normal levels, significant cancellations in the future could have a material adverse effect on our business, which could result in lost revenue and the accumulation of unsold housing inventory.
+Added: Supply shortages and other risks could materially disrupt our operations and increase costs.
+Added: Our ability to timely construct our homes may be significantly impacted by circumstances beyond our control, such as work stoppages, shortages of qualified trades people or municipal employees, lack of utility infrastructure and services, our need to rely on local subcontractors, and shortages or delays in availability of building materials.
+Added: Constraints on the availability of raw materials and finished goods or in the distribution channels of our construction inputs can delay delivery of our homes to customers and can increase our building costs or lead to sales orders cancellations.
+Added: These delays impact the timing of our expected home closings and may also result in cost increases that we may not be able to pass to our current or future customers.
+Added: Sustained increases in construction costs may, over time, erode our margins, and impact our total order and closing volumes.
+Added: During the global pandemic, supply chain and labor constraints related to sustained demand caused our construction cycle times to lengthen, although in recent years the supply chain and labor capacity have been at normal levels.
If home prices decline, potential buyers may not be able to sell their existing homes, which may negatively impact our sales.
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Declines in home prices could have an adverse effect on our homebuilding business volumes and cash flows.
−Removed: Our ability to acquire and develop raw or partially finished lots may be negatively impacted if we are unable to secure performance bonds.
−Removed: In connection with land development work on our raw or partially developed land, we are often required to provide performance bonds, letters of credit or other assurances for the benefit of the respective municipalities or governmental authorities.
−Removed: These instruments provide assurance to the beneficiaries that the development will be completed, or that in case we do not perform, that funds from these instruments are available for the municipality or governmental agency to arrange for completion of such work.
−Removed: Although such instruments are currently accessible, in the future additional performance bonds or letters of credit may be difficult to obtain, or may become difficult to obtain on terms that are acceptable to us.
−Removed: If we are unable to secure such instruments, progress on affected projects may be delayed or halted or we may be required to expend additional cash or other forms of guarantees, which may adversely affect our financial position and ability to grow our operations.
A reduction in our orders absorption levels may force us to incur and absorb additional community-level costs.
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A sustained reduction in home absorption rates increases the associated holding costs and extends our time and ability to recover such costs.
−Removed: Legislation related to tariffs could increase the cost to construct our homes.
−Removed: The cost of certain building materials is influenced by changes in local and global commodity prices as well as government regulation, such as government-imposed tariffs on building supplies such as lumber and flooring materials.
−Removed: Such cost increases limit our ability to control costs, potentially reducing margins on the homes we build if we are not able to successfully offset the increased costs through higher sales prices.
−Removed: Additionally, tariffs pose a risk to our supply chain availability if we are forced to use alternative materials or products.
+Added: Our ability to acquire and develop raw or partially finished lots may be negatively impacted if we are unable to secure performance bonds.
+Added: In connection with land development work on our raw or partially developed land, we are often required to provide performance bonds, letters of credit or other assurances for the benefit of the respective municipalities or governmental authorities.
+Added: These instruments provide assurance to the beneficiaries that the development will be completed, or that in case we do not perform, that funds from these instruments are available for the municipality or governmental agency to arrange for completion of such work.
+Added: Although such instruments are currently readily accessible, in the future performance bonds or letters of credit may be difficult to obtain, or may become difficult to obtain on terms that are acceptable to us.
+Added: If we are unable to secure such instruments, progress on affected projects may be delayed or halted or we may be required to expend additional cash or other forms of guarantees, which may adversely affect our financial position and ability to grow our operations.
The value of our real estate inventory may decline, leading to impairments and reduced profitability.
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During the last significant downturn that began in 2008, and in certain isolated circumstances afterward, we had to impair many of our real-estate assets to fair-value, incurring large impairment charges which negatively impacted our financial results and financial position.
+Added: During the year ended December 31, 2025, we recognized relatively smaller impairment charges due to softening economic conditions.
If we are unable to successfully compete in the highly competitive housing industry, our financial results and growth may suffer.
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We sometimes encounter construction defect issues that may be alleged to be widespread within a single community or geographic area.
−Removed: See Note 1 - “Business and Summary of Significant Accounting Policies” and Note 16 - "Commitments and Contingencies" in the accompanying financial statements for additional information regarding warranty reserves and adjustments .
+Added: See Note 1 - “Business and Summary of Significant Accounting Policies” and Note 16 - "Commitments and Contingencies" in the accompanying consolidated financial statements for additional information regarding warranty reserves and adjustments .
In order to account for future potential warranty and construction defect obligations, we establish a warranty reserve in connection with every home closing.
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For example, we may be responsible for applicable self-insured retentions, and certain claims may not be covered by insurance or may exceed applicable coverage limits, which could be material to our financial results.
−Removed: In addition, the cost of insuring against construction defect and product liability claims is high, and the amount of coverage offered by insurance companies is currently limited.
+Added: In addition, the cost of insuring against construction defect and product liability claims is high, and the amount of coverage offered by insurance companies may not be sufficient to cover all costs.
There can be no assurance that this coverage will not be further restricted and become more costly.
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• quarterly seasonal variations in our operating results and capital requirements;
+Added: • timing of community openings and closings;
• timing of home deliveries and land sales;
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Although our participation in land options is limited at this time, a downturn in the homebuilding market may cause us to re-evaluate the feasibility of our optioned projects which may result in us forfeiting associated deposits, which would reduce our assets and stockholders’ equity.
+Added: For example, during 2025 we recognized charges on terminated land contracts of $39.4 million as we elected to terminate certain positions to release capital to top-grade our land portfolio as better opportunities become available.
Our lack of geographic diversification could adversely affect us if the homebuilding industry in our markets decline.
−Removed: We have homebuilding operations in Arizona, California, Colorado, Utah, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee.
+Added: We have homebuilding operations in Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina and South Carolina.
Although we have, in recent years, expanded our operations to new markets, our geographic diversification is still more limited than some of our competitors and could adversely impact us if the homebuilding business in our current markets should decline, since we may not have a balancing opportunity in other geographic regions.
−Removed: Our commitment and disclosures related to sustainability matters expose us to risks that could adversely affect our reputation and performance.
−Removed: We have established and publicly announced sustainability initiatives addressing climate change and biodiversity concerns.
−Removed: These statements reflect our current intentions and are not guarantees that we will be able to achieve them.
−Removed: Our failure to accomplish or accurately track and report on these goals on a timely basis, or at all, could adversely affect our reputation, financial performance and growth, and expose us to increased scrutiny from the investment community as well as enforcement authorities.
−Removed: Although we do not have any public carbon targets, stakeholders may view our ability to maintain any environmental data initiatives noted in our public reports as subject to the following risks:
−Removed: • the availability and cost of low- or non-carbon-based energy sources;
−Removed: • the evolving regulatory requirements affecting ESG standards or disclosures and the ability to obtain the required data, especially from third-parties;
−Removed: • the availability of suppliers that can meet our sustainability standards.
−Removed: We voluntarily published our fourth annual ESG report in 2024 which followed certain reporting frameworks that we believe are of value to our investors and other stakeholders.
−Removed: If our ESG practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted.
+Added: Our disclosures related to sustainability matters expose us to risks that could adversely affect our reputation and performance.
+Added: Although we have not publicly announced any carbon targets, we voluntarily published our fifth annual S&CR Report in 2025 which followed certain reporting frameworks that we believe are of value to our investors and other stakeholders.
+Added: If our S&CR practices do not meet evolving investor or other stakeholder expectations and standards, then our reputation, our ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted.
Further, our failure or perceived failure to pursue or fulfill our goals and objectives or to satisfy various reporting standards on a timely basis, or at all, could have similar negative impacts or expose us to government enforcement actions and private litigation.
−Removed: For example, the SEC and California have recently adopted climate-related reporting and audit requirements that would require us to gather information from our third-party business partners over which we are unable to exert control or significant influence.
+Added: For example, California has recently adopted climate-related reporting and audit requirements that would require us to gather information from our third-party business partners over which we are unable to exert control or significant influence.
If our third-party business partners are unwilling or unable to provide adequate information, we may be unable to fully comply with future mandatory reporting and audit requirements at the state or federal level.
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Additionally, we maintain cybersecurity insurance and require our employees to complete ongoing information security training;
−Removed: however, our ability to conduct our business may be impaired if these information technology resources are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error (including a failure of security controls incorporated into or applied to such
−Removed: hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols), or lost connectivity to our networked resources.
+Added: however, our ability to conduct our business may be impaired if these information technology resources are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, intentional penetration or disruption of our information technology resources by a third party, natural disaster, hardware or software corruption or failure or error (including a failure of security controls incorporated into or applied to such hardware or software), telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions (including the failure to follow our security protocols), or lost connectivity to our networked resources.
While we continuously assess and enhance our cybersecurity controls, we cannot assure you that cyber attacks will not occur in the future.
−Removed: Such events could have a significant and extended disruption to the functioning of our information technology and other digital resources, damage our reputation and cause us to lose customers and sales, result in the unintended disclosure or the misappropriation of proprietary, personal and confidential information (including information about our homebuyers, employees and business partners), and require us to incur significant expense to address and remediate these kinds of issues.
