What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-21 compared with 2025-07-22 · 148 added, 145 removed, 345 unchanged (46% 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 Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

6 unchanged sentences

Diluted earnings per share $ 2.96 $ 3.35 $ 8.55 $ 10.28

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

In the third quarter of 2025, the consumer demand weakness we experienced in the first half of 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 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 have responded to these conditions by adjusting production cadence and sales prices where necessary and focusing sales incentives on discounts on spec inventory (houses without customer orders) and closing cost incentives, especially mortgage interest rate buydowns.

Despite these efforts, net new orders in units decreased 6% and 7% for the three and nine months ended September 30, 2025, respectively, versus the comparable prior year periods.

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

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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 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.

This is evidenced in our gross margin from home sales for the third quarter of 2025, which decreased to 26.2% from 28.8% in the comparable prior year period, and from 27.0% in the second quarter of 2025.

These decreases are primarily due to higher land costs combined with the aforementioned elevated 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 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.

We remain focused on taking a measured approach to our capital allocation strategy to effectively respond to future volatility in demand.

Accordingly, we are focused on protecting liquidity and closely managing our cash flows while also continuing to focus on shareholder returns, including the following actions:

In response to the significant shift in market conditions in 2025, we have slowed the pace of our housing starts, have increased sales incentives, and are taking additional pricing actions in many of our communities, which have resulted in $42.2 million of land inventory impairments during the nine months ended September 30, 2025.

We continue to update the underwriting for our land option contracts prior to buying additional land and have made decisions to walk away from a number of land option agreements, which resulted in write-offs of deposits and pre-acquisition costs totaling $26.5 million in the nine months ended September 30, 2025.

We will continue working with our trade partners to update the costs for materials, labor, and services to reflect changes in market conditions and plan to adjust our overhead cost structure as necessary to align with demand.

Inventories of new and existing homes have increased in the majority of our geographies as a result of the weakened demand experienced this year, so we are taking a measured approach to our capital allocation strategy as we anticipate continued volatility in demand.

Accordingly, we are focused on protecting liquidity and closely managing our cash flows while also continuing to emphasize shareholder returns, including the following actions:

– Increasing our lot optionality within our land pipeline for increased flexibility;

– 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 $1.6 billion as of June 30, 2025, after $600.0 million of share repurchases in the first half of 2025;

– Taking an opportunistic approach to repurchasing debt;

– Producing sufficient levels of spec inventory to service buyers seeking to close within 30 to 90 days;

authorization to $1.3 billion as of September 30, 2025, after $900.0 million of share repurchases in the first nine months of 2025;

– Taking an opportunistic approach to retiring debt;

– Maintaining ample liquidity.

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.

We believe our strategic approach with respect to balancing sales price with sales pace, including actions taken related to sales incentives 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 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.

Homebuilding Operations

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2025 vs.

11 unchanged sentences

entities, net (c)

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

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

2,422 (3) % 2,508 2,083 (d) 41,527

Other income, net 1,755 (d) 9,702 7,110 (d) 39,709

Income before income taxes $ 723,430 (15) % $ 851,270 $ 2,133,069 (20) % $ 2,663,868

4 unchanged sentences

sale revenues (b)

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

9.4 % — 9.4 % 9.7 % 80 bps 8.9 %

Closings (units) 7,529 (5) % 7,924 21,751 (6) % 23,116

5 unchanged sentences

Average active communities 1,002 5 % 957 986 5 % 940

Backlog at June 30:

Backlog at September 30:

Units 9,888 (18) % 12,089

1 unchanged sentence

(a) Includes the amortization of capitalized interest.

(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.

(b) SG&A includes insurance reserve reversals of $78.7 million for the nine months ended September 30, 2024 (see Note 8 ).

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

(d) Percentage not meaningful.

1 unchanged sentence

Home sale revenues

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.

Home sale revenues in the three and nine months ended September 30, 2025 were lower than the prior year periods by $94.9 million and $345.4 million, respectively.

In the three months ended September 30, 2025, the 2% decrease resulted primarily from a 5% decrease in closings from the prior year period, partially offset by a 3% increase in average selling price.

In the nine months ended September 30, 2025 the 3% decrease resulted primarily from a 6% decrease in closings, partially offset by a 3% 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.

Average selling price during the three and nine months ended September 30, 2025 increased primarily due to product and geographic mix, including a slightly higher mix of closings toward our move-up buyers and in our Northeast segment, both of which carry a higher average selling price.

Home sale gross margins

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.

Home sale gross margins were 26.2% and 26.9% in the three and nine months ended September 30, 2025, respectively, compared with 28.8% and 29.4% in the three and nine months ended September 30, 2024, respectively.

The decreases in home sale gross margins were primarily attributable to the aforementioned pricing actions, including elevated sales incentives, and 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.

Gross margins for the first nine months of 2025 were also unfavorably impacted by our efforts to reduce completed 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 reducing the level of spec inventory during 2025, the level of completed spec inventory remains elevated for the current demand environment.

Land sale and other revenues

1 unchanged sentence

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 $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.

Land sales and other revenues contributed income of $5.1 million and $10.8 million for the three and nine months ended September 30, 2025, respectively, compared with losses of $6.0 million and $4.9 million for the three and nine months ended September 30, 2024, respectively.

SG&A as a percentage of home sale revenues was 9.4% and 9.7% and in the three and nine months ended September 30, 2025, respectively, compared with 9.4% and 8.9% for the three and nine months ended September 30, 2024, respectively.

The gross dollar amount of our SG&A decreased $6.2 million, or 2%, for the three months ended September 30, 2025 compared with the prior year period, and increased $58.8 million, or 5%, for the nine months ended September 30, 2025 compared with the prior year period.

The increase in gross dollars for the nine months ended September 30, 2025 resulted primarily from insurance reserve reversals of $78.7 million recorded in the nine months ended September 30, 2024, respectively.

Additionally, SG&A for the first nine months 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.

1 unchanged sentence

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

8 unchanged sentences

Net new orders

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.

Net new orders in units decreased 6% while net new orders in dollars decreased 7% in the three months ended September 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 nine months ended September 30, 2025, as compared with the prior year period.

The decreased net new order volume and dollars in the three and nine months ended September 30, 2025 over the comparable prior year periods was primarily attributable to 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 16% and 15% for the three and nine months ended September 30, 2025, respectively, and 15% and 14% for the three and nine months ended September 30, 2024, respectively.

Ending backlog dollars, which represent orders for homes that have not yet closed, decreased 19% at September 30, 2025 compared with September 30, 2024.

Homes in production

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.

Our production cycle times have improved significantly over the past two years and have now returned to near historical norms.

The following is a summary of our homes in production:

2025 June 30,

September 30,

2025 September 30,

Sold 7,727 9,684

3 unchanged sentences

Total 16,806 18,633

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

The number of homes in production at September 30, 2025 was 10% lower than at September 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.

We continue to carefully monitor our production levels and expect to lower the percentage of our inventory that is unsold by the end of 2025.

Controlled lots

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

June 30, 2025 December 31, 2024

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

September 30, 2025 December 31, 2024

Owned Optioned Controlled Owned Optioned Controlled

9 unchanged sentences

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 June 30, 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 $9.9 billion at September 30, 2025.

Homebuilding Segment Operations

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

As of September 30, 2025, we conducted our operations in 47 markets located throughout 26 states.

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

Maryland, Massachusetts, New Jersey, Pennsylvania, Virginia

Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Virginia

Georgia, North Carolina, South Carolina, Tennessee

3 unchanged sentences

Operating Data by Segment ($000's omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2025 vs.

17 unchanged sentences

Other homebuilding (c)

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

10,372 (51) % 21,043 36,868 (78) % 165,954

$ 723,430 (15) % $ 851,270 $ 2,133,069 (20) % $ 2,663,868

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

1 unchanged sentence

(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.

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

Operating Data by Segment ($000's omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2025 vs.

33 unchanged sentences

Operating Data by Segment ($000's omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2025 vs.

25 unchanged sentences

($000’s omitted)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

10 unchanged sentences

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

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.

For the third quarter of 2025, Northeast home sale revenues increased 14% when compared with the prior year period due to a 4% 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 19%, primarily due to higher revenues across the majority of markets.

Net new orders decreased across the majority of markets.

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.

For the nine months ended September 30, 2025, Northeast home sale revenues increased 25% when compared with the prior year period due to a 14% 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 all markets.

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

Net new orders decreased across the majority of markets.

For the third quarter of 2025, Southeast home sale revenues increased 16% when compared with the prior year period due to a 8% increase in closings combined with a 7% increase in average selling price.

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

Income before income taxes increased 8%, primarily due to higher revenues across the majority of markets.

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

For the nine months ended September 30, 2025, Southeast home sale revenues increased slightly when compared with the prior year period due to a 6% increase in average selling price partially offset by a 6% decrease in closings.

The increase in average selling price and decrease in closings was mixed among markets.

Income before income taxes decreased 11% primarily due to lower gross margins across all markets.

The decrease in net new orders was mixed among markets.

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.

For the third quarter of 2025, Florida home sale revenues decreased 6% when compared with the prior year period primarily due to a 3% decrease in closings combined with an 3% decrease in average selling price.

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

Income before income taxes decreased 20% primarily due to lower revenues across the majority of markets and lower gross margins across all 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.

For the nine months ended September 30, 2025, Florida home sale revenues decreased 14% when compared with the prior year period due to a 10% decrease in closings combined with a 4% decrease in the average selling price.

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

Income before income taxes decreased 31% primarily due to lower revenues and gross margins across the majority of markets.

Net new orders decreased across the majority of markets.

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 decrease in net new orders was mixed among markets.

For the third quarter of 2025, Midwest home sale revenues increased 9% when compared with the prior year period due to a 10% increase in closings partially offset by a 1% 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 13% 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 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 decrease in net new orders occurred across the majority of markets.

For the nine months ended September 30, 2025, Midwest home sale revenues increased 8% when compared with the prior year period due to an 9% increase in closings partially offset by a slight 1% decrease in average selling price.

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

1 unchanged sentence

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.

For the third quarter of 2025, Texas home sale revenues decreased 28% when compared with the prior year period due to a 28% decrease in closings combined with a slight decrease in average selling price.

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

Income before income taxes decreased 58% primarily due to lower revenues across all markets and lower gross margins 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.

For the nine months ended September 30, 2025, Texas home sale revenues decreased 23% when compared with the prior year period due to a 22% decrease in closings combined with a 1% decrease in average selling price.

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

Income before income taxes decreased 50% primarily due to decreased revenues across all markets and decreased gross margins across the majority of markets.

Net new orders decreased across all markets.

For the third quarter of 2025, West home sale revenues decreased 7% when compared with the prior year period due to a 11% decrease in closings partially offset by a 5% 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 35%, primarily due to lower revenues and gross margins 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 decreased 3%, primarily due to lower gross margins and increased overhead costs across the majority of markets.

For the nine months ended September 30, 2025, West home sale revenues increased 8% when compared with the prior year period due to an 8% increase in average selling price partially offset by a slight decrease in closings.

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

Income before income taxes decreased 13% primarily due to lower gross margin 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

8 unchanged sentences

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

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2025 vs.

10 unchanged sentences

Principal $ 2,054,441 (2) % $ 2,103,197 $ 6,085,214 1 % $ 5,998,347

Six Months Ended

Nine Months Ended

September 30,

Supplemental data:

7 unchanged sentences

Total funded originations 100 % 100 %

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.

Total Financial Services revenues for the three and nine months ended September 30, 2025 decreased 9% and 7%, 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 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.

Income before income taxes in the three and nine months ended September 30, 2025 decreased 19% and 23%, 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 nine months ended September 30, 2025 was 23.7% and 23.9%, respectively, compared with 23.0% and 23.1% 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.

Income tax expense for the nine months ended September 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 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.

At September 30, 2025, we had unrestricted cash and equivalents of $1.5 billion, restricted cash balances of $28.0 million, and $902.0 million available under our Revolving Credit Facility.

Our ratio of debt-to-total capitalization, excluding our Financial Services debt, was 11.2% at September 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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Unsecured senior notes

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.

We had $1.6 billion of unsecured senior notes outstanding at both September 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 $39.7 million and $35.8 million at June 30, 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 September 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 interest rate on borrowings under the Revolving Credit Facility may be based on either the Secured Overnight Financing Rate or a base rate plus an applicable margin, as defined therein.

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 June 30, 2025.

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 September 30, 2025.

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

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 September 30, 2025, we had no borrowings outstanding, $348.0 million of letters of credit issued, and $902.0 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 June 30, 2025, aggregate outstanding debt of unconsolidated joint ventures was $36.5 million.

At September 30, 2025, aggregate outstanding debt of unconsolidated joint ventures was $37.2 million.

Financial Services debt

Pulte Mortgage maintains a master repurchase agreement with third-party lenders (as amended, the "Repurchase Agreement") that matures on August 12, 2026.

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

The maximum aggregate commitment under the Repurchase Agreement was $625.0 million at September 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 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 September 30, 2025, Pulte Mortgage had $404.2 million outstanding at a weighted-average interest rate of 5.93% and $220.8 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 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.

In the nine months ended September 30, 2025, we declared cash dividends totaling $132.2 million and repurchased 8.2 million shares under our share repurchase authorization for $900.0 million.

In the nine months ended September 30, 2024, we declared cash dividends totaling $126.2 million and repurchased 7.6 million shares under our share repurchase authorization for $880.0 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.

At September 30, 2025, we had remaining authorization to repurchase $1.3 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 June 30, 2025, while others are considered future commitments.

Certain contractual obligations are reflected on the Consolidated Balance Sheet as of September 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 June 30, 2025, we had outstanding letters of credit totaling $341.2 million.

At September 30, 2025, we had outstanding letters of credit totaling $348.0 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 $3.1 billion at June 30, 2025, are typically outstanding over a period of approximately three to five years.

These bonds, which approximated $3.1 billion at September 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 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 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.

At September 30, 2025, these agreements had an aggregate remaining purchase price of $9.9 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 September 30, 2025, outstanding deposits totaled $681.5 million, of which $18.0 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 September 30, 2025 related to debt and commitments and contingencies, respectively.

Operating activities

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

Net cash provided by operating activities in the nine months ended September 30, 2025 was $1.1 billion.

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 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.

The cash inflows from our operations for the nine months ended September 30, 2025 were primarily due to net income of $1.7 billion, partially offset by a net increase in inventories of $635.9 million, which was primarily attributable to land acquisition, development, and house spend to support ongoing operations.

Net cash provided by operating activities in the nine months ended September 30, 2024 was $1.1 billion.

The cash inflows from our operations for the nine months ended September 30, 2024 were primarily due to net income of $2.2 billion, partially offset by a net increase in inventories of $805.3 million, which was primarily attributable to land acquisition, development, and house spend to support expected future growth, and a $45.2 million increase in residential mortgage loans available-for-sale due to higher loan origination volumes.

Investing activities

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

Net cash used in investing activities in the nine months ended September 30, 2025 was $64.1 million.

These cash outflows primarily resulted from capital expenditures of $91.4 million related to our ongoing investments in new communities, facilities, and information technology applications, partially offset by distributions of capital from unconsolidated entities of $45.7 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.

Net cash used in investing activities in the nine months ended September 30, 2024 was $108.4 million.

These cash outflows primarily resulted from capital expenditures of $94.1 million related to our ongoing investments in new communities, facilities, and information technology applications along with $15.1 million of investments in unconsolidated entities.

Financing activities

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

Net cash used in financing activities in the nine months ended September 30, 2025 totaled $1.2 billion.

These cash outflows resulted primarily from the repurchase of 8.2 million common shares for $900.0 million under our share repurchase authorization, payments of $133.7 million in cash dividends, payments of $33.0 million related to consolidated inventory not owned, and net repayments of $122.7 million under the Repurchase Agreement.

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

Net cash used in financing activities in the nine months ended September 30, 2024 totaled $1.4 billion.

These cash outflows resulted primarily from the repurchase of 7.6 million common shares for $880.0 million under our share repurchase authorization, payments of $126.6 million in cash dividends, payments of $94.1 million related to consolidated inventory not owned, and $350.5 million of repayments of notes payable, partially offset by net borrowings of $24.5 million under the Repurchase Agreement.

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Supplemental Guarantor Financial Information

As of June 30, 2025, PulteGroup, Inc.

As of September 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, $348.0 million of letters of credit issued, and $902.0 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 June 30, 2025 December 31, 2024

ASSETS September 30, 2025 December 31, 2024

Cash, cash equivalents, and restricted cash $1,294,776 $1,218,207

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Total liabilities 4,721,240 4,801,056

Six Months Ended

Nine Months Ended

September 30,

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 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.

There have been no significant changes to our critical accounting estimates in the nine months ended September 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