UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the transition period from ________ to ________

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of June 30, 2021,2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the registrant's common shares (its only class of common equity) held by non-affiliates (28,703,915(27,130,879 shares) was approximately $1.7$2.4 billion.  The number of common shares of the registrant outstanding as of February 16, 202214, 2024 was 28,459,630.27,806,899.

DOCUMENT INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement for the 20222024 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, are incorporated by reference into Part III of this Annual Report on Form 10-K.

Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission (the “SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements, including, but not limited to, statements regarding our future financial performance and financial condition.  Words such as “expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements involve a number of risks and uncertainties.  Any forward-looking statements that we make herein and in future reports and statements are not guarantees of future performance, and actual results may differ materially from those in such forward-looking statements as a result of various risk factors. See “Item 1A. Risk Factors” in Part I of this Annual Report on Form 10-K for more information regarding those risk factors.

For reporting purposes, our 1617 homebuilding divisions are aggregated into the following two segments:

During 2023, housing market conditions stabilized compared to the more challenging housing market conditions that were present during the second half of 2022 and the first quarter of 2023. Housing demand deteriorated during most of 2022 in connection with significant increases to 30-year fixed mortgage rates resulting from the Federal Reserve's aggressive actions to combat inflation. We believe that this interest rate environment caused many potential homebuyers to stay on the sidelines and delay their home purchases which resulted in lower new contracts and higher cancellations in 2022. The Federal Reserve implemented more modest interest rate changes in 2023 than in 2022 which we believe improved consumer confidence. We continued to offer sales incentives and interest rate buy-downs in select communities in 2023 to further stimulate demand which, in combination with product mix, lowered our average closing price in 2023 compared to 2022. Inventory levels in the housing market remain undersupplied relative to demand due to (1) the underproduction of new homes over the past decade and (2) near record low levels of existing home resale inventory. We believe that the 20% increase in new contracts during 2023 compared to 2022 resulted from the more stable interest rate environment, our sales incentives and interest rate buy-down offerings and the low inventory levels in the housing market. In addition, supply chain conditions also normalized to a large degree with average construction cycle times improving year-over-year.

With respect to current market conditions, we believe that the underproduction of new homes over the past decade and the constrained supply of resale inventory will continue to benefit from a continued undersupplythe housing industry over the long term. The current demand for new homes, however, remains subject to uncertainty due to ongoing inflation concerns, consumer confidence, and the current interest rate environment. The potential effect of available homes, historically low mortgage rates, improving employment levelsthese factors is uncertain and positive consumer demographics, whichcould adversely impact our operations and financial results in future periods.

We believe that we are leadingwell positioned to a growing number of younger homebuyers moving to single family homes in suburban locations. However, we also expect that overall economicmanage through the ever-evolving housing industry market conditions with our affordable product offerings, land position and homebuilding conditions in the United States in 2022 will continue to be negatively impacted by labor and supply shortages, inflation, and increasing costs of materials and labor.planned new community openings. We remain sensitive to potential changes in market conditions, and continue to focus on controlling overhead leverage, and carefully managing our investment in land and land development spending. We arespending, and selectively offering incentives. Our strong balance sheet and liquidity position should also closely monitoring mortgage availabilityprovide us with flexibility through changing economic conditions. However, we cannot provide any assurances that our strategic business objectives will remain successful, and lending standards. While interest rates remain low by historical standards, mortgage rates are generally expectedwe may need to increase during 2022, which could negatively impact affordability and mortgage availability.adjust elements of our strategy to address evolving market conditions more effectively.

By offering Whole Home Energy-Efficient Homes to our customers, we enable our homebuyers to save on their energy costs (the second largest cost of home ownership) compared to a home that is built to minimum code requirements.requirements, while also contributing to the reduction of greenhouse gas emissions and potential climate change impacts. We use independent RESNET-Certified Raters and the HERS (Home Energy Rating System) Index, the national standard for energy efficiency, to measure the performance of our homes, including insulation, ventilation, air tightness, and the heating and cooling system. Our divisions’ average scores are generally lower (and, therefore, better) than the Environmental Protection Agency’s Energy Star target standard of 72-75 or the average score for a resale home (130 or higher). These lower HERS scores translate to not only reduced heating/heating and cooling costs for our homebuyers, but also a reduction inreduced energy intensity whenusage compared to an average resale home, and therefore a lower environmental impact.

The COVID-19 pandemic has had a significant impact on the housing industry. With a growing at-home workforce,Work-from-home needs for potential homebuyers continue to be an important planning tool for us, and we have hadwill continue to find waysdesign and offer in-home spaces that are bright, functional and bring value to accommodate new lifestyle needs. In particular, home offices are in high demand with features such as high ceilings, larger floor area and natural light and special attention to their “Zoom” backgrounds.

Our “City Collection” floor plans offer a unique and upscale urban lifestyle by utilizing narrow lots, detached rear garages and thoughtfully designed interiors. Our City Collection enables us to participate in new infill development opportunities that extend beyond our traditional suburban markets.

