NVR, Inc. · 10-Q · Item 2 MD&A

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

(dollars in thousands, except per share data)

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press releases or other public communications, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should,” "could," or “anticipates” or the negative thereof or other comparable terminology. All statements other than of historical facts are forward-looking statements.

Forward-looking statements contained in this document may include those regarding market trends, our financial position and financial results, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or performance to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to the following: general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by us and our customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by us in our homebuilding operations; shortages of labor; the economic impact of a major epidemic or pandemic; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which we have little or no control.

We undertake no obligation to update such forward-looking statements except as required by law. For additional information regarding risk factors and uncertainties, see Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Unless the context otherwise requires, references to “NVR,” “we,” “us,” or “our” include NVR and its consolidated subsidiaries.

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Results of Operations for the Three and Six Months Ended June 30, 2026 and 2025

Business Environment and Current Outlook

During the second quarter of 2026, T1demand for new homes continued to be negatively impacted by affordability issues, high home inventory levels in certain markets, T2T3weak consumer sentiment and economic volatility. We expect that these issues may continue to weigh on demand and home prices. T4We also expect further margin pressure from higher land prices and from repositioning of communities as the housing market continues to adjust. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that T5we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet and our disciplined lot acquisition strategy.

Business

Our primary business is the construction and sale of single-family detached homes, townhomes and condominiums, all of which are primarily constructed on a pre-sold basis. To fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business. We primarily conduct our operations in mature markets. Additionally, we generally grow our business through market share gains in our existing markets and by expanding into markets contiguous to our current active markets. Our four homebuilding reportable segments consist of the following regions:

Mid Atlantic:

Maryland, Virginia, West Virginia, Delaware and Washington, D.C.

North East:

New Jersey and Eastern Pennsylvania

Mid East:

New York, Ohio, Western Pennsylvania, Indiana and Illinois

South East:

North Carolina, South Carolina, Tennessee, Florida, Georgia and Kentucky

Our lot acquisition strategy is predicated upon avoiding the financial requirements and risks associated with direct land ownership and development. We generally do not engage in land development (see discussion below of our land development activities). Instead, we typically acquire finished building lots from various third-party land developers pursuant to fixed price finished lot purchase agreements (“LPAs”). These LPAs require deposits, typically ranging up to 10% of the aggregate purchase price of the finished lots, in the form of cash or letters of credit that may be forfeited if we fail to perform under the LPA. This strategy has allowed us to maximize inventory turnover, which we believe enables us to minimize market risk and to operate with less capital, thereby enhancing rates of return on equity and total capital.

In addition to constructing homes primarily on a pre-sold basis and utilizing what we believe is a conservative lot acquisition strategy, we focus on obtaining and maintaining a leading market position in each market we serve. This strategy allows us to gain valuable efficiencies and competitive advantages in our markets, which we believe contributes to minimizing the adverse effects of regional economic cycles and provides growth opportunities within these markets. Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build.

In certain specific strategic circumstances, we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development. Once we acquire raw ground, we generally sell the raw parcel to a developer and enter into an LPA with the developer to purchase the finished lots or, on a limited basis, hire a developer to develop the land on our behalf. While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so. We expect, however, to continue to acquire substantially all our finished lot inventory using LPAs with forfeitable deposits.

As of June 30, 2026, we controlled approximately 184,400 lots as described below.

Lot Purchase Agreements

We controlled approximately 174,900 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $1,012,300 and $7,200, respectively. Included in the number of controlled lots are

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approximately 20,950 lots for which we have recorded a contract land deposit impairment allowance of approximately $134,950 as of June 30, 2026.

Joint Venture Limited Liability Corporations (“JVs”)

We had an aggregate investment totaling approximately $73,300 in four JVs, expected to produce approximately 8,000 lots. We had additional JV funding commitments totaling approximately $23,400 as of June 30, 2026.

Land Under Development

We owned land with a carrying value of approximately $21,100 that we intend to develop into approximately 1,500 finished lots.