+Added: Such events could have a significant and extended disruption to the functioning of our IT and other digital resources, damage our reputation and cause us to lose customers and sales, result in the unintended disclosure or the misappropriation of proprietary, personal and confidential information (including information about our homebuyers, employees and business partners), and require us to incur significant expense to address and remediate these kinds of issues.
The release of confidential information may also lead to litigation or other proceedings against us by affected individuals and/or business partners and/or by regulators, and the outcome of such proceedings, which could include penalties or fines, could have a material and adverse effect on our results of operations and financial position and reputation.
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Although these incidents did not materially impact our operations, should these or other companies experience cybersecurity incidents or IT failures that disrupt or prevent their performance, our ability to operate may be significantly disrupted which could have a material impact on our results of operations or financial position.
−Removed: See Item 1C - “Cybersecurity" in Part I of this Form 10-K for additional information regarding our cybersecurity risk management, strategy and governance .
+Added: See Item 1C - “Cybersecurity" in Part I of this Annual Report for additional information regarding our cybersecurity risk management, strategy and governance .
The loss of key personnel may negatively impact us.
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Any increases in personal income tax rates and/or additional tax deduction limits relating to the cost of home ownership could adversely impact demand for homes, including homes we build, which could adversely affect the results of our operations.
+Added: On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act, which includes several significant corporate tax changes.
+Added: The legislation modifies or extends provisions originally enacted under the Tax Act, including, but not limited to, the repeal of the §45L energy-efficient home credit for homes acquired after June 30, 2026.
+Added: The impact of more stringent building criteria for these tax credits is already reflected in our 2025 financial results with low participation rates, so we anticipate a limited impact on a go-forward basis.
We are subject to federal and state income taxes and recognize benefits from certain allowable deductions and available credits.
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With concern from government agencies and the general public over the effects of climate change on the environment, we may be subject to additional regulatory responses to reduce greenhouse gas emissions and combat climate change that may increase our costs particularly as they relate to land development and home construction activities.
−Removed: For example, in California, all homes constructed are now required to have solar panels, which we offer as standard feature for homes built in the state.
+Added: For example, in California, all homes constructed are required to have solar panels, which we offer as standard feature for homes built in the state.
Such compliance has not had a material impact on our operations;
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These and other similar environmental laws or permit restrictions may also result in production delays and may prohibit or severely restrict development in certain environmentally sensitive or geographic areas.
−Removed: Environmental regulations can also have an adverse impact on the availability and price of certain raw materials, such as lumber.
+Added: Environmental regulations can also have an adverse impact on the use, availability and price of certain raw materials and natural resources.
While we believe we are complying in all material respects with existing climate-related government standards and regulations applicable to our business, we also cannot predict our future exposure given the rapidly changing nature of environmental matters.
−Removed: There is a variety of new regulations being adopted and legislation being enacted, or considered for enactment, at the federal, state, local and international levels relating to energy and climate change.
+Added: In the future, there may be new regulations adopted and legislation being enacted, or considered for enactment, at the federal, state, local and international levels relating to energy and climate change.
This legislation relates to items such as carbon dioxide emissions control and building codes that impose energy efficiency standards.
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The title and settlement services provided by Carefree Title are subject to various regulations, including regulation by state banking and insurance authorities.
−Removed: These laws and regulations include many compliance requirements, including but not limited to licensing, consumer disclosures, fair lending and real estate settlement procedures.
+Added: These laws and regulations include many compliance requirements, including but not limited to licensing, consumer disclosures and real estate settlement procedures.
As a result, our operations are subject to regular, extensive examinations by the applicable agencies.
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Although we do not originate mortgages, we may be directly or indirectly subject to certain of these regulations.
−Removed: In addition, if we are determined to have violated federal or state regulations, we face the loss of our licenses or other required approvals or we could be subject to fines, penalties, civil actions or we could be required to suspend our activities, each of which could have an adverse effect on our reputation, results and operations.
+Added: In addition, if we are
+Added: determined to have violated federal or state regulations, we could face the loss of our licenses or other required approvals or we could be subject to fines, penalties, civil actions or we could be required to suspend our activities, each of which could have an adverse effect on our reputation, results and operations.
General Risk Factors
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our cash management strategy and intentions;
−Removed: our goals, strategies and strategic initiatives including our all spec and move-in ready strategy and the anticipated benefits relating thereto;
+Added: our goals, strategies and strategic initiatives including our all spec and move-in ready strategy and our focus on external real estate brokers as customers, and the anticipated benefits relating thereto;
our intentions and the expected benefits and advantages of our product and land positioning strategies, including with respect to our focus on the first-time and first move-up buyer and housing demand for affordable homes;
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the benefits of and our intentions to use options to acquire land;
−Removed: our preselected design collections strategy;
our exposure to supplier concentration risk and other matters concerning our supply chain;
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.