We design all of our product lines to reduce production costs and construction cycle times while adhering to our quality standards and using materials and construction techniques that reflect our commitment to more environmentally conscious homebuilding methods. Some of those techniques include wall, floor, and roof panelization to minimize waste as well as construction waste recycling. We also strive to maximize greenspace, develop in environmentally harmonious communities, build energy efficient homes, and purchase sustainable inputs. All of our homes are constructed according to proprietary designs that meet the applicable FHA and VA requirements and all local building codes. We attempt to maintain efficient operations by utilizing standardized materials. Our raw materials consist primarily of lumber, concrete and similar construction materials, and while these materials are generally available from a variety of sources, we have reduced construction and administrative costs by executing national purchasing contracts with select vendors. However, during 2021, weWe experienced more normalized labor and supply shortages and price increases.markets in 2023 which improved our construction cycle times. Our homes are constructed according to standardized prototypes which are designed and engineered to provide innovative product design while attempting to minimize costs of construction and control product consistency and availability. We believe our construction process, and the construction cycle times resulting from our product line design, reference above, generally reduce the time our subcontractors and vendors spend transporting labor, equipment, and materials to and from our communities and thereby also reduceas well as the environmental impact and carbon emissions associated with the construction forof our homes. We generally employ subcontractors for the installation ofto install site improvements and the construction ofconstruct homes. The construction of each home is supervised by a Personal Construction Supervisor who reports to a Production Manager, both of whom are employees of the Company. Our Personal Construction Supervisors manage the scheduling and construction process. Subcontractor work is performedOur subcontractors perform pursuant to written agreements that require our subcontractorsthem to comply with all applicable laws and labor practices, follow local building codes and permits, and meet performance, warranty, and insurance requirements. The agreements generally specify a fixed price for labor and materials and are structured to provide price protection for a majority of the higher-cost phases of construction for homes in our backlog.

WeFor our buyers who are not interested in purchasing an inventory home (homes started in the absence of an executed contract), we begin construction on a majority of our homesthe home after we have obtainedobtain a sales contract and preliminary oralwritten confirmation from the buyer’s lender that financing should be approved. In certain markets, contracts may be accepted contingent upon the sale of an existing home, and construction may be authorized through a certain phase prior to satisfaction of that contingency. The construction of our homes typically takes approximately four to six months from the start of construction to completion of the home, depending on the size and complexity of the particular home being built, weather conditions, and the availability of labor, materials, and supplies. However, due to the strong overall housing demand and the ongoing impact of the pandemic, we experienced disruptions in our supply chain during 2021, including the availability of labor and the timely availability of certain materials, which have lengthened the productionWe remain focused on improving construction cycle times in certainall of our markets. In 2023, we reduced our average days under construction by more than 60 days. Continued improvement in supply chain and labor market conditions would enhance our ability to reduce production times.

We also construct inventory homes (i.e., homes started in the absence of an executed contract) to facilitate delivery of homes on an immediate-need basis under our Ready Now Homes program and to provide presentation of new products. For some prospective buyers, selling their existing home has become a less predictable process and, as a result, when they sell their home, they often need to find, buy and move into a new home in 6090 days or less. Other buyers simply prefer the certainty provided by being able to fully visualize a home before purchasing it. Of the total number of homes closed in 20212023 and 2020, 35%2022, 57% and 49%43%, respectively, were inventory homes which include both homes started as inventory homes and homes that started under a contract that were later cancelled and became inventory homes as a result. The declineincrease in the percentage of inventory homes closed in 20212023 compared to 2022 was due to our lower cancellation rate in 2021higher demand and more selective incentives offered on inventory homes compared to 2020 as well as selling our available lots reserved for inventory homes prior to beginning construction as a result of the high demand. Additionally,new builds. The incentives we generally prioritize backlog starts over inventory starts, and we were limited by construction capacity constraints from starting moreoffered on inventory homes in certain communities2023 were based on community level market conditions and we may decide to discontinue such incentives in 2021.2024 depending on how market conditions evolve.

We believe that our employees are our most important resource. Our workforce development strategy is rooted in building a workforce in which individuals from a diverse mix of backgrounds, experiences and talents can thrive, contribute and develop professionally. We recognize the value of creating a collaborative, inclusive workplace, and to help foster such an environment, we promote a culture of mutual understanding and respect among employees, customers and building partners.

We believe in developing each employee’s professional skill set and promoting career development. Our operating divisions assign training to our employees based upon their particular roles and responsibilities. In addition, all of our employees must adhere to our code of conduct and participate in mandatory company-wide training sessions to ensure all employees follow the same set of safety and ethical standards. These training sessions cover topics such as workplace safety, cyber security, risk mitigation, unconscious bias, harassment, and discrimination.

We pay our employees competitively and offer a comprehensive set of benefits to full-time employees, including a 401(k) Profit Sharing Plan to help employees plan for retirement, which we believe are competitive with others in our industry.

The following tables show total assets by segment at December 31, 2021, 20202023, 2022 and 2019:2021:

The following table sets forth the cancellation rates for each of our homebuilding segments for the years ended December 31, 2021, 20202023, 2022 and 2019:2021:

Year Ended December 31, 20212023 Compared to Year Ended December 31, 2020

During 2021,2023, we experienced a 2% decrease22% increase in new contracts in our Northern region, from 3,7432,747 in 20202022 to 3,6673,361 in 20212023. Backlog increased 18% from 1,056 homes at December 31, 2022 to 1,248 homes at December 31, 2023. The increases in new contracts and backlog were primarily due to increased demand as a result of a decreasethe increase in our average number of communities and limiting sales in certain communities during the period. Backlog increased 4% from 1,815 homes at December 31, 2020 to 1,890 homes at December 31, 2021 which was attributable to improved demand in our Smart Series101 communities compared to 92 communities in the prior year.year and improved absorption rate. Average sