Investors interested in Building Products - Home Builders stocks are likely familiar with D.R. Horton (DHI) and NVR (NVR) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our S ...

Core Insights - The housing sector is facing significant challenges, with new housing starts declining to an annual pace of 1.3 million, which is below economists' expectations [2][3] - The median U.S. home price is projected to reach $416,900 by 2025, while the median household income is around $83,150, resulting in a price-to-income multiple of 5X, indicating severe affordability issues [4][7] - A housing shortage has reached an all-time high of 4.7 million units, exacerbating the crisis as younger buyers are priced out and older homeowners are not selling [8] Government Response - The White House is considering measures to address the high cost of housing, with potential actions including declaring a national housing emergency, providing tariff relief, and offering incentives for first-time buyers [9][10] - These combined measures could significantly boost both supply and demand in the housing market within a year, potentially leading to a housing boom [11] Investment Opportunities - Key homebuilders identified for investment include Lennar, PulteGroup, DR Horton, KB Home, NVR, Toll Brothers, Meritage Homes, and Green Brick Partners, referred to as "blue chips" of the housing construction industry [12] - Housing technology companies like Zillow are also highlighted as potential investment opportunities, especially if more buyers enter the market [12] Interest Rate Outlook - The Federal Reserve is expected to cut interest rates four to five times over the next year, which could lower mortgage rates significantly from the current range of 6-7% [15][17] - Lower mortgage rates could improve affordability for buyers but may also lead to increased demand and higher prices in a tight market [19] Additional Investment Considerations - Companies like Opendoor, Compass, and Rocket Mortgage are positioned to benefit from a potential housing boom and falling mortgage rates, with Rocket Mortgage expected to dominate the refinancing space [21]

Core Viewpoint - NVR reported better-than-expected Q2 2025 results, with earnings and homebuilding revenues exceeding estimates, but year-over-year earnings declined and homebuilding revenues remained flat [2][5]. Financial Performance - Earnings per share were $108.54, surpassing the Zacks Consensus Estimate of $104.89 by 3.5%, but down 10.1% from $120.69 in the prior year [5]. - Homebuilding revenues reached $2.55 billion, exceeding the consensus mark of $2.4 billion by 6.1%, but flat compared to the previous year [5]. - Consolidated revenues, including Homebuilding and Mortgage Banking fees, totaled $2.60 billion, a slight decrease of 0.4% year-over-year [5]. Segment Analysis - Homebuilding segment revenues were flat year-over-year, with settlements down 3% to 5,475 units, while the average selling price (ASP) increased by 3% to $465,400 [6]. - New orders decreased by 11% year-over-year to 5,379 units, with the ASP remaining flat at $458,100; the cancellation rate rose to 17% from 13% a year ago [7]. - Mortgage banking fees fell 21.7% year-over-year to $50.5 million, while closed loan production increased by 2% to $1.56 billion [8]. Market Conditions - The results reflect ongoing affordability challenges for homebuyers amid macroeconomic risks and inflationary pressures, leading to a pullback in the homebuilding segment [3][4]. - Backlog units and value weakened due to uncertainties in the housing market, with backlog decreasing 13% to 10,069 homes and $4.75 billion in value [7]. Financial Position - As of June 30, 2025, NVR had cash and cash equivalents of $1.73 billion for Homebuilding and $39.3 million for Mortgage Banking, down from $2.56 billion and $49.6 million at the end of 2024 [9]. - The company repurchased 142,954 shares for $1.05 billion during the first half of 2025, with 2,883,215 shares outstanding at the end of June [9]. Industry Comparison - NVR is part of the Zacks Building Products - Home Builders industry, where PulteGroup reported a revenue decline of 4.3% year-over-year, with an EPS of $3.03 compared to $3.58 a year ago [13]. - PulteGroup's expected earnings for the current quarter are $2.86 per share, reflecting a year-over-year change of -14.6% [14].

Company Performance - NVR, Inc. reported its second quarter results on July 23, showing flat revenues and a 17% year-over-year decrease in net income [1] Stock Market Reaction - Despite the decline in net income, NVR's stock has been trading sideways, indicating a lack of significant market reaction to the earnings report [1]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section provides NVR, Inc.'s unaudited condensed consolidated financial statements and comprehensive notes for the specified periods [Condensed Consolidated Balance Sheets (unaudited)](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(unaudited)) The unaudited balance sheets reflect a decrease in total assets and shareholders' equity, primarily due to reduced cash - Total assets decreased by approximately **$441.6 million** from December 31, 2024, to June 30, 2025, primarily driven by a significant reduction in homebuilding cash and cash equivalents[10](index=10&type=chunk) Condensed Consolidated Balance Sheets (unaudited) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | **Total Assets** | $5,939,339 | $6,380,988 | | Homebuilding Cash and cash equivalents | $1,726,865 | $2,561,339 | | Homebuilding Inventory | $2,170,040 | $2,058,707 | | Mortgage Banking Mortgage loans held for sale, net | $415,974 | $355,209 | | **Total Liabilities** | $2,094,208 | $2,170,916 | | Homebuilding Senior notes | $910,145 | $911,118 | | **Total Shareholders' Equity** | $3,845,131 | $4,210,072 | [Condensed Consolidated Statements of Income (unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20(unaudited)) The unaudited income statements indicate a significant decrease in net income and diluted earnings per share across all periods - **Net income decreased by 17%** for the three months ended June 30, 2025, and by **20%** for the six months ended June 30, 2025, compared to the respective prior year periods[16](index=16&type=chunk) - **Diluted EPS decreased by 10%** for the three months ended June 30, 2025, and by **14%** for the six months ended June 30, 2025, compared to the respective prior year periods[16](index=16&type=chunk) Condensed Consolidated Statements of Income (unaudited) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Homebuilding Revenues | $2,548,267 | $2,547,891 | $4,898,712 | $4,834,068 | | Homebuilding Income | $417,517 | $488,536 | $787,001 | $930,214 | | Mortgage Banking Income | $29,616 | $45,032 | $62,136 | $74,046 | | Net Income | $333,737 | $400,904 | $633,313 | $795,173 | | Basic earnings per share | $114.52 | $128.21 | $214.78 | $251.94 | | Diluted earnings per share | $108.54 | $120.69 | $203.20 | $237.05 | [Condensed Consolidated Statements of Cash Flows (unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) The unaudited cash flow statements show a notable decrease in operating cash flow and increased cash used in investing activities - **Net cash provided by operating activities decreased by approximately 36%** year-over-year for the six months ended June 30, 2025[19](index=19&type=chunk) - **Net cash used in investing activities significantly increased** from **$11.1 million** in 2024 to **$50.3 million** in 2025, primarily due to higher investments in unconsolidated joint ventures[19](index=19&type=chunk) Condensed Consolidated Statements of Cash Flows (unaudited) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $242,886 | $379,150 | | Net cash used in investing activities | $(50,264) | $(11,145) | | Net cash used in financing activities | $(1,027,364) | $(1,054,503) | | Net decrease in cash, restricted cash, and cash equivalents | $(834,742) | $(686,498) | | Cash, restricted cash, and cash equivalents, end of period | $1,829,925 | $2,528,946 | [Notes to Condensed Consolidated Financial Statements (unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanatory notes supporting the condensed consolidated financial statements [1. Significant Accounting Policies](index=7&type=section&id=1.%20Significant%20Accounting%20Policies) This note outlines NVR's key accounting policies, including revenue recognition and the evaluation of new accounting standards - Homebuilding revenue is recognized on the settlement date when control is transferred to customers[22](index=22&type=chunk) - The company is evaluating the impact of new FASB ASUs 2024-03 (Expense Disaggregation Disclosures) and 2023-09 (Improvements to Income Tax Disclosures), with ASU 2023-09 not expected to have a material impact[23](index=23&type=chunk)[24](index=24&type=chunk)[26](index=26&type=chunk) Contract Liabilities | Contract Liabilities | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :----------------------------- | :------------------------------- | | Customer deposits | $295,145 | $322,926 | [2. Variable Interest Entities ("VIEs")](index=8&type=section&id=2.%20Variable%20Interest%20Entities%20(%22VIEs%22)) This note details NVR's involvement with Variable Interest Entities through Lot Purchase Agreements and associated financial risks - NVR typically acquires finished building lots from third-party land development entities under Lot Purchase Agreements (LPAs), which are considered variable interests in VIEs, and NVR does not consolidate these VIEs[27](index=27&type=chunk)[28](index=28&type=chunk) - Pre-tax impairment charges on lot deposits were approximately **$13.2 million** for Q2 2025 and **$21.3 million** for H1 2025, compared to a net expense reversal of **$1.3 million** for Q2 2024 and **$8.8 million** for H1 2024[29](index=29&type=chunk) Variable Interest Entities | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------ | :----------------------------- | :------------------------------- | | Lots controlled under LPAs | 162,100 | N/A | | Contract land deposits, net | $837,845 | $726,675 | | Allowance for losses on contract land deposits | $(76,393) | $(58,597) | | Total risk of loss | $842,047 | $735,397 | [3. Joint Ventures](index=8&type=section&id=3.%20Joint%20Ventures) This note describes NVR's limited use of joint ventures for lot acquisition and related investment and commitments - NVR uses joint venture limited liability corporations (JVs) on a limited basis to obtain finished lots, acting as a non-controlling member with risk limited to investment/commitments[32](index=32&type=chunk)[34](index=34&type=chunk) Joint Ventures | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Aggregate investment in JVs | $65,500 | $29,300 | | Lots expected from JVs | 7,300 | N/A | | Additional JV funding commitments | $13,300 | N/A | [4. Land Under Development](index=9&type=section&id=4.%20Land%20Under%20Development) This note outlines NVR's direct acquisition and development of raw land parcels and related carrying values - NVR directly acquires raw land parcels for development on a limited basis[38](index=38&type=chunk) - During Q2 2025, NVR sold a land parcel for approximately **$32.7 million** and entered into an LPA for the option to purchase finished lots from the developer[39](index=39&type=chunk) Land Under Development | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Carrying value of land under development | $39,450 | $65,394 | | Finished lots to be developed | 2,350 | N/A | [5. Capitalized Interest](index=9&type=section&id=5.%20Capitalized%20Interest) This note explains NVR's policy for capitalizing interest costs related to land development and joint venture investments - NVR capitalizes interest costs to land under development and joint venture investments during active development[41](index=41&type=chunk) Capitalized Interest | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Interest capitalized, end of period | $556 | $206 | $556 | $206 | | Interest incurred | $7,257 | $6,962 | $14,989 | $13,841 | | Interest charged to interest expense | $(6,985) | $(6,898) | $(14,439) | $(13,724) | [6. Earnings per Share](index=10&type=section&id=6.%20Earnings%20per%20Share) This note provides details on the calculation of basic and diluted earnings per share, including weighted average shares Earnings per Share | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Weighted average number of shares outstanding used to calculate basic EPS | 2,914,319 | 3,126,831 | 2,948,719 | 3,156,247 | | Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS | 3,074,869 | 3,321,654 | 3,116,757 | 3,354,519 | | Anti-dilutive securities | 8,690 | 4,864 | 8,660 | 4,894 | [7. Shareholders' Equity](index=10&type=section&id=7.%20Shareholders'%20Equity) This note details changes in shareholders' equity, including retained earnings, treasury stock, and significant share repurchases - The company repurchased **65,834 shares ($475.8 million)** during Q2 2025 and **142,954 shares ($1.06 billion)** during H1 2025[48](index=48&type=chunk)[46](index=46&type=chunk) Shareholders' Equity | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------- | | Total Shareholders' Equity | $3,845,131 | $4,210,072 | | Retained earnings | $15,680,266 | $15,046,953 | | Treasury stock at cost | $(14,921,245) | $(13,868,724) | [8. Product Warranties](index=12&type=section&id=8.%20Product%20Warranties) This note describes NVR's product warranty and liability reserves for estimated future construction and product defect expenses - NVR establishes warranty and product liability reserves for estimated future expenses related to construction and product defects[52](index=52&type=chunk) Product Warranties | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Warranty reserve, end of period | $127,440 | $143,341 | $127,440 | $143,341 | | Provision | $20,665 | $23,273 | $37,899 | $42,221 | | Payments | $(23,017) | $(23,061) | $(43,554) | $(45,163) | [9. Segment Disclosures](index=12&type=section&id=9.%20Segment%20Disclosures) This note provides financial information for NVR's four homebuilding segments and one mortgage banking segment - NVR operates four homebuilding segments (Mid Atlantic, North East, Mid East, South East) and one mortgage banking segment[54](index=54&type=chunk)[56](index=56&type=chunk) Segment Revenues | Segment Revenues | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Homebuilding Mid Atlantic | $1,128,874 | $1,133,685 | $2,211,109 | $2,151,155 | | Homebuilding North East | $308,929 | $287,334 | $597,755 | $543,004 | | Homebuilding Mid East | $449,953 | $433,996 | $862,362 | $850,947 | | Homebuilding South East | $660,511 | $692,876 | $1,227,486 | $1,288,962 | | Mortgage Banking | $50,547 | $64,566 | $103,134 | $111,852 | | Total consolidated revenues | $2,598,814 | $2,612,457 | $5,001,846 | $4,945,920 | Segment Profit | Segment Profit | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :----------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Homebuilding Mid Atlantic | $191,390 | $209,166 | $378,223 | $399,130 | | Homebuilding North East | $57,964 | $54,372 | $113,075 | $101,229 | | Homebuilding Mid East | $61,729 | $63,588 | $115,338 | $129,989 | | Homebuilding South East | $51,518 | $94,442 | $97,248 | $185,847 | | Mortgage Banking | $30,825 | $46,234 | $64,531 | $75,890 | | Total segment profit | $393,426 | $467,802 | $768,415 | $892,085 | [10. Fair Value](index=16&type=section&id=10.%20Fair%20Value) This note details the fair value measurements for NVR's financial instruments, including senior notes and derivative instruments - NVRM uses derivative instruments (rate lock commitments and forward sale contracts) to mitigate interest rate risk, marking them to fair value through earnings[72](index=72&type=chunk) Senior Notes | Financial Instrument | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------- | :----------------------------- | :------------------------------- | | Senior Notes (Fair Value) | $838,476 | $811,161 | | Senior Notes (Carrying Value) | $910,145 | $911,118 | Derivative Instruments (Net) | Derivative Instruments (Net) | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--------------------------- | :----------------------------- | :------------------------------- | | Net rate lock commitments | $46,804 | $9,196 | | Net forward sales contracts | $(11,422) | $5,700 | [11. Debt](index=18&type=section&id=11.%20Debt) This note outlines NVR's debt structure, including Senior Notes, revolving credit facility, and mortgage repurchase agreement - NVR has **$900 million** in Senior Notes outstanding, maturing in May 2030, bearing **3.00% interest**[81](index=81&type=chunk)[84](index=84&type=chunk) - A **$300 million** senior unsecured revolving credit facility was amended in March 2025, extending maturity to March 2030, with no borrowings outstanding as of June 30, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) - NVRM has a **$150 million** revolving mortgage repurchase agreement, extended through July 2026, with no borrowings outstanding as of June 30, 2025[87](index=87&type=chunk)[88](index=88&type=chunk) [12. Commitments and Contingencies](index=19&type=section&id=12.%20Commitments%20and%20Contingencies) This note addresses NVR's commitments and contingencies, stating that current litigation is not expected to have a material adverse effect - Management believes current litigation will not have a material adverse effect on financial position, results of operations, or cash flows[89](index=89&type=chunk) [13. Leases](index=19&type=section&id=13.%20Leases) This note details NVR's operating and finance lease arrangements, including associated lease expenses and terms - NVR has operating and finance leases for offices, production facilities, model homes, and equipment, with remaining lease terms up to **15.2 years**[90](index=90&type=chunk) Lease Expense | Lease Expense | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :-------------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Operating lease expense | $10,547 | $9,514 | $20,864 | $18,861 | | Finance lease expense | $1,887 | $1,006 | $3,671 | $1,681 | | Short-term lease expense | $8,380 | $8,179 | $16,687 | $16,079 | | Total lease expense | $20,814 | $18,699 | $41,222 | $36,621 | [14. Income Taxes](index=21&type=section&id=14.%20Income%20Taxes) This note provides information on NVR's effective tax rate and factors influencing its changes, such as stock option benefits - The increase in the effective tax rate for 2025 periods is primarily due to a **lower income tax benefit from excess tax benefits from stock option exercises**[94](index=94&type=chunk) Effective Tax Rate | Effective Tax Rate | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Effective tax rate | 25.4% | 24.9% | 25.4% | 20.8% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on NVR's financial condition and operational results for the three and six months ended June 30, 2025, compared to 2024 [Forward-Looking Statements](index=22&type=section&id=Forward-Looking%20Statements) This section cautions that the report contains forward-looking statements subject to various known and unknown risks and uncertainties - The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[95](index=95&type=chunk) - Risk factors include general economic conditions, interest rate changes, financing access, competition, land/raw material costs, labor shortages, and governmental regulation[95](index=95&type=chunk) [Business Environment and Current Outlook](index=22&type=section&id=Business%20Environment%20and%20Current%20Outlook) This section discusses the challenging business environment, including affordability issues, and NVR's strategic positioning for market volatility - Demand for new homes in Q2 2025 was negatively impacted by **affordability issues, rising inventory, declining consumer confidence, and economic volatility**[97](index=97&type=chunk) - The company expects continued **margin pressure** due to affordability issues and cost pressures but believes its **strong balance sheet and disciplined lot acquisition strategy** position it well for future market volatility[97](index=97&type=chunk) [Business](index=22&type=section&id=Business) This section describes NVR's core homebuilding business, operating segments, and disciplined lot acquisition strategy via LPAs - NVR's primary business is the construction and sale of single-family detached homes, townhomes, and condominiums, primarily on a pre-sold basis, supported by mortgage banking and title services[98](index=98&type=chunk) - The company operates in **four homebuilding segments**: Mid Atlantic, North East, Mid East, and South East[98](index=98&type=chunk)[99](index=99&type=chunk) - NVR's lot acquisition strategy focuses on acquiring finished lots from third-party developers via LPAs with forfeitable deposits, minimizing direct land ownership risks[99](index=99&type=chunk) Lot Control Method | Lot Control Method | Lots Controlled (as of June 30, 2025) | | :-------------------------- | :------------------------------------ | | LPAs with third parties | 162,100 | | Joint Ventures (JVs) | 6,950 | | Land Under Development | 2,350 | | Total Controlled Lots | 171,400 | [Key Financial Results](index=24&type=section&id=Key%20Financial%20Results) This section summarizes NVR's key financial results, highlighting decreases in net income, diluted EPS, and new orders - The average sales price for New Orders remained relatively flat year-over-year in Q2 2025[107](index=107&type=chunk) Key Financial Results | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Change (%) | | :-------------------------- | :--------------------- | :--------------------- | :--------- | | Consolidated Revenues | $2,598,814 | $2,612,457 | -0.5% | | Net Income | $333,737 | $400,904 | -16.8% | | Diluted EPS | $108.54 | $120.69 | -10.0% | | Homebuilding Gross Profit Margin | 21.5% | 23.6% | -2.1 ppt | | New Orders (units) | 5,379 | 6,067 | -11.3% | | New Order Cancellation Rate | 16.5% | 12.9% | +3.6 ppt | [Homebuilding Operations](index=24&type=section&id=Homebuilding%20Operations) This section provides an overview of NVR's consolidated and segment-specific homebuilding operational performance [Consolidated Homebuilding - Three Months Ended June 30, 2025 and 2024](index=24&type=section&id=Consolidated%20Homebuilding%20-%20Three%20Months%20Ended%20June%2030,%202025%20and%202024) Consolidated homebuilding operations for Q2 2025 show flat revenues, decreased gross profit margin, and lower new orders - Homebuilding revenues