What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-22 compared with 2025-04-22 · 162 added, 105 removed, 328 unchanged (45% of the section changed)

2 unchanged sentences

The following is a summary of our operating results by line of business ($000's omitted, except per share data):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Income before income taxes:

5 unchanged sentences

Diluted earnings per share $ 3.03 $ 3.83 $ 5.60 $ 6.93

In the first quarter of 2025, consumer demand was influenced by ongoing affordability challenges, resulting from elevated mortgage interest rates and higher housing costs, as well as volatility in other macroeconomic and geopolitical conditions, including weakened consumer confidence.

In the second quarter of 2025, the consumer demand weakness we experienced to begin the year continued.

This softening continued to be influenced by ongoing affordability challenges, resulting from elevated mortgage interest rates and higher housing costs, as well as volatility in other macroeconomic and geopolitical conditions, including weakened consumer confidence.

We have responded to these conditions by adjusting sales prices where necessary and focusing sales incentives on closing cost incentives, especially mortgage interest rate buydowns.

Despite these efforts, net new orders in units for the first quarter of 2025 decreased 7% compared to the first quarter of 2024.

Although higher mortgage interest rates and volatile macroeconomic and geopolitical conditions may persist for some time, the demographics supporting housing demand remain favorable over the long term, and during the first quarter of 2025 there continued to be a limited supply of existing homes for sale in many of our geographic markets.

We expect that homebuyers will continue to face affordability challenges, so our sales paces may remain volatile on a monthly basis.

Despite these efforts, net new orders in units decreased 7% for each of the three and six months ended June 30, 2025 versus the comparable prior year periods.

Although elevated mortgage interest rates and volatile macroeconomic and geopolitical conditions may persist for some time, we believe the demographics supporting housing demand remain favorable over the long term.

While inventories of new and existing homes have increased in the majority of our geographies, we believe that a chronic undersupply of housing stock remains in the United States that will take years to resolve.

We expect that many homebuyers will continue to face affordability challenges, so our sales paces may remain volatile on a monthly basis.

In response, we expect our sales incentives to remain elevated and for our pace of house starts to remain dynamic.

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Due to the length of our land development and construction cycle times, there is a lag between when such cost changes occur and when they impact our operating results.

This is evidenced in our gross margin from home sales for the first quarter of 2025, which decreased to 27.5% from 29.6% in the comparable prior year period, primarily due to higher land costs and sales incentives.

This is evidenced in our gross margin from home sales for the second quarter of 2025, which decreased to 27.0% from 29.9% in the comparable prior year period, and from 27.5% in the first quarter of 2025.

These decreases are primarily due to higher land costs and sales incentives.

While we expect to continue to generate healthy gross margins, they may decline somewhat in future periods as a result of these factors.

We operate our business to generate a cadence of house starts that aligns with the sales environment, and an appropriate inventory of quick move-in speculative ("spec") homes as we focus on turning our assets and delivering high returns on investment, which has allowed us to achieve an effective balance of price and pace.

The supply chain constraints that arose in recent years have largely subsided.

The supply chain constraints that arose several years ago have largely subsided.

As a result, our production cycle times have improved significantly over the past two years and have now returned to near historical norms.

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– Producing sufficient levels of spec inventory (houses without customer orders) to service buyers seeking to close within 30 to 90 days;

– Maintaining a focus on shareholder return through share buybacks and dividends, including a 10% increase in our quarterly dividends from $0.20 to $0.22 per share effective with our January 2025 dividend payment and an additional $1.5 billion share repurchase authorization effective January 2025, bringing our total remaining share repurchase authorization to $1.9 billion as of March 31, 2025;

– Taking an opportunistic approach to repurchasing debt;

– Maintaining ample liquidity.

We believe our strategic approach with respect to balancing sales price with sales price, including actions taken related to sales incentives, advertising, and our production cadence, will enable us to meet consumer demand at the selling prices necessary to turn our inventory, maintain market share, and generate healthy returns.

We believe our strategic approach with respect to balancing sales price with sales pace, including actions taken related to sales incentives, advertising, and our production cadence, will enable us to meet consumer demand at the selling prices necessary to turn our inventory, maintain market share, and generate healthy returns.

And we remain confident in our ability to navigate the future environment and to position the Company to take advantage of opportunities as they arise and support future growth and continued profitability and financial strength.

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The following presents selected financial information for our Homebuilding operations ($000’s omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2025 vs.

2024 2024 2025 2025 vs.

Home sale revenues $ 4,267,975 (4) % $ 4,448,168 $ 8,017,244 (3) % $ 8,267,754

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(390,453) 8 % (361,145) (783,790) 9 % (718,739)

Equity income from unconsolidated

Equity income (loss) from unconsolidated

entities, net (c)

502 (d) 37,902

Other income, net 6,362 (62) % 16,683

(841) (d) 1,117 (339) (d) 39,019

Other income (expense), net (1,006) (d) 13,324 5,355 (d) 30,008

Income before income taxes $ 764,359 (22) % $ 984,934 $ 1,409,639 (22) % $ 1,812,598

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Gross margin from home sales (a)

27.5 % (210) bps 29.6 %

27.0 % (290) bps 29.9 % 27.2 % (260) bps 29.8 %

SG&A as a percentage of home

sale revenues (b)

10.5 % 110 bps 9.4 %

9.1 % 100 bps 8.1 % 9.8 % 110 bps 8.7 %

Closings (units) 7,639 (6) % 8,097 14,222 (6) % 15,192

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Average active communities 994 6 % 934 978 5 % 932

Backlog at March 31:

Backlog at June 30:

Units 10,779 (17) % 12,982

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(a) Includes the amortization of capitalized interest.

(b) SG&A includes insurance reserve reversals of $26.8 million for the three months ended March 31, 2024 (see Note 8 ).

(c) Equity income from unconsolidated entities includes a gain of $37.7 million for the three months ended March 31, 2024 related to the sale of our minority interest in a joint venture.

(b) SG&A includes insurance reserve reversals of $51.9 million and $78.7 million, respectively, for the three and six months ended June 30, 2024 (see Note 8 ).

(c) Equity income from unconsolidated entities includes a gain of $37.7 million for the six months ended June 30, 2024 related to the sale of our minority interest in a joint venture.

(d) Percentage not meaningful.

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Home sale revenues

Home sale revenues in the three months ended March 31, 2025 were lower than the prior year period by $70.3 million.

In the three months ended March 31, 2025, the 2% decrease resulted primarily from a 7% decrease in closings from the prior year period, partially offset by a 6% increase in average selling price.

The decrease in closings was primarily attributable to lower net new orders in both the first quarter of 2025 and in the second half of 2024 as compared with the first half of 2024, contributing to a weaker backlog, partially offset by improved production cycle times.

Average selling price during the three months ended March 31, 2025 increased primarily due to geographic mix, including our Northeast and West segments, which carry a higher average selling price.

Home sale revenues in the three and six months ended June 30, 2025 were lower than the prior year periods by $180.2 million and $250.5 million, respectively.

In the three months ended June 30, 2025, the 4% decrease resulted primarily from a 6% decrease in closings from the prior year period, partially offset by a 2% increase in average selling price.

In the six months ended June 30, 2025 the 3% decrease resulted primarily from a 6% decrease in closings, partially offset by a 4% increase in average selling price.

The decreases in closings were primarily attributable to lower net new orders in the first half of 2025 and a weaker order backlog entering the year, partially offset by a higher community count and improved production cycle times.

Average selling price during the three and six months ended June 30, 2025 increased primarily due to geographic mix, including our Northeast segment, which carries a higher average selling price.

Home sale gross margins

Home sale gross margins were 27.5% in the three months ended March 31, 2025 compared with 29.6% in the three months ended March 31, 2024.

The decrease in homes sale gross margins was primarily attributable to higher land acquisition and development costs, coupled with elevated sales incentives.

Home sale gross margins were 27.0% and 27.2% in the three and six months ended June 30, 2025, respectively, compared with 29.9% and 29.8% in the three and six months ended June 30, 2024, respectively.

The decreases in homes sale gross margins were primarily attributable to elevated sales incentives coupled with increased land acquisition and development costs.

We expect these factors to continue to impact our gross margins over the near term.

Gross margins for the first six months of 2025 were also unfavorably impacted by our efforts to reduce the number of final spec inventory to more appropriate levels, which we expect will continue to be an area of focus for the remainder of 2025.

While we have made significant progress in the first half of 2025, the level of final spec inventory remains elevated for the current demand environment.

Land sale and other revenues

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Land sale and other revenues and their related gains or losses vary between periods, depending on the timing of land sales and our strategic operating decisions.

Land sales and other revenues contributed income of $1.6 million and $0.2 million and for the three months ended March 31, 2025 and 2024, respectively.

SG&A as a percentage of home sale revenues was 10.5% and in the three months ended March 31, 2025 compared with 9.4% for the three months ended March 31, 2024.

The gross dollar amount of our SG&A increased $35.7 million, or 10%, for the three months ended March 31, 2025 compared with the prior year period.

The increase in gross dollars for the three months ended March 31, 2025 resulted primarily from increased overhead costs to support ongoing production volumes, combined with insurance reserve reversals of $26.8 million recorded in the three months ended March 31, 2024.

Land sales and other revenues contributed income of $4.1 million and $5.7 million for the three and six months ended June 30, 2025, respectively, compared with $1.0 million and $1.1 million for the three and six months ended June 30, 2024, respectively.

SG&A as a percentage of home sale revenues was 9.1% and 9.8% and in the three and six months ended June 30, 2025, respectively, compared with 8.1% and 8.7% for the three and six months ended June 30, 2024, respectively.

The gross dollar amount of our SG&A increased $29.3 million, or 8%, for the three months ended June 30, 2025 compared with the prior year period, and increased $65.1 million, or 9%, for the six months ended June 30, 2025 compared with the prior year period.

The increase in gross dollars for the three and six months ended June 30, 2025 resulted primarily from insurance reserve reversals of $51.9 million and $78.7 million recorded in the three and six months ended June 30, 2024, respectively.

Additionally, SG&A for the first half of 2025 reflects modestly higher headcount and technology costs to support ongoing production volumes.

We expect to continue managing and balancing our overhead costs consistent with expected changes in the demand environment.

Other income, net

Other income, net includes the following ($000’s omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Write-offs of deposits and pre-acquisition costs $ (11,344) $ (3,685) $ (15,679) $ (7,675)

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Other income, net $ (1,006) $ 13,324 $ 5,355 $ 30,008

The increase in write-offs of deposits and pre-acquisition costs for 2025 relative to 2024 resulted from strategic decisions to not move forward with certain projects based on the current environment.

Interest income declined in 2025, primarily due to lower returns on invested cash balances.

Net new orders

Net new orders in units decreased 7% while net new orders in dollars decreased 5% in the three months ended March 31, 2025, as compared with the prior year period.

The decreased net new order volume and dollars in the three months ended March 31, 2025 over the comparable prior year period was primarily attributable to the lower volumes in our West segment.

Cancellation rates (canceled orders for the period divided by gross new orders for the period) were 13% for both the three months ended March 31, 2025 and 2024.

Ending backlog dollars, which represent orders for homes that have not yet closed, decreased 12% at March 31, 2025 compared with March 31, 2024.

Net new orders in units decreased 7% while net new orders in dollars decreased 11% in the three months ended June 30, 2025, as compared with the prior year period.

Net new orders in units decreased 7% while net new orders in dollars decreased 8% in the six months ended June 30, 2025, as compared with the prior year period.

The decreased net new order volume and dollars in the three and six months ended June 30, 2025 over the comparable prior year periods was primarily attributable to the lower order volumes in our Texas and West segments.

Cancellation rates (canceled orders for the period divided by gross new orders for the period) were 15% and 14% for the three and six months ended June 30, 2025, respectively, and 14% and 13% for the three and six months ended June 30, 2024, respectively.

Ending backlog dollars, which represent orders for homes that have not yet closed, decreased 16% at June 30, 2025 compared with June 30, 2024.

Homes in production

The following is a summary of our homes in production:

2025 March 31,

2025 June 30,

Sold 8,499 10,322

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Total 17,778 18,761

The number of homes in production at March 31, 2025 was 3% lower than at March 31, 2024.

The number of homes in production at June 30, 2025 was 5% lower than at June 30, 2024.

This decrease was primarily due to a decreased number of sold homes due to lower backlog and improved production cycle times, which reduces the length of time a home sits in inventory.

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Controlled lots

The following is a summary of our lots under control at March 31, 2025 and December 31, 2024:

March 31, 2025 December 31, 2024

The following is a summary of our lots under control at June 30, 2025 and December 31, 2024:

June 30, 2025 December 31, 2024

Owned Optioned Controlled Owned Optioned Controlled

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While competition for well-positioned land is robust, we have continued to pursue land investments that we believe can achieve appropriate risk-adjusted returns on invested capital.

We have also continued to seek to maintain a high percentage of our lots that are controlled via land option agreements as such contracts enable us to defer acquiring portions of properties owned by third parties or unconsolidated entities until we have determined whether and when to exercise our option, which reduces our financial risks associated with long-term land holdings.

The remaining purchase price under our land option agreements totaled $10.1 billion at March 31, 2025.

We have also continued to seek to maintain a high percentage of our lots that are controlled via land option agreements as such contracts enable us to defer acquiring portions of properties owned by

third parties or unconsolidated entities until we have determined whether and when to exercise our option, which reduces our financial risks associated with long-term land holdings.

The remaining purchase price under our land option agreements totaled $10.1 billion at June 30, 2025.

Homebuilding Segment Operations

As of March 31, 2025, we conducted our operations in 47 markets located throughout 25 states.

As of June 30, 2025, we conducted our operations in 47 markets located throughout 25 states.

For reporting purposes, our Homebuilding operations are aggregated into six reportable segments:

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Operating Data by Segment ($000's omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2025 vs.

2024 2024 2025 2025 vs.

