China: 70-city average primary property prices decline accelerated in January Bottom line: The National Bureau of Statistics' 70-city house price data suggest the weighted average property price in the primary market fell by 5.3% mom annualized in January after seasonal adjustments. The widening in sequential decline of house prices was broad-based across all city tiers. We emphasize the 70-city data are for primary market transactions (new home sales) only; secondary market data by NBS and some third-party ...

Financial Data and Key Metrics Changes - In Q4 2025, home closing revenue was $1.4 billion, a 12% decrease year-over-year due to a 7% lower home closing volume and a 5% decrease in average selling price (ASP) to $375,000 per home [20][27] - Adjusted diluted EPS decreased by 30% year-over-year to $1.67 from $2.39 in Q4 2024 [27] - The company achieved a 19.3% adjusted home closing gross margin, down from 23.3% in Q4 2024 [21][27] - Full year 2025 home closing revenue decreased by 9% to $5.8 billion [27] Business Line Data and Key Metrics Changes - Q4 2025 sales orders totaled 3,224, reflecting a 2% decrease year-over-year, primarily due to an 18% decline in average absorption rates [12] - The cancellation rate increased to 14%, slightly below the historical average [12] - The average absorption pace for the full year 2025 was 3.9, better than broader market trends [7] Market Data and Key Metrics Changes - Demand patterns in Q4 were localized, with stronger performance in Dallas, Houston, and North and South Carolina, while facing lower demand in Austin, San Antonio, and parts of Florida [15] - The company anticipates continued impact from elevated mortgage interest rates and job security concerns in the near term [8] Company Strategy and Development Direction - The company is focused on a balanced approach to capital allocation, including share repurchases and land acquisitions [9] - A commitment to redeploy $400 million towards share buybacks in 2026 was announced, indicating the stock is viewed as undervalued [11] - The strategy includes maintaining a competitive edge through a 60-day closing guarantee and realtor engagement [34] Management's Comments on Operating Environment and Future Outlook - Management noted that long-term housing demand is supported by favorable demographics and an undersupply of affordable homes [8] - The company expects the spring selling season to improve compared to Q4 2025, with signs of better demand in January [48] - Management remains cautious about the impact of consumer confidence and affordability on future sales [44] Other Important Information - The company returned $179 million to shareholders in Q4 2025 through buybacks and dividends, significantly up from $67 million in the same period last year [30] - The balance sheet remained healthy with cash of $775 million and no debt drawn on the credit facility [29] Q&A Session Summary Question: 2026 outlook and absorption pace - Management indicated a temporary refocus on margin rather than chasing incentives due to elevated inventory levels in Q4, with expectations for improved returns in Q1 and Q2 [35][36] Question: Specs and inventory management - Approximately 50% of specs are nearing completion, with a target to have one-third ready for quick move-in [39] Question: Community count guidance - The 5%-10% community count growth is based on year-end figures, indicating continued expansion [40] Question: Margin guidance and seasonality - Management acknowledged typical seasonal margin pressure and expects a flattish margin guide for Q1 [41] Question: Demand trends and selling season expectations - Management expressed optimism for improved demand in the spring selling season compared to Q4, with indications of increased buyer activity in January [48][49] Question: Share repurchase strategy - The company balances share repurchases with operational growth, emphasizing the importance of returning capital to shareholders when stock is undervalued [51]

Summary of J.P. Morgan's Research on China's Housing Market Industry Overview - The report focuses on the **Chinese housing market**, highlighting a broad-based weakness at year-end 2025 and projecting a continued downturn into 2026 without significant policy changes [1][6]. Key Indicators and Trends - **Housing Activity Index**: J.P. Morgan's housing activity index showed a slight increase at year-end, but most indicators are still contracting sharply. Key metrics include: - New home sales down **18.9%** year-over-year - New starts down **18.8%** - Completions down **20.6%** - Real estate fixed asset investment (FAI) down **36.5%** - Funding sources down **28.1%** [1][4]. - **Price Trends**: - New home prices fell **0.37%** month-over-month (non-seasonally adjusted) in December, a slight improvement from **-0.39%** in November. - Secondary home prices dropped **0.70%**, with larger declines in tier-2 and tier-3 cities. - New home prices are down **12.6%** from the 2021 peak, while secondary prices have decreased by **21.3%** [1][2]. - **Inventory Levels**: - New homes under construction equate to **72.3 months** of sales, while completed unsold units stand at **6.7 months** [1][2]. Demand and Supply Dynamics - The equilibrium demand for housing in China is estimated at around **1 billion square meters** annually. However, both demand and supply are expected to remain below this equilibrium in the near term due to weak income and price expectations [2][6]. - The market is characterized by curtailed demand, widespread incomplete projects, and rising inventories of unsold units, leading to a collapse in housing transactions and investment [2][6]. Policy Measures and Market Outlook - Recent policy measures, including relaxed home purchase restrictions and lower mortgage costs, have been introduced to support the market. However, these measures are viewed as insufficient to halt the ongoing correction or revive the market [3][5]. - A comprehensive rescue package is deemed necessary to stabilize the housing market, which may include a large-scale real estate stability fund and removal of purchase restrictions [5][6]. Future Projections - Without major policy changes, the downturn in the housing market is expected to persist into 2026, with key indicators continuing to contract, albeit at a slower pace. A further **10%** decline in real estate FAI is anticipated, contributing to a macro drag on GDP growth [6][5]. - Critical indicators for the outlook include house price trends and new home sales by state-owned enterprise (SOE) developers. Price stabilization is essential for demand recovery, while faster declines could pose additional risks [6][4]. Conclusion - The Chinese housing market is facing significant challenges, with ongoing declines in key metrics and elevated inventories. Without substantial policy reforms, the market is likely to continue its correction, impacting broader economic growth and household wealth [2][6].

Summary of China Property Market Conference Call Industry Overview - **Industry**: China Property Market - **Key Data**: - Real Estate Investment (REI) recorded a significant decline of **-35.8% year-on-year** in December, marking the largest drop since December 2009 [1] - New home prices decreased by **-3.0% year-on-year** in December, while secondary home prices fell by **-6.1% year-on-year** [1] - The overall residential sales volume dropped by **-26% year-on-year** in December [1] Core Insights - **Investment Trends**: - REI for FY25 is projected at **Rmb8.3 trillion**, a **-17.2% year-on-year** decline, falling below residential sales of **Rmb8.4 trillion** [2] - New housing starts are at a **21-year low**, with **588 million sqm** started, down **-20% year-on-year** [2] - The area under construction decreased by **-10%**, reaching **6.6 billion sqm** [2] - **Market Conditions**: - The market is expected to face a structural decline into 2026 unless liquidity improves, with anticipated REI dropping by **-13% year-on-year** [3] - National sales are projected to decline by **-11% year-on-year**, with new home average selling prices expected to fall by **-3% year-on-year** [3] - **Policy Impacts**: - Recent government policies aim to stabilize the market, including a reduction in the down payment for commercial properties from **50% to 30%** and extending tax refunds for home sellers [4] - The easing measures are seen as risk control rather than a direct boost to the market [4] Additional Important Points - **Sales and Earnings Outlook**: - Weak sales and earnings downgrades are anticipated, with a potential short-lived rebound in share prices driven by policy expectations [5] - The luxury retail sector showed positive same-store sales growth in Q4, but December results were below expectations [5] - **Land Sales**: - Land sales in 300 cities decreased by **-9% in area** and **-23% in value**, reaching an 18-year low [2] - The government land revenue for the first 11 months of 2025 was down **-11%** [1] - **Macro Economic Indicators**: - China's GDP growth for FY25 is projected at **+5.0% year-on-year**, with a slight deceleration in retail sales growth to **+0.9% year-on-year** in December [1] This summary encapsulates the critical insights and data points from the conference call regarding the current state and future outlook of the China property market.

Group 1 - New home sales remained stable in October, showing no significant change after an increase in September [1] - The Census Bureau reported that new home sales were at a seasonally adjusted annual rate of 737,000 in October [1]

Group 1 - Sales in October last year decreased to 737,000 from 738,000 in September, indicating a slight decline [1] - However, sales showed an increase compared to a downwardly revised figure of 711,000 in August, reflecting a recovery trend [1]

Summary of Key Points from the Conference Call Industry Overview - The report focuses on the US economic outlook, particularly regarding the Federal Reserve's monetary policy and employment trends. Core Insights and Arguments 1. **Federal Reserve Rate Cuts**: The expectation for additional rate cuts from the Federal Reserve has been pushed to June and September 2026, from earlier predictions of January and April. This change is based on the belief that rate cuts will occur only when tariff pass-through is complete and inflation is decreasing [1][8][30]. 2. **Economic Growth Forecast**: The growth outlook for 2026 has been revised upward to 2.4% from a previous estimate of 1.8%. This adjustment reflects stronger incoming economic data [8][23]. 3. **Unemployment Rate Trends**: The unemployment rate fell to 4.4% in December, with November's rate revised down to 4.5%. Despite soft labor demand, a stable or declining unemployment rate suggests that labor supply growth is slowing in line with labor demand [3][29]. 4. **Private Employment Growth**: Private employment growth remains weak, with only 29,000 jobs added on a three-month moving average. This indicates ongoing challenges in the labor market [3][29]. 5. **Consumer Spending**: Consumer spending on services has shown resilience, increasing by 3.5% in the third quarter. This trend is expected to continue, as spending on services tends to be more stable compared to durable goods [16][17]. 6. **Trade Deficit**: The trade deficit was reported at -$29.4 billion in October, with a notable decline in real imports, reflecting adjustments from earlier front-loading of imports [11][30]. 7. **Tariff Rates**: The effective tariff rate is expected to rise to approximately 16.0% due to ongoing trade negotiations and tariff implementations. This rate is projected to stabilize around 15-16% by the end of 2025 [34][35]. 8. **Shipping Volumes**: High-frequency container traffic has decreased significantly after a surge earlier in the year, indicating a reversal in import trends [39][40]. Additional Important Insights 1. **Productivity Growth**: There has been a notable increase in productivity growth, recorded at 4.9% quarter-over-quarter, although the reasons behind this acceleration remain unclear [18][24]. 2. **K-Shaped Recovery**: The report highlights a K-shaped recovery in consumer behavior, where higher-income households are driving new car purchases, accounting for 43% of sales, while lower-income households' share has decreased [17]. 3. **GDP Tracking**: The GDP tracking estimate for the fourth quarter of 2025 has been adjusted to 2.2%, indicating a more positive outlook than previously anticipated [22][50]. 4. **Federal Budget Balance**: The report notes a federal budget balance of -$173.3 billion for December, reflecting ongoing fiscal challenges [62]. This summary encapsulates the key points discussed in the conference call, providing a comprehensive overview of the current economic landscape and expectations for the future.

Core Insights - U.S. homebuyers are experiencing the most affordable monthly payments in a year due to average mortgage rates near 6%, with homebuilders offering significant incentives to attract buyers [1][2] Industry Dynamics - Homebuilders are heavily subsidizing mortgage rates, sometimes matching record lows from the Covid-19 pandemic, alongside offering perks like free appliances and zero closing costs [2] - A large private builder provided a client with a 3.49% fixed rate on a $414,000 home, showcasing aggressive pricing strategies to attract buyers [3] - D.R. Horton, the largest U.S. builder by market value, is offering an introductory rate of less than 1% for the first year, indicating competitive tactics to stimulate demand [3] Market Challenges - The housing market is facing challenges due to external factors such as tariffs, a government shutdown, and job insecurity, with over 1 million job cuts year-to-date [4] - Despite lower mortgage rates, demand has not increased as expected, with builders reporting weak demand, particularly from entry-level buyers [5] - PulteGroup noted that first-time buyer orders dropped 14% compared to the previous year, reflecting a broader trend of declining buyer interest [5] Economic Factors - The decline in mortgage rates is not translating into increased housing demand due to economic concerns, with renters finding cheaper options and landlords reporting high retention rates [6] - The resale market is becoming a formidable competitor for homebuilders, with pending sales stalling and existing home prices being more attractive [7] - For the first time, the price of a typical new home was cheaper than that of an existing home, indicating a shift in market dynamics [7] Incentive Strategies - Production builders are increasing their spending on incentives, averaging 7.5% of sales prices, up from 4.8% earlier in the year [8] - Lennar Corp. is conducting a nationwide "Inventory Close-Out Sale," offering competitive rates and significant price reductions, reflecting a strategy to undercut the resale market [10] - New home buyers are expecting substantial incentives, with agents emphasizing that clients should not pay for closing costs [11]

2025 Third Quarter INVESTOR PRESENTATION Southgate Homes | Reserve at Watters| Allen, TX Forward Looking Statements This presentation contains "forward-looking statements" within the meaning of the Private Securities Litigation Act of 1995. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts and typically include the words "anticipate," "believe," "consider," "estimate," "expe ...

Core Insights - Century Communities reported revenue of $980.28 million for Q3 2025, a year-over-year decline of 13.8%, with EPS of $1.52 compared to $2.72 a year ago, indicating a significant drop in profitability [1] - The revenue exceeded the Zacks Consensus Estimate of $972.9 million by 0.76%, while the EPS surprised positively by 76.74% against the consensus estimate of $0.86 [1] Financial Performance Metrics - Net New Home Contracts were reported at 2,386, slightly above the estimated 2,378 [4] - Average Sales Price for Home Deliveries was $384.20, exceeding the estimate of $377.50 [4] - Backlog of Homes stood at 1,117, below the average estimate of 1,194 [4] - Home Deliveries totaled 2,486, surpassing the estimated 2,400 [4] - Financial services revenues were $19.36 million, above the estimate of $18.38 million, but represented a 3.7% decline year-over-year [4] - Total homebuilding revenues were $960.93 million, slightly above the average estimate of $954.53 million, reflecting a 14% year-over-year decline [4] - Home sales revenues were reported at $955.16 million, below the estimated $977.7 million, marking a 14.4% decrease compared to the previous year [4] Stock Performance - Shares of Century Communities have returned -3.8% over the past month, contrasting with the Zacks S&P 500 composite's +1.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]