remained **flat** in Q2 2025 compared to Q2 2024[109](index=109&type=chunk) - Gross profit margin decreased to **21.5% from 23.6%** due to higher lot costs, pricing pressure, and a **$13.2 million lot deposit impairment charge**[109](index=109&type=chunk) - New Orders decreased **11%** due to a **2% decrease in active communities** and a **10% lower sales absorption rate**[110](index=110&type=chunk) - SG&A expense increased by **$8 million** and as a percentage of revenue to **5.9% from 5.5%**, driven by higher sales and marketing expenses and increased headcount[111](index=111&type=chunk) [Consolidated Homebuilding - Six Months Ended June 30, 2025 and 2024](index=25&type=section&id=Consolidated%20Homebuilding%20-%20Six%20Months%20Ended%20June%2030,%202025%20and%202024) Consolidated homebuilding operations for H1 2025 reflect increased revenues, decreased gross profit margin, and reduced backlog - Homebuilding revenues increased **1%** in H1 2025, driven by a **3% increase in average settlement price**, partially offset by a **1% decrease in units settled**[112](index=112&type=chunk) - Gross profit margin decreased to **21.7% from 24.0%** due to higher lot costs, pricing pressure, and a **$21.3 million lot deposit impairment charge** (compared to an **$8.8 million expense reversal** in H1 2024)[112](index=112&type=chunk) - New Orders decreased **11%** and average sales price decreased **1%**, impacted by a **4% decrease in active communities** and an **8% lower sales absorption rate**[113](index=113&type=chunk) - Backlog decreased by **13% in units (to 10,069)** and **dollars (to $4.75 billion)** as of June 30, 2025, compared to June 30, 2024, primarily due to lower new orders[115](index=115&type=chunk) - The cancellation rate increased to **16%** in H1 2025 from **13%** in H1 2024[116](index=116&type=chunk) [Reportable Segments](index=26&type=section&id=Reportable%20Segments) This section provides a comparative overview of NVR's homebuilding segment performance, including new orders and gross profit margins New Orders by Segment | Segment | Q2 2025 New Orders (Units) | Q2 2024 New Orders (Units) | H1 2025 New Orders (Units) | H1 2024 New Orders (Units) | | :---------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Mid Atlantic | 1,930 | 2,297 | 3,796 | 4,579 | | North East | 424 | 478 | 801 | 1,005 | | Mid East | 1,072 | 1,262 | 2,170 | 2,525 | | South East | 1,953 | 2,030 | 3,957 | 4,007 | | Total | 5,379 | 6,067 | 10,724 | 12,116 | Gross Profit Margin by Segment | Segment | Q2 2025 Gross Profit Margin (%) | Q2 2024 Gross Profit Margin (%) | H1 2025 Gross Profit Margin (%) | H1 2024 Gross Profit Margin (%) | | :---------------- | :------------------------------ | :------------------------------ | :------------------------------ | :------------------------------ | | Mid Atlantic | 23.5% | 24.7% | 23.8% | 25.2% | | North East | 26.2% | 26.5% | 26.3% | 26.4% | | Mid East | 21.0% | 21.8% | 20.7% | 22.2% | | South East | 18.7% | 22.2% | 19.2% | 23.3% | Total Lots Controlled by Segment | Segment | June 30, 2025 Total Lots Controlled | December 31, 2024 Total Lots Controlled | | :---------------- | :---------------------------------- | :------------------------------------ | | Mid Atlantic | 55,700 | 50,900 | | North East | 17,500 | 17,000 | | Mid East | 25,300 | 24,100 | | South East | 72,900 | 70,400 | | Total | 171,400 | 162,400 | [Mid Atlantic Segment](index=29&type=section&id=Mid%20Atlantic%20Segment) The Mid Atlantic segment experienced decreased profit and gross profit margins, alongside a reduction in new orders - Q2 2025 segment profit decreased **9%** due to lower gross profit margins (**23.5% vs 24.8%**) caused by higher lot costs and pricing pressure[127](index=127&type=chunk) - Q2 2025 New Orders decreased **16%**, primarily due to a **21% decrease in active communities**, partially offset by a **7% higher sales absorption rate**[128](index=128&type=chunk) - H1 2025 segment profit decreased **5%** due to lower gross profit margins (**23.8% vs 25.2%**), despite a **3% increase in segment revenues**[129](index=129&type=chunk) [North East Segment](index=29&type=section&id=North%20East%20Segment) The North East segment reported increased profit and revenues, driven by higher average settlement prices despite fewer new orders - Q2 2025 segment profit increased **7%** due to an **8% increase in segment revenues**, driven by an **11% increase in average settlement price**[131](index=131&type=chunk) - Q2 2025 New Orders decreased **11%**, impacted by a **16% decrease in active communities**, but average sales price increased **5%** due to a shift to higher-priced communities[132](index=132&type=chunk) - H1 2025 segment profit increased **12%** due to a **10% increase in segment revenue**, favorably impacted by an **11% increase in average settlement price**[133](index=133&type=chunk) [Mid East Segment](index=30&type=section&id=Mid%20East%20Segment) The Mid East segment saw decreased profit due to lower gross margins and reduced new orders, despite increased revenues - Q2 2025 segment profit decreased **3%** due to lower gross profit margins (**21.0% vs 21.8%**), despite a **4% increase in segment revenues**[136](index=136&type=chunk) - Q2 2025 New Orders decreased **15%**, affected by a **7% decrease in active communities** and a **9% lower sales absorption rate**, but average sales price increased **5%**[137](index=137&type=chunk) - H1 2025 segment profit decreased **11%** due to lower gross profit margins (**20.7% vs 22.2%**), impacted by higher lot and operating costs and pricing pressure[138](index=138&type=chunk) [South East Segment](index=30&type=section&id=South%20East%20Segment) The South East segment experienced a substantial profit decrease, driven by lower gross margins, reduced revenues, and higher SG&A - Q2 2025 segment profit decreased **45%** due to lower gross profit margins (**18.7% vs 22.2%**), a **5% decrease in revenues**, and **19% higher SG&A expenses**[140](index=140&type=chunk) - Gross profit margins were negatively impacted by higher lot costs, increased operating costs, pricing pressure, and **$2.4 million higher lot deposit impairment charges**[140](index=140&type=chunk) - Q2 2025 New Orders decreased **4%**, impacted by a **23% lower absorption rate**, despite a **25% increase in active communities**[141](index=141&type=chunk) - H1 2025 segment profit decreased **48%** due to similar factors as Q2, including a **5% revenue decrease** and **20% higher SG&A expenses**[142](index=142&type=chunk) [Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations](index=32&type=section&id=Homebuilding%20Segment%20Reconciliations%20to%20Consolidated%20Homebuilding%20Operations) This section reconciles segment profit to consolidated income before tax, detailing various adjustments and corporate allocations - Reconciling items between segment profit and consolidated income before tax include contract land deposit adjustments, equity-based compensation, corporate capital allocation, unallocated corporate overhead, consolidation adjustments, and corporate interest income/expense[145](index=145&type=chunk) Reconciling Items | Reconciling Item | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Contract land deposit reserve adjustment | $(13,153) | $1,325 | $(21,270) | $8,791 | | Equity-based compensation expense | $(16,604) | $(16,899) | $(33,944) | $(33,398) | | Corporate capital allocation | $91,898 | $82,494 | $179,525 | $159,555 | | Unallocated corporate overhead | $(34,364) | $(33,816) | $(90,333) | $(85,520) | | Corporate interest income | $20,276 | $34,171 | $45,475 | $73,764 | | Corporate interest expense | $(6,675) | $(6,670) | $(13,806) | $(13,265) | [Mortgage Banking Segment](index=33&type=section&id=Mortgage%20Banking%20Segment) The Mortgage Banking segment, NVRM, exclusively serves homebuilding customers, showing decreased profit despite stable loan closing volume - NVRM, a wholly-owned subsidiary, exclusively serves homebuilding customers and sells almost all mortgage loans to secondary markets on a servicing-released basis[148](index=148&type=chunk) - Q2 2025 segment profit decreased **33%** due to a **22% decrease in mortgage banking fees**, primarily from lower gains on sales of loans[149](index=149&type=chunk) - H1 2025 segment profit decreased **15%** due to an **8% decrease in mortgage banking fees**[150](index=150&type=chunk) Mortgage Banking Segment | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | H1 2025 (in thousands) | H1 2024 (in thousands) | | :-------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Loan closing volume (principal) | $1,555,280 | $1,530,081 | $2,988,201 | $2,908,090 | | Segment profit | $30,825 | $46,234 | $64,531 | $75,890 | | Mortgage banking income before tax | $29,616 | $45,032 | $62,136 | $74,046 | | Capture rate | 87% | 86% | 87% | 86% | | Net gain on sale of loans | $39,868 | $53,695 | $82,519 | $91,150 | [Seasonality](index=34&type=section&id=Seasonality) This section discusses NVR's historical seasonal trends for new orders and settlements, noting recent market condition impacts - NVR historically experiences higher New Order activity in the first half of the year and higher home settlements, revenue, and net income in the second half[151](index=151&type=chunk) - Recent market conditions have affected typical seasonal trends, making quarterly results not necessarily indicative of full-year performance[151](index=151&type=chunk) [Effective Tax Rate](index=34&type=section&id=Effective%20Tax%20Rate) This section details NVR's effective tax rate, highlighting the increase due to reduced stock option tax benefits and expected volatility - The increase in the effective tax rate for 2025 periods is primarily due to a **lower income tax benefit from stock option exercises** (**$3.5 million** in Q2 2025 vs **$6.8 million** in Q2 2024; **$6.2 million** in H1 2025 vs **$50.6 million** in H1 2024)[152](index=152&type=chunk) - Tax rate volatility is expected to continue due to equity-based awards and deferred compensation plan distributions[153](index=153&type=chunk) Effective Tax Rate | Effective Tax Rate | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :----------------- | :------ | :------ | :------ | :------ | | Effective tax rate | 25.4% | 24.9% | 25.4% | 20.8% | [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section outlines NVR's liquidity and capital resources, including cash, credit facilities, and significant share repurchase activities - NVR funds operations primarily from cash holdings and operating cash flows, supplemented by a revolving credit facility and mortgage repurchase facility[154](index=154&type=chunk) - Material cash requirements include debt service (**$900 million** Senior Notes due 2030), **$598.9 million** for existing LPAs, and obligations under operating and finance leases[155](index=155&type=chunk) - NVR repurchased **142,954 shares for $1.05 billion** in H1 2025 under its common stock repurchase program[156](index=156&type=chunk)[163](index=163&type=chunk) - Cash flows for H1 2025 show a net decrease of **$834.7 million**, with **$242.9 million** from operating activities, **$50.3 million** used in investing, and **$1.03 billion** used in financing[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) Liquidity Metric (as of June 30, 2025) | Liquidity Metric (as of June 30, 2025) | Amount (in thousands) | | :------------------------------------- | :-------------------- | | Cash and cash equivalents | $1,800,000 | | Unused committed capacity (revolving credit facility) | $289,700 | | Unused committed capacity (mortgage repurchase facility) | $150,000 | | Available under share repurchase authorizations | $563,400 | [Critical Accounting Estimates](index=36&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to NVR's critical accounting estimates since the prior annual report - There have been no material changes to critical accounting estimates as previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[164](index=164&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section states that there have been no material changes in NVR's market risks during the six months ended June 30, 2025, referring to the Annual Report on Form 10-K for further details - No material changes in market risks occurred during the six months ended June 30, 2025[165](index=165&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that NVR's management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures, concluding they were effective as of June 30, 2025 - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2025[166](index=166&type=chunk) - No material changes to internal control over financial reporting occurred in the last fiscal quarter[166](index=166&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section states that NVR is involved in various litigation matters in the ordinary course of business, but management believes these are not expected to have a material adverse effect - Ongoing litigation is not expected to materially adversely affect NVR's financial position, results of operations, or cash flows[168](index=168&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section indicates that there have been no material changes to the risk factors previously disclosed in NVR's Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the December 31, 2024, Annual Report on Form 10-K[169](index=169&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details NVR's common stock repurchase activity during the second quarter of 2025, including the full utilization of a previous authorization and the approval of a new $750 million repurchase authorization - NVR fully utilized its **$750 million** share repurchase authorization (announced December 11, 2024) during Q2 2025[170](index=170&type=chunk) - A new **$750 million** share repurchase authorization was approved by the Board of Directors on May 6, 2025, with no expiration date[170](index=170&type=chunk) Common Stock Repurchase Activity | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :----------------- | :------------------------------- | :--------------------------- | | April 1 - 30, 2025 | 22,084 | $7,129.12 | | May 1 - 31, 2025 | 22,242 | $7,179.79 | | June 1 - 30, 2025 | 21,508 | $7,173.20 | | Total Q2 2025 | 65,834 | $7,160.64 | [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) This section confirms that no director or officer of the company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during Q2 2025[171](index=171&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to repurchase agreements, certifications from the CEO and CFO, and XBRL-related documents - Exhibits include the Fourth Amendment to Second Amended and Restated Master Repurchase Agreement, CEO and CFO certifications (Sections 302 and 906 of Sarbanes-Oxley Act), and XBRL Instance Document and Taxonomy Extension Documents[172](index=172&type=chunk) [SIGNATURE](index=39&type=section&id=SIGNATURE) This section contains the signature block, confirming that the report was duly caused to be signed on behalf of NVR, Inc. by Daniel D. Malzahn, Senior Vice President, Chief Financial Officer and Treasurer, on August 6, 2025 - The report was signed by Daniel D. Malzahn, Senior Vice President, Chief Financial Officer and Treasurer, on August 6, 2025[176](index=176&type=chunk)

Core Insights - Investors are evaluating Persimmon Plc (PSMMY) and NVR (NVR) for potential undervalued stock opportunities [1] Valuation Metrics - Persimmon Plc has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while NVR has a Zacks Rank of 3 (Hold) [3] - PSMMY has a forward P/E ratio of 12.04, significantly lower than NVR's forward P/E of 18.98 [5] - The PEG ratio for PSMMY is 0.79, while NVR's PEG ratio is 11.03, suggesting PSMMY is more favorably valued in terms of expected earnings growth [5] - PSMMY's P/B ratio is 1.1, compared to NVR's P/B of 5.9, indicating a better valuation relative to book value [6] - Based on various valuation metrics, PSMMY holds a Value grade of B, while NVR has a Value grade of C [6] Conclusion - Given the stronger estimate revision activity and more attractive valuation metrics, PSMMY is considered the superior option for value investors at this time [7]

Core Insights - NVR, Inc. reported better-than-expected second-quarter 2025 results, with earnings and Homebuilding revenues surpassing the Zacks Consensus Estimate, although year-over-year earnings declined and Homebuilding revenues remained flat [1][4]. Financial Performance - Earnings per share were $108.54, exceeding the Zacks Consensus Estimate of $104.89 by 3.5%, but decreased 10.1% from the prior-year quarter's earnings of $120.69 [4][9]. - Homebuilding revenues reached $2.55 billion, surpassing the consensus mark of $2.4 billion by 6.1%, but were flat year over year [4][9]. - Consolidated revenues, including Homebuilding and Mortgage Banking fees, amounted to $2.60 billion, a slight decline of 0.4% year over year [4]. Homebuilding Segment Analysis - Homebuilding segment revenues were flat compared to the year-ago quarter, with settlements down 3% year over year to 5,475 units [5][9]. - The average selling price (ASP) for settlements increased by 3% year over year to $465,400, while gross margin contracted by 210 basis points to 21.5% [5][6]. - New orders decreased by 11% year over year to 5,379 units, with the ASP of new orders remaining flat at $458,100 [6][9]. Market Conditions - The results reflect ongoing affordability challenges for homebuyers amid macroeconomic risks and inflationary pressures, leading to a pullback in the Homebuilding segment [2][3]. - Backlog units and value weakened due to uncertainties in the housing market, with backlog decreasing 13% to 10,069 homes and $4.75 billion in value [6][9]. Mortgage Banking Performance - Mortgage banking fees fell 21.7% year over year to $50.5 million, while closed loan production totaled $1.56 billion, up 2% year over year [7][9]. - The capture rate improved to 87% in the second quarter, up from 86% in the prior year [7]. Shareholder Actions - During the first six months of 2025, NVR repurchased 142,954 shares for $1.05 billion, with 2,883,215 shares outstanding at the end of June 30, 2025 [10].

Core Insights - NVR reported Q2 2025 earnings with revenue of $2.60 billion, exceeding analyst estimates of $2.50 billion, and earnings per share (EPS) of $108.54, surpassing the expected $106.20, despite a year-over-year decline in key metrics [1][2][5] Financial Performance - EPS (GAAP) decreased by 10.1% year-over-year from $120.69 in Q2 2024 to $108.54 in Q2 2025 [2] - Revenue (GAAP) remained flat at $2.60 billion compared to $2.61 billion in Q2 2024, reflecting a slight decline of 0.4% [2] - Gross profit margin in homebuilding fell to 21.5%, down 2.1 percentage points from 23.6% in Q2 2024 [2][5] - Net income dropped by 16.8% from $400.9 million in Q2 2024 to $333.7 million in Q2 2025 [2] Market Dynamics - New home orders decreased by 11.3% from 6,067 units in Q2 2024 to 5,379 units in Q2 2025 [2][6] - The backlog of homes fell by 13.2% from 11,597 units in Q2 2024 to 10,069 units in Q2 2025 [2] - The cancellation rate increased from 13% in Q2 2024 to 17% in Q2 2025, indicating a decline in demand [6] Business Model and Strategy - NVR focuses on acquiring finished building lots through purchase agreements to minimize land risk and cash outlays, operating in 36 metropolitan areas across 16 states and Washington, D.C. [3] - The company maintains a robust supply of ready-to-build lots and has a mortgage banking division that supports home sales volumes by capturing a high rate of buyers using its mortgage products [4] Operational Highlights - NVR's mortgage banking operations closed a loan volume of $1.56 billion, but pre-tax income from this segment fell by 34% due to reduced gains from reselling loans [7] - The company ended Q2 2025 with 171,400 lots under control, a 14% increase from the previous year, which supports ongoing building activity [8] - Cash and equivalents decreased to $1.73 billion, partly due to share repurchases totaling $471.4 million in Q2 2025 and increased investments in inventory and land deposits [9] Future Outlook - Management did not provide formal financial guidance for the remainder of fiscal 2025, citing typical industry risks without specific projections for revenue, orders, or earnings [10] - Key areas to monitor include trends in order intake, backlog, margins, cash position, lot pipeline, and the management of cancellations and cost pressures [11]

Core Insights - NVR reported Q2 2025 earnings that exceeded Wall Street forecasts, with earnings per share of $108.54 and revenue of $2.60 billion, but showed year-over-year declines in profit and earnings per share due to lower new home orders and higher cancellation rates [1][2][5] Financial Performance - EPS (GAAP) for Q2 2025 was $108.54, beating the estimate of $106.20 but down 10.1% from $120.69 in Q2 2024 [2] - Revenue (GAAP) was $2.60 billion, slightly above the consensus of $2.50 billion but down 0.4% from $2.61 billion in Q2 2024 [2] - Homebuilding gross margin decreased to 21.5% from 23.6%, reflecting higher costs and pricing pressures [2][6] - Homebuilding income before tax fell 14.5% to $417.5 million, while mortgage banking income before tax dropped 34.2% to $29.6 million [2][6][7] Market Dynamics - New home orders decreased by 11% to 5,379 units, with a cancellation rate rising to 17% from 13% [5][6] - The average sale price for settled homes increased by 3% to $465,400, while the average price for new orders remained flat at $458,100, indicating pricing pressure [5][6] - The backlog value decreased by 13% to $4.75 billion, with the total number of homes in backlog also down 13% to 10,069 units, signaling softer demand [6] Business Strategy - NVR employs a risk-averse lot acquisition strategy, securing future building sites through finished lot purchase agreements, which mitigates exposure to land risks [4] - The company maintains strong local market positions and integrates its mortgage banking operations with home sales to enhance revenue [4] Operational Highlights - The mortgage banking segment saw a 2% increase in closed loan production to $1.56 billion, with a strong capture rate of 87% [7] - NVR's total controlled lot supply increased to 171,400, up from 149,700, despite slower sales [9] - The company repurchased 65,834 shares for $471.4 million, reducing outstanding shares to 2.88 million [9] Outlook - NVR did not provide explicit forward-looking guidance, but the decline in backlog and rising cancellation rates suggest caution for future quarters [10] - Monitoring new order activity, backlog trends, and mortgage banking performance will be critical for assessing future stability [11]

分组1 - NVR reported quarterly earnings of $108.54 per share, exceeding the Zacks Consensus Estimate of $104.89 per share, but down from $120.69 per share a year ago, representing an earnings surprise of +3.48% [1] - The company posted revenues of $2.55 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 6.12%, with year-ago revenues also at $2.55 billion [2] - NVR shares have underperformed the market, losing about 3.3% since the beginning of the year compared to the S&P 500's gain of 7.3% [3] 分组2 - The current consensus EPS estimate for the coming quarter is $96.67 on $2.35 billion in revenues, and for the current fiscal year, it is $403.07 on $9.51 billion in revenues [7] - The Zacks Industry Rank for Building Products - Home Builders is currently in the bottom 21% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8] - NVR has surpassed consensus EPS estimates two times over the last four quarters and topped consensus revenue estimates three times during the same period [2]