See Notes 2, 3 and 4 to the condensed consolidated financial statements included herein for additional information regarding LPAs, JVs and land under development, respectively.

Raw Land Purchase Agreements

In addition, we have certain properties under contract with land owners that are expected to yield approximately 38,600 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. As of June 30, 2026, these properties are controlled with deposits in cash totaling approximately $50,000, of which approximately $12,800 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.

Key Financial Results

Our consolidated revenues for the second quarter of 2026 totaled $2,326,356, a decrease of 10% from the second quarter of 2025. Net income for the second quarter ended June 30, 2026 was $236,458, or $83.96 per diluted share. For the second quarter ended June 30, 2026, net income decreased 29% and diluted earnings per share decreased 23% when compared to net income and diluted earnings per share for the second quarter of 2025, respectively. Our homebuilding gross profit margin percentage decreased to 19.2% in the second quarter of 2026 from 21.5% in the second quarter of 2025. New orders, net of cancellations (“New Orders”) increased by 9% in the second quarter of 2026 compared to the second quarter of 2025.

The New Order cancellation rate for the second quarter of 2026 decreased to 14.9% from 16.5% in the same period in 2025. The average sales price for New Orders in the second quarter of 2026 was $437.1, a decrease of 5% compared to the same period in the prior year.

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Homebuilding Operations

The following table summarizes the results of operations and other data for our homebuilding operations:

Three Months Ended June 30,

Six Months Ended June 30,

Financial Data:

Revenues

$

$

$

$

Cost of sales

$

$

$

$

Gross profit margin percentage

%

%

%

%

Selling, general and administrative expenses

$

$

$

$

Operating Data:

New orders (units)

Average new order price

$

$

$

$

Settlements (units)

Average settlement price

$

$

$

$

Backlog (units)

Average backlog price

$

$

New order cancellation rate

%

%

%

%

Consolidated Homebuilding - Three Months Ended June 30, 2026 and 2025

Homebuilding revenues decreased 11% in the second quarter of 2026 compared to the same period in 2025, as a result of a 8% decrease in units settled, coupled with a 3% decrease in average price of units settled. The decrease in units settled was primarily attributable to a lower backlog turnover rate quarter over quarter. Gross profit margin percentage in the second quarter of 2026 decreased to 19.2% from 21.5% in the second quarter of 2025. T6Gross profit margin was negatively impacted by higher lot costs, T7pricing pressure due to continued affordability challenges and weak consumer sentiment. In addition, T8margins were impacted by contract land deposit impairments totaling approximately $21,700, compared to $13,200 in the second quarter of 2025.

New Orders increased 9% while the average sales price decreased 5% in the second quarter of 2026 compared to the second quarter of 2025. New Orders were favorably impacted by a 4% increase in the average number of active communities quarter over quarter, coupled with a 5% higher sales absorption rate in the second quarter of 2026. The decrease in the average sales price of New Orders is attributable to pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices.

Selling, general and administrative (“SG&A”) expense in the second quarter of 2026 was relatively flat, but increased as a percentage of revenue to 6.6% from 5.9%. The increase in SG&A expense as a percentage of revenue was primarily attributable to a decrease in revenues quarter over quarter.

Consolidated Homebuilding - Six Months Ended June 30, 2026 and 2025

Homebuilding revenues decreased 16% in the first six months of 2026 compared to the same period in 2025, as a result of a 14% decrease in units settled, coupled with a 2% decrease in the average settlement price year over year. The decrease in settlements was attributable to a 15% lower backlog unit balance entering 2026 compared to the backlog unit balance entering 2025. Gross profit margin percentage in the first six months of 2026 decreased to 19.4% from 21.7% in the first six months of 2025. Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges and weak consumer sentiment. In addition, margins were impacted by contract land deposit impairments totaling approximately $30,600 in the six months ended June 30, 2026, compared to $21,300 in the first six months of 2025.