Northeast $ 347,437 35 % $ 257,153 $ 597,171 31 % $ 457,557

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West 979,758 10 % 890,769 1,868,555 17 % 1,594,934

Other homebuilding 49,170 45 % 34,016

Other homebuilding (a)

33,767 (17) % 40,524 $ 82,936 11 % $ 74,539

Income before income taxes (a) :

$ 4,302,597 (4) % $ 4,487,993 $ 8,104,420 (3) % $ 8,344,796

Income before income taxes (b) :

Northeast $ 88,586 51 % $ 58,793 $ 149,807 54 % $ 97,432

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West 121,495 (3) % 125,094 214,072 3 % 207,639

Other homebuilding (b)

2,319 (c) 69,677

Other homebuilding (c)

24,178 (d) 75,233 26,496 (d) 144,909

$ 764,359 (22) % $ 984,934 $ 1,409,639 (22) % $ 1,812,598

(a) Includes land-related charges as summarized in the table below.

(b) Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the other segments.

Other homebuilding also includes insurance reserve reversals of $26.8 million for the three months ended March 31, 2024, (see Note 8 ), and a gain of $37.7 million for the three months ended March 31, 2024 related to the sale of our minority interest in a joint venture.

(a) Other homebuilding includes revenues from land sales and construction services.

(b) Includes land-related charges as summarized in the table below.

(c) Other homebuilding includes the amortization of intangible assets and capitalized interest and other items not allocated to the other segments.

Other homebuilding also includes insurance reserve reversals of $51.9 million and $78.7 million, respectively, for the three and six months ended June 30, 2024, (see Note 8 ), and a gain of $37.7 million for the six months ended June 30, 2024 related to the sale of our minority interest in a joint venture.

(d) Percentage not meaningful.

Operating Data by Segment ($000's omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2025 vs.

2024 2024 2025 2025 vs.

Closings (units):

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Operating Data by Segment ($000's omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2025 vs.

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West 21 % 19 % 19 % 17 %

15 % 14 % 14 % 13 %

Unit backlog:

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($000’s omitted)

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2024 2025 2024

Land-related charges (a) :

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Other homebuilding consists primarily of write-offs of capitalized interest related to such land-related charges.

For the first quarter of 2025, Northeast home sale revenues increased 25% when compared with the prior year period due to a 19% increase in closings combined with a 5% increase in average selling price.

The increase in closings and average selling price occurred across the majority of markets.

For the second quarter of 2025, Northeast home sale revenues increased 35% when compared with the prior year period due to a 19% increase in closings combined with a 13% increase in average selling price.

The increase in closings and average selling price occurred across all markets.

Income before income taxes increased 51%, primarily due to higher revenues and gross margins across all markets, partially offset by increased overhead costs across all markets.

Net new orders decreased across the majority of markets.

For the first quarter of 2025, Southeast home sale revenues decreased 11% when compared with the prior year period due to a 17% decrease in closings partially offset by an 8% increase in average selling price.

For the six months ended June 30, 2025, Northeast home sale revenues increased by a 31% when compared with the prior year period due to a 19% increase in closings combined with a 10% increase in average selling price.

The increase in closings was primarily due to the timing of projects in our Northeast Corridor operations, while the increase in average selling price occurred across the majority of markets.

Income before income taxes increased 54% primarily due to higher revenues and gross margins across all markets, partially offset by increased overhead costs across all markets.

Net new orders decreased across all markets.

For the second quarter of 2025, Southeast home sale revenues decreased 3% when compared with the prior year period due to a 6% decrease in closings partially offset by a 4% increase in average selling price.

The decrease in closings and increase in average selling price occurred across the majority of markets.

Income before income taxes decreased 16%, primarily due to lower gross margins and higher overhead costs across the majority of markets.

The increase in net new orders was mixed among markets.

For the six months ended June 30, 2025, Southeast home sale revenues decreased 7% when compared with the prior year period due to a 12% decrease in closings partially offset by a 6% increase in average selling price.

The decrease in closings occurred across the majority of markets while the increase in average selling price was mixed among markets.

Income before income taxes decreased 19% primarily due to lower gross margins across the majority of markets.

The decrease in net new orders was mixed among markets.

For the first quarter of 2025, Florida home sale revenues decreased 14% when compared with the prior year period primarily due to a 14% decrease in closings combined with a slight decrease in average selling price.

For the second quarter of 2025, Florida home sale revenues decreased 20% when compared with the prior year period primarily due to a 12% decrease in closings combined with an 8% decrease in average selling price.

The decrease in closings occurred across the majority of markets, while the decrease in average selling price occurred across all markets.

Income before income taxes decreased 41% primarily due to lower revenues and gross margins across the majority of markets.

Net new orders increased across the majority of markets.

For the six months ended June 30, 2025, Florida home sale revenues decreased 17% when compared with the prior year period due to a 13% decrease in closings combined with a 5% decrease in the average selling price.

The decrease in closings and average selling price occurred across the majority of markets.

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Net new orders decreased across the majority of markets.

For the first quarter of 2025, Midwest home sale revenues increased 10% when compared with the prior year period due to a 10% increase in closings partially offset by a 1% decrease in average selling price.

For the second quarter of 2025, Midwest home sale revenues increased 6% when compared with the prior year period due to a 6% increase in closings partially offset by a slight decrease in average selling price.

The increase in closings occurred across the majority of markets while the decrease in average selling price was mixed among markets.

Income before income taxes increased 15% primarily due to higher revenues and gross margins across the majority of markets.

Net new orders increased across the majority of markets.

For the first quarter of 2025, Texas home sale revenues decreased 21% when compared with the prior year period due to a 22% decrease in closings partially offset by a 1% increase in average selling price.

The decrease in closings occurred across all markets while the increase in average selling price was mixed among markets.

Income before income taxes decreased 44%,

primarily due to decreased revenues and gross margins across all markets and increased overhead costs across the majority of markets.

The decrease in net new orders occurred across the majority of markets.

For the first quarter of 2025, West home sale revenues increased 26% compared with the prior year period due to a 13% increase in closings combined with a 12% increase in average selling price.

The increase in net new orders was mixed among markets.

For the six months ended June 30, 2025, Midwest home sale revenues increased 8% when compared with the prior year period due to an 8% increase in closings combined with a slight decrease in average selling price.

The increase in closings and the decrease in average selling price occurred across the majority of markets.

Income before income taxes increased 15% primarily due to higher revenues and gross margins across the majority of markets.

The increase in net new orders was mixed among markets.

For the second quarter of 2025, Texas home sale revenues decreased 20% when compared with the prior year period due to a 17% decrease in closings combined with a 3% decrease in average selling price.

The decrease in closings occurred across the majority of markets while the decrease in average selling price was mixed among markets.

Income before income taxes decreased 49% primarily due to decreased revenues and gross margins across all markets, partially offset by lower overhead costs across the majority of markets.

The decrease in net new orders occurred across all markets.

For the six months ended June 30, 2025, Texas home sale revenues decreased 21% when compared with the prior year period due to a 19% decrease in closings combined with a 2% decrease in average selling price.

The decrease in closings occurred across the majority of markets while the decrease in average selling price was mixed among markets.

Income before income taxes decreased 47% primarily due to decreased revenues and gross margins across all markets, partially offset by lower overhead costs across the majority of markets.

Net new orders decreased across the majority of markets.

For the second quarter of 2025, West home sale revenues increased 10% when compared with the prior year period due to a 1% increase in closings combined with a 9% increase in average selling price.

The increase in closings and average selling price occurred across the majority of markets.

Income before income taxes increased 12%, primarily due to higher revenues and gross margins across the majority of markets, partially offset by increased overhead costs across all markets.

Income before income taxes decreased 3%, primarily due to lower gross margins and increased overhead costs across the majority of markets.

Net new orders decreased across the majority of markets.

For the six months ended June 30, 2025, West home sale revenues increased 17% when compared with the prior year period due to a 6% increase in closing combine with a 10% increase in average selling price.

The increase in closings and average selling price occurred across the majority of markets.

Income before income taxes increased 3% primarily due to increased revenues, partially offset by lower gross margins and increased overhead costs across the majority of markets.

Net new orders decreased across all markets.

Financial Services Operations

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Operating as a captive business model primarily targeted to support our Homebuilding operations, the business levels of our Financial Services operations are highly correlated to Homebuilding, as Homebuilding customers continue to account for substantially all of its business.

We believe that our mortgage capture rate, which represents loan originations from our Homebuilding operations as a percentage of total loan opportunities from our Homebuilding operations, excluding cash closings, is an important metric in evaluating the effectiveness of our captive mortgage business model.

evaluating the effectiveness of our captive mortgage business model.

The following tables present selected financial information for our Financial Services operations ($000's omitted):

Three Months Ended

Three Months Ended Six Months Ended

June 30, June 30,

2025 2025 vs.

2024 2024 2025 2025 vs.

Mortgage revenues $ 74,224 (4) % $ 76,967 $ 137,094 (2) % $ 139,992

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Expenses (59,611) 21 % (49,334) (114,581) 14 % (100,712)

Equity income from unconsolidated entities 1,250 19 % 1,050 1,250 19 % 1,050

Income before income taxes $ 42,797 (32) % $ 63,378 $ 78,655 (25) % $ 104,357

2 unchanged sentences

Principal $ 2,164,755 1 % $ 2,140,103 $ 4,030,773 3 % $ 3,895,150

Three Months Ended

Six Months Ended

Supplemental data:

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Total funded originations 100 % 100 %

Total Financial Services revenues for the three months ended March 31, 2025 decreased 2% compared with the same period in 2024, primarily due to lower insurance agency commissions.

Total Financial Services revenues for the three and six months ended June 30, 2025 decreased 9% and 6%, respectively, compared with the comparable prior year periods, reflective of the lower homebuilding volume.

Insurance agency commissions reflect lower policy retention and commission rates as a result of the evolving environment for home insurance as carriers adjust their premiums, geographic markets, and product coverages.

Income before income taxes

Income before income taxes in the three months ended March 31, 2025 decreased 12%, compared with the same period in 2024.

Our effective tax rate was 23.2% for the three months ended March 31, 2025, compared with 23.7% for the same period in 2024.

Income before income taxes in the three and six months ended June 30, 2025 decreased 32% and 25%, respectively, compared with the same period in 2024 due to lower insurance agency commissions combined with higher expenses.

Our effective tax rate for the three and six months ended June 30, 2025 was 24.6% and 24.0%, respectively, compared with 22.8% and 23.2% for the comparable prior year periods.

Our effective tax rate for each of these periods differs from the federal statutory rate primarily due to state income tax expense and federal tax credits.

Our income tax expense for the three and six months ended June 30, 2024 also reflected a reduction in income tax liabilities totaling $13.2 million related to the favorable resolution of uncertain state tax positions.

Liquidity and Capital Resources

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We routinely monitor current and expected operational requirements and financial market conditions to evaluate accessing available financing sources, including revolving bank credit and securities offerings.

At March 31, 2025, we had unrestricted cash and equivalents of $1.2 billion, restricted cash balances of $40.2 million, and $942.3 million available under our Revolving Credit Facility.

Our ratio of debt-to-total capitalization, excluding our Financial Services debt, was 11.7% at March 31, 2025, compared with 11.8% at December 31, 2024.

At June 30, 2025, we had unrestricted cash and equivalents of $1.2 billion, restricted cash balances of $33.2 million, and $908.8 million available under our Revolving Credit Facility.

Our ratio of debt-to-total capitalization, excluding our Financial Services debt, was 11.4% at June 30, 2025, compared with 11.8% at December 31, 2024.

We follow a diversified investment approach for our cash and equivalents by maintaining such funds with a portfolio of banks within our group of relationship banks in high quality, highly liquid, short-term deposits and investments, which helps mitigate banking concentration risk.

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However, we believe we have adequate liquidity to meet Pulte Mortgage's anticipated financing needs.

Beyond the next 12 months, we will need to repay or refinance our Revolving Credit Facility, which matures in June 2027, and our unsecured senior notes, the next tranche of which becomes due in March 2026.

Beyond the next 12 months, we will need to repay or refinance our Revolving Credit Facility, which matures in June 2027, and additional unsecured senior notes beginning in January 2027 and beyond (see Note 4 ).

We may from time to time repurchase our unsecured senior notes through open market purchases, privately negotiated transactions, or otherwise.

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Unsecured senior notes

We had $1.6 billion of unsecured senior notes outstanding at both March 31, 2025 and December 31, 2024, with no repayments due until March 2026, when $251.9 million of unsecured senior notes are scheduled to mature.

We had $1.6 billion of unsecured senior notes outstanding at both June 30, 2025 and December 31, 2024, with no repayments due until March 2026, when $251.9 million of unsecured senior notes are scheduled to mature.

Other notes payable

Other notes payable include non-recourse and limited recourse secured notes with third parties that totaled $42.6 million and $35.8 million at March 31, 2025 and December 31, 2024, respectively.

Other notes payable include non-recourse and limited recourse secured notes with third parties that totaled $39.7 million and $35.8 million at June 30, 2025 and December 31, 2024, respectively.

These notes have maturities ranging up to five years, are secured by the applicable land positions to which they relate, and generally have no recourse to other assets.

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The Revolving Credit Facility contains financial covenants that require us to maintain a minimum Tangible Net Worth and a maximum Debt-to-Capitalization Ratio (as each term is defined in the Revolving Credit Facility).

We were in compliance with all covenants and requirements as of March 31, 2025.

We were in compliance with all covenants and requirements as of June 30, 2025.

Outstanding balances under the Revolving Credit Facility are guaranteed by certain of our wholly-owned subsidiaries.

At March 31, 2025, we had no borrowings outstanding, $307.7 million of letters of credit issued, and $942.3 million of remaining capacity under the Revolving Credit Facility.

At June 30, 2025, we had no borrowings outstanding, $341.2 million of letters of credit issued, and $908.8 million of remaining capacity under the Revolving Credit Facility.

At December 31, 2024, we had no borrowings outstanding, $321.1 million of letters of credit issued, and $928.9 million of remaining capacity under the Revolving Credit Facility.

Joint venture debt

At March 31, 2025, aggregate outstanding debt of unconsolidated joint ventures was $34.9 million.

At June 30, 2025, aggregate outstanding debt of unconsolidated joint ventures was $36.5 million.

Financial Services debt

Pulte Mortgage maintains a master repurchase agreement with third-party lenders (as amended, the "Repurchase Agreement") that matures on August 13, 2025.

The maximum aggregate commitment under the Repurchase Agreement was $650.0 million at March 31, 2025, which continues until maturity.

The maximum aggregate commitment under the Repurchase Agreement was $650.0 million at June 30, 2025, which continues until maturity.

The Repurchase Agreement also contains an accordion feature that could increase the commitment by $50.0 million above its active commitment level.

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The Repurchase Agreement contains various affirmative and negative covenants applicable to Pulte Mortgage, including quantitative thresholds related to net worth, net income, and liquidity.

At March 31, 2025, Pulte Mortgage had $426.9 million outstanding at a weighted-average interest rate of 6.12% and $223.1 million of remaining capacity under the Repurchase Agreement.

At June 30, 2025, Pulte Mortgage had $498.4 million outstanding at a weighted-average interest rate of 6.12% and $151.6 million of remaining capacity under the Repurchase Agreement.

At December 31, 2024, Pulte Mortgage had $526.9 million outstanding at a weighted-average interest rate of 6.13% and $148.1 million of remaining capacity under the Repurchase Agreement.

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Dividends and share repurchase program

In the three months ended March 31, 2025, we declared cash dividends totaling $44.7 million and repurchased 2.8 million shares under our share repurchase authorization for $300.0 million.

In the three months ended March 31, 2024, we declared cash dividends totaling $42.6 million and repurchased 2.3 million shares under our share repurchase authorization for $245.8 million.

On January 29, 2025, the Board of Directors increased our share repurchase authorization by $1.5 billion.

At March 31, 2025, we had remaining authorization to repurchase $1.9 billion of common shares.

In the six months ended June 30, 2025, we declared cash dividends totaling $88.7 million and repurchased 5.8 million shares under our share repurchase authorization for $600.0 million.

In the six months ended June 30, 2024, we declared cash dividends totaling $84.7 million and repurchased 5.1 million shares under our share repurchase authorization for $560.0 million.

On January 29, 2025, the Board of Directors increased our share repurchase authorization by $1.5 billion, which was publicly announced on January 30, 2025.

At June 30, 2025, we had remaining authorization to repurchase $1.6 billion of common shares.

Contractual Obligations

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These obligations impact our short-term and long-term liquidity and capital resource needs.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of March 31, 2025, while others are considered future commitments.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of June 30, 2025, while others are considered future commitments.

Our contractual obligations primarily consist of long-term debt and related interest payments, purchase obligations related to expected acquisitions and development of land, house construction costs, operating leases, and obligations under our various compensation and benefit plans.

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If the obligations related to a project or program are ongoing, annual extensions of the letters of credit are typically granted on a year-to-year basis.

At March 31, 2025, we had outstanding letters of credit totaling $307.7 million.

At June 30, 2025, we had outstanding letters of credit totaling $341.2 million.

Our surety bonds generally do not have stated expiration dates;

rather, we are released from the bonds as the contractual performance is completed.

These bonds, which approximated $3.0 billion at March 31, 2025, are typically outstanding over a period of approximately three to five years.

These bonds, which approximated $3.1 billion at June 30, 2025, are typically outstanding over a period of approximately three to five years.

Because significant construction and development work has been performed related to projects that have not yet received final acceptance by the respective counterparties, the aggregate amount of surety bonds outstanding is in excess of the projected cost of the remaining work to be performed.

In the ordinary course of business, we enter into land option agreements in order to procure land for the construction of houses in the future.

At March 31, 2025, these agreements had an aggregate remaining purchase price of $10.1 billion.

At June 30, 2025, these agreements had an aggregate remaining purchase price of $10.1 billion.

Pursuant to these land option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices.

At March 31, 2025, outstanding deposits totaled $667.7 million, of which $27.0 million is refundable.

For further information regarding our primary obligations, refer to Note 4 and Note 8 to the Consolidated Financial Statements included elsewhere in this Quarterly Report on 10-Q for amounts outstanding as of March 31, 2025 related to debt and commitments and contingencies, respectively.

At June 30, 2025, outstanding deposits totaled $673.1 million, of which $21.5 million is refundable.

For further information regarding our primary obligations, refer to Note 4 and Note 8 to the Consolidated Financial Statements included elsewhere in this Quarterly Report on 10-Q for amounts outstanding as of June 30, 2025 related to debt and commitments and contingencies, respectively.

Operating activities

Net cash provided by operating activities in the three months ended March 31, 2025 was $134.2 million.

Net cash provided by operating activities in the six months ended June 30, 2025 was $421.7 million.

Generally, the primary drivers of our cash flow from operations are profitability and changes in the levels of inventory and residential mortgage loans available-for-sale, each of which experiences seasonal fluctuations.

The cash inflows from our operations for the three months ended March 31, 2025 were primarily due to net income of $522.8 million, partially offset by a net increase in inventories of $270.6 million, which was primarily attributable to land acquisition, development, and house spend to support future growth.

Net cash provided by operating activities in the three months ended March 31, 2024 was $239.8 million.

The cash inflows from our operations for the three months ended March 31, 2024 were primarily due to net income of $663.0 million, partially offset by a net increase in inventories of $289.2 million, which was primarily attributable to the increased number of homes in production coupled with land acquisition, development, and house spend to support future growth, as well as a seasonal $54.8 million increase in residential mortgage loans available-for-sale.

The cash inflows from our operations for the six months ended June 30, 2025 were primarily due to net income of $1.1 billion, partially offset by a net increase in inventories of $533.0 million, which was primarily attributable to land acquisition, development, and house spend to support expected future growth.

Net cash provided by operating activities in the six months ended June 30, 2024 was $657.3 million.

The cash inflows from our operations for the six months ended June 30, 2024 were primarily due to net income of $1.5 billion, partially offset by a net increase in inventories of $473.7 million, which was primarily attributable to the increased number of homes in production coupled with land acquisition and development spend to support expected future growth, as well as a seasonal $55.3 million increase in residential mortgage loans available-for-sale.

Investing activities

Net cash used in investing activities in the three months ended March 31, 2025 was $39.7 million.

These cash outflows primarily resulted from capital expenditures of $29.6 million related to our ongoing investments in new communities, facilities, and information technology applications.

Net cash used in investing activities in the three months ended March 31, 2024 was $26.9 million.

Net cash used in investing activities in the six months ended June 30, 2025 was $39.2 million.

These cash outflows primarily resulted from capital expenditures of $64.1 million related to our ongoing investments in new communities, facilities, and information technology applications, partially offset by distributions of capital from unconsolidated entities of $39.4 million.

Net cash used in investing activities in the six months ended June 30, 2024 was $66.2 million.

These cash outflows primarily resulted from capital expenditures of $55.3 million related to our ongoing investments in new communities, facilities, and information technology applications.

Financing activities

Net cash used in financing activities in the three months ended March 31, 2025 totaled $472.3 million.

Net cash used in financing activities in the six months ended June 30, 2025 totaled $768.9 million.

These cash outflows resulted primarily from the repurchase of 5.8 million common shares for $600.0 million under our share repurchase authorization, payments of $90.1 million in cash dividends, payments of $22.4 million related to consolidated inventory not owned, and net repayments of $28.5 million under the Repurchase Agreement.

Net cash used in financing activities in the three months ended March 31, 2024 totaled $296.0 million.

Net cash used in financing activities in the six months ended June 30, 2024 totaled $994.3 million.

These cash outflows resulted primarily from the repurchase of 5.1 million common shares for $560.0 million under our share repurchase authorization, payments of $84.9 million in cash dividends, payments of $70.6 million related to consolidated inventory not owned, and $318.3 million of repayments of notes payable, partially offset by net borrowings of $24.4 million under the Repurchase Agreement.

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Supplemental Guarantor Financial Information

As of March 31, 2025, PulteGroup, Inc.

As of June 30, 2025, PulteGroup, Inc.

had outstanding $1.6 billion principal amount of unsecured senior notes due at dates from March 2026 through February 2035 and no borrowings outstanding, $341.2 million of letters of credit issued, and $908.8 million of remaining capacity under its Revolving Credit Facility.

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Our subsidiaries associated with our Financial Services operations and certain other subsidiaries do not guarantee the unsecured senior notes or the Revolving Credit Facility (collectively, "Non-Guarantor Subsidiaries").

The guarantees are senior unsecured obligations of each Guarantor and rank equal with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor.

The guarantees are senior unsecured obligations of each Guarantor and rank equal

with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor.

The guarantees are effectively subordinated to any secured debt of such Guarantor to the extent of the value of the assets securing such debt.

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Summarized Balance Sheet Data

ASSETS March 31, 2025 December 31, 2024

ASSETS June 30, 2025 December 31, 2024

Cash, cash equivalents, and restricted cash $1,117,535 $1,218,207

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Total liabilities 4,656,932 4,801,056

Three Months Ended

Six Months Ended

Summarized Statement of Operations Data 2025 2024

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Critical Accounting Estimates

There have been no significant changes to our critical accounting estimates in the three months ended March 31, 2025 compared with those contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no significant changes to our critical accounting estimates in the six months ended June 30, 2025 compared with those contained in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024.

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.

What changed 10-Q

Item 2. Management’s Discussion and Analysis