New Orders increased 8% while the average sales price of New Orders decreased 3% in the first six months of 2026 compared to the same period in 2025. New Orders were favorably impacted by a 6% increase in the average number of active communities, coupled with a 3% higher sales absorption rate year over year. The decrease in the

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average sales price of New Orders is attributable to pricing pressure and a relative product mix shift in New Orders from single family detached homes to single family attached homes, which generally sell at lower prices.

SG&A expense in the first six months of 2026 decreased by approximately $6,600 compared to the same period in 2025, but increased as a percentage of revenue to 7.5% in 2026 from 6.4% in 2025. The decrease in SG&A expense was primarily attributable to T9a decrease of approximately $3,500 in personnel costs due primarily to lower headcount and a decrease of approximately $3,100 in equity based compensation expense year over year.

Our backlog represents homes sold but not yet settled with our customers. As of June 30, 2026, our backlog increased on a unit basis by 9% to 10,998 units and on a dollar basis by 5% to $4,992,229, when compared to 10,069 units and $4,753,905, respectively, as of June 30, 2025. The increase in the number of backlog units was primarily attributable to an 8% increase in New Orders year over year. Backlog dollars were higher primarily due to the increase in backlog units in 2026, offset partially by a 4% decrease in the average price of backlog units year over year.

Our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Our cancellation rate was approximately 14% and 16% in the first six months of 2026 and 2025, respectively, calculated as the total of all cancellations during the period as a percentage of gross sales during the same period.

During the most recent four quarters, approximately 6% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2026 or future years. Other than units that are cancelled, we expect to settle substantially all of our June 30, 2026 backlog within the next twelve months.

The rate at which we turn over our backlog is impacted by various factors, including, but not limited to, changes in New Order activity, internal production capacity, external subcontractor capacity, building material availability, regulatory approvals and other external factors over which we do not exercise control.

Reportable Segments

Homebuilding segment profit includes all revenues and income generated from the sale of homes, less the cost of homes sold, SG&A expenses, and a corporate capital allocation charge determined by corporate management. The corporate capital allocation charge eliminates in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment is providing the desired rate of return after covering our cost of capital.

We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve as of June 30, 2026 and December 31, 2025 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $7,200 and $4,600 as of June 30, 2026 and December 31, 2025, respectively, of letters of credit issued as deposits in lieu of cash.

The following tables summarize certain homebuilding operating activity by reportable segment for the three and six months ended June 30, 2026 and 2025.

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Selected Segment Financial Data:

Three Months Ended June 30,

Six Months Ended June 30,

Revenues:

Mid Atlantic

$

$

$

$

North East

Mid East

South East

Three Months Ended June 30,

Six Months Ended June 30,

Gross profit margin:

Mid Atlantic

$

$

$

$

North East

Mid East

South East

Three Months Ended June 30,

Six Months Ended June 30,

Gross profit margin percentage:

Mid Atlantic

%

%

%

%

North East

%

%

%

%

Mid East

%

%

%

%

South East

%

%

%

%

Three Months Ended June 30,

Six Months Ended June 30,

Segment profit:

Mid Atlantic

$

$

$

$

North East

Mid East

South East

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Operating Activity:

Three Months Ended June 30,

Six Months Ended June 30,

Units

Average

Price

Units

Average

Price

Units

Average

Price

Units

Average

Price

New orders, net of cancellations:

Mid Atlantic

$

$

$

$

North East

$

$

$

$

Mid East

$

$

$

$

South East

$

$

$

$

Total

$

$

$

$

Three Months Ended June 30,

Six Months Ended June 30,

Units

Average

Price

Units

Average

Price

Units

Average

Price

Units

Average

Price

Settlements:

Mid Atlantic

$

$

$

$

North East

$

$

$

$

Mid East

$

$

$

$

South East

$

$

$

$

Total

$

$

$

$

As of June 30,

Units

Average

Price

Units

Average

Price

Backlog:

Mid Atlantic

$

$

North East

$

$

Mid East

$

$

South East

$

$

Total

$

$

Three Months Ended June 30,

Six Months Ended June 30,

New order cancellation rate:

Mid Atlantic

%

%

%

%

North East

%

%

%

%

Mid East

%

%

%

%

South East

%

%

%

%

Three Months Ended June 30,

Six Months Ended June 30,

Average active communities:

Mid Atlantic

North East

Mid East

South East

Total

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Homebuilding Inventory:

Sold inventory:

Mid Atlantic

$

$

North East

Mid East

South East

Total (1)

$

$

Unsold lots and housing units inventory:

Mid Atlantic

$

$

North East

Mid East

South East

Total (1)

$

$

(1) The reconciling items between segment inventory and consolidated inventory include certain consolidation adjustments necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes. These consolidation adjustments are not allocated to our operating segments.

Lots Controlled and Land Deposits:

Total lots controlled:

Mid Atlantic

North East

Mid East

South East

Total

Contract land deposits, net:

Mid Atlantic

$

$

North East

Mid East

South East

Total

$

$

Mid Atlantic

The Mid Atlantic segment had an approximate $85,800, or 45%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $249,300, or 22%, coupled with a decrease in gross profit margin to 20.9% in the second quarter of 2026 from 23.5% in the same period of 2025. Segment revenues decreased due to an 18% decrease in units settled, coupled with a 5% lower average settlement price quarter over quarter. The decrease in settlements was primarily attributable to a 6% lower backlog unit balance entering the second quarter of 2026 compared to backlog entering the second quarter of 2025, coupled with a lower backlog turnover rate. The decrease

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in the average settlement price was primarily attributable to a 4% lower average price of units in backlog entering the second quarter of 2026 compared to the backlog entering the second quarter of 2025. Gross profit margins were negatively impacted by higher lot costs and by pricing pressure due to affordability challenges.

Segment New Orders increased 8%, while the average sales price of New Orders decreased 6% in the second quarter of 2026 compared to the second quarter of 2025. The increase in New Orders was primarily attributable to an 11% increase in the average number of active communities quarter over quarter, offset by a 3% lower absorption rate. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain markets within the segment.

The Mid Atlantic segment had an approximate $181,400, or 48%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $593,600, or 27%, coupled with a decrease in gross profit margin to 21.5% in the first six months of 2026 from 23.8% in the first six months of 2025. Segment revenues decreased due to a 24% decrease in units settled, coupled with a 3% lower average settlement price in the first six months of 2026 compared to the same period in 2025. The decrease in settlements was primarily attributable to a 22% lower backlog unit balance entering 2026 compared to the backlog entering 2025.

The decrease in the average settlement price was primarily attributable to a 3% lower average price of units in backlog entering 2026 compared to the backlog entering 2025. Gross profit margins were negatively impacted by higher lot costs and by pricing pressure due to affordability challenges.

Segment New Orders increased 5%, while the average sales price of New Orders decreased 5%, in the first six months of 2026 compared to the first six months of 2025. New Orders were higher primarily due to a 7% increase in the average number of active communities, offset partially by a 2% lower sales absorption rate year over year. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain markets within the segment.

North East

The North East segment had an approximate $19,000, or 33%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $28,100, or 9%, coupled with a decrease in gross profit margin to 22.0% in the second quarter of 2026 from 26.2% in the second quarter of 2025. Segment revenues decreased due to a 5% decrease in units settled, coupled with a 5% lower average settlement price quarter over quarter. The decrease in settlements was primarily attributable to a lower backlog turnover rate quarter over quarter. The decrease in the average settlement price was primarily attributable to a 10% lower average price of units in backlog entering the second quarter of 2026 compared to the backlog entering the second quarter of 2025. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to affordability challenges.

Segment New Orders and the average sales price of New Orders decreased 8% and 2%, respectively, in the second quarter of 2026 compared to the second quarter of 2025. New Orders were lower primarily due to a 16% lower sales absorption rate, offset by a 9% increase in the average number of active communities. The decrease in sales absorption was attributable to weak consumer sentiment.

The North East segment had an approximate $41,700, or 37%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $76,400, or 13%, coupled with a decrease in gross profit margin to 22.2% in the first six months of 2026 from 26.3% in the first six months of 2025. Segment revenues decreased primarily due to a 13% decrease in units settled. The decrease in settlements was attributable to both an 8% lower backlog unit balance entering 2026 compared to the backlog entering 2025 and a lower backlog turnover rate year over year. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to affordability challenges.

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Segment New Orders increased 7% while the average sales price of New Orders decreased 7% in the first six months of 2026 compared to the first six months of 2025. New Orders were higher primarily due to a 19% increase in the average number of active communities, offset by a 10% lower sales absorption rate year over year. The average sales price of New Orders was negatively impacted by a shift to lower priced communities in certain markets within the segment.

Mid East

The Mid East segment had an approximate $2,800, or 5%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025, due primarily to a decrease in gross profit margins, which offset an increase in segment revenues of approximately $3,500, or 1%. The segment's gross profit margin percentage decreased to 20.4% in the second quarter of 2026 from 21.0% in the second quarter of 2025. Gross profit margin was negatively impacted by higher lot costs. The segment's revenues were higher primarily due to a 3% higher average settlement price in the second quarter of 2026, attributable to a 2% higher average settlement price of units in backlog entering the second quarter of 2026 compared to the same period in 2025.

Segment New Orders increased 11% while the average sales price of New Orders decreased 1% in the second quarter of 2026 compared to the second quarter of 2025. New Orders were favorably impacted by a 9% higher sales absorption rate attributable to better product positioning in certain markets in the current year.

The Mid East segment had an approximate $21,800, or 19%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was driven by a decrease in segment revenues of approximately $98,500, or 11%. Segment revenues decreased due to a 15% decrease in units settled, offset partially by a 4% higher average settlement price. The decrease in settlements was primarily attributable to a 20% lower backlog unit balance entering 2026 compared to the backlog entering 2025. The increase in the average settlement price was attributable to a 5% higher average price of units in backlog entering 2026 compared to backlog entering 2025.

Segment New Orders increased 9% while the average sales price of New Orders remained flat in the first six months of 2026 compared to the first six months of 2025. New Orders were favorably impacted by a 6% higher sales absorption rate, coupled with a 3% increase in the number of active communities year over year.

South East

The South East segment had an approximate $3,400, or 7%, decrease in segment profit in the second quarter of 2026 compared to the second quarter of 2025. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage to 17.7% in the second quarter of 2026 from 18.7% in the second quarter of 2025. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to continued affordability challenges.

Segment New Orders increased 14% while the average sales price of New Orders decreased 2% in the second quarter of 2026 compared to the second quarter of 2025. New Orders were favorably impacted by a 14% higher sales absorption rate attributable to better product positioning in certain markets in the current year.

The South East segment had an approximate $20,500, or 21%, decrease in segment profit in the first six months of 2026 compared to the first six months of 2025. The decrease in segment profit was primarily due to a decrease in the segment's gross profit margin percentage to 17.6% in the first six months of 2026 from 19.2% in the first six months of 2025. Gross profit margins were negatively impacted by higher lot costs and pricing pressure due to continued affordability challenges year over year.

Segment New Orders increased 11% while the average sales price of New Orders decreased 1% in the first six months of 2026 compared to the first six months of 2025. New Orders were favorably impacted by a 7% higher

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sales absorption rate, attributable to better product positioning in certain markets in the current year, coupled with a 4% increase in the average number of active communities within the segment year over year.

Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations

In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between homebuilding segment profit and homebuilding consolidated income before tax include unallocated corporate overhead (which includes all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. Our overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to our operating segments. Consolidation adjustments consist of such items to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments.

External corporate interest expense primarily consists of interest charges on our Senior Notes, and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.

Three Months Ended June 30,

Six Months Ended June 30,

Homebuilding consolidated gross profit:

Mid Atlantic

$

$

$

$

North East

Mid East

South East

Consolidation adjustments and other

Homebuilding consolidated gross profit

$

$

$

$

Three Months Ended June 30,

Six Months Ended June 30,

Homebuilding consolidated income before taxes:

Mid Atlantic

$

$

$

$

North East

Mid East

South East

Reconciling items:

Contract land deposit reserve adjustment (1)

Equity-based compensation expense

Corporate capital allocation (2)

Unallocated corporate overhead

Consolidation adjustments and other

Corporate interest income

Corporate interest expense

Reconciling items sub-total

Homebuilding consolidated income before taxes

$

$

$

$

(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of lot deposit impairment charges in Note 2 in the accompanying condensed consolidated financial statements.

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(2)This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and is as follows for the periods presented:

Three Months Ended June 30,

Six Months Ended June 30,

Corporate capital allocation charge:

Mid Atlantic

$

$

North East

Mid East

South East

Total

$

$

$

$

Mortgage Banking Segment

We conduct our mortgage banking activity through NVR Mortgage Finance, Inc. (“NVRM”), a wholly owned subsidiary. NVRM focuses exclusively on serving the homebuilding segment's customers. NVRM sells almost all of the mortgage loans it closes to investors in the secondary markets on a servicing-released basis, typically within 30 days from the loan closing. The following table summarizes the results of our mortgage banking operations and certain statistical data for the three and six months ended June 30, 2026 and 2025:

Three Months Ended June 30,

Six Months Ended June 30,

Loan closing volume:

Total principal

$

$

$

$

Loan volume mix:

Adjustable rate mortgages

%

5

%

%

4

%

Fixed-rate mortgages

%

%

%

%

Operating profit:

Segment profit

$

$

$

$

Equity-based compensation expense

Mortgage banking income before tax

$

$

$

$

Capture rate:

%

%

%

%

Mortgage banking fees:

Net gain on sale of loans

$

$

$

$

Title services

Servicing fees

$

$

$

$

Loan closing volume for the three and six months ended June 30, 2026 decreased by approximately $200,600, or 13%, and $580,500, or 19%, respectively, from the same periods in 2025. These decreases are consistent with the decreases in homebuilding revenue of 11% and 16%, respectively.

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Segment profit for the three months ended June 30, 2026 decreased by approximately $4,400, or 14%, from the same period in 2025. This decrease was primarily attributable to a decrease of approximately $4,000, or 8%, in mortgage banking fees due to a decrease in gains on sales of loans.

Segment profit for the six months ended June 30, 2026 decreased by approximately $10,100, or 16%, from the same period in 2025. This decrease was primarily attributable to a decrease of approximately $10,400, or 10%, in mortgage banking fees due to a decrease in gains on sales of loans.

Seasonality

We historically have experienced variability in our quarterly results, generally having higher New Order activity in the first half of the year and higher home settlements, revenue and net income in the second half of the year. As a result, our quarterly results of operations are not necessarily indicative of the results that may be expected for the full year.

Effective Tax Rate

Our effective tax rate for the three and six month periods ended June 30, 2026 was 25.8% and 23.8%, respectively, compared to 25.4% in each respective period of 2025. The effective tax rate for the respective periods is primarily impacted by the income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $900 and $13,500 for the three and six months ended June 30, 2026, respectively, compared to $3,500 and $6,200 for the three and six months ended June 30, 2025, respectively.

We expect continued tax rate volatility in future periods attributable to the recognition of excess tax benefits from equity-based awards activity and distributions from the deferred compensation plans. Given the limited number of participants in our deferred compensation plan, the retirement of a participant could result in a significant distribution of the rabbi trust shares and corresponding tax deduction for the Company.

Liquidity and Capital Resources

We fund our operations primarily from our current cash holdings and cash flows generated by operating activities. In addition, we have available a short-term unsecured working capital revolving credit facility and revolving mortgage repurchase facility, as further described below. As of June 30, 2026, we had approximately $1,100,000 in cash and cash equivalents, approximately $287,200 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.

Material Cash Requirements

We believe that our current cash holdings, cash generated from operations, and cash available under our short-term unsecured credit agreement and revolving mortgage repurchase facility, as well as the public debt and equity markets, will be sufficient to satisfy both our short term and long term cash requirements for working capital to support our daily operations and meet commitments under our contractual obligations with third parties. Our material contractual obligations primarily consist of the following:

(i) Payments due to service our debt and interest on that debt. Our Senior Notes have an outstanding aggregate principal balance of $900,000 and mature in May 2030. Future interest payments on our outstanding Senior Notes total $104,550, with $27,000 due within the next twelve months.

(ii) Payment obligations totaling approximately $737,500 under existing LPAs for deposits to be paid to land developers, assuming that contractual development milestones are met by the developers and we exercise our option to acquire finished lots under those LPAs. We expect to make the majority of these payments within the next three years.

(iii) Obligations under operating and finance leases related primarily to office space and our production facilities. See Note 13 of this Quarterly Report on Form 10-Q for additional discussion of our leases.

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In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions. This ongoing repurchase program assists us in accomplishing our primary objective, creating increases in shareholder value. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, of this Quarterly Report on Form 10-Q for further discussion of repurchase activity during the second quarter of 2026. For the six months ended June 30, 2026, T10we repurchased 144,896 shares of our common stock at an aggregate purchase price of $989,733. As of June 30, 2026, we had approximately $1,059,864 available under Board approved repurchase authorizations.

Capital Resources

Senior Notes

As of June 30, 2026, we had Senior Notes with an aggregate principal balance of $900,000, which mature in May 2030.

Credit Agreement

We have an unsecured revolving credit agreement (the "Credit Agreement") which provides for aggregate revolving loan commitments of $300,000, and a $100,000 sublimit for the issuance of letters of credit of which there was approximately $12,800 outstanding as of June 30, 2026. There were no borrowings outstanding under the Credit Agreement as of June 30, 2026.

Repurchase Agreement

NVRM has an unsecured revolving mortgage repurchase facility (the “Repurchase Agreement”) which provides for aggregate borrowings up to $150,000. There were no borrowings outstanding under the Repurchase Agreement as of June 30, 2026,

For additional information regarding the Senior Notes, Credit Agreement and Repurchase Agreement, see Note 11 to the condensed consolidated financial statements included herein, and Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

Cash Flows

For the six months ended June 30, 2026, cash, restricted cash, and cash equivalents decreased by $759,622. Net cash provided by operating activities was $188,156, due primarily to cash provided by earnings for the six months ended June 30, 2026 and a $176,022 reduction in mortgage loans held for sale. In addition, $49,200 of cash was provided by an increase in accounts payable and accrued expenses attributable to an increase in inventory and $45,488 of cash was provided by an increase in customer deposits. Cash was primarily used to fund the increase in inventory of $511,729, attributable to an increase in units under construction as of June 30, 2026 compared to December 31, 2025, and an increase of $106,509 in contract land deposits.

Net cash provided by investing activities for the six months ended June 30, 2026 was $3,916, due primarily to cash provided by the sale of our interest in an unconsolidated joint venture of $21,559. Cash was used primarily for investments in unconsolidated joint ventures totaling $6,911 and purchases of property, plant and equipment of $11,023.

Net cash used in financing activities was $951,694 for the six months ended June 30, 2026. Cash was used to repurchase 144,896 shares of our common stock at an aggregate purchase price of $989,733 under our ongoing common stock repurchase program, discussed above. Cash was provided from stock option exercise proceeds totaling $56,784.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates as previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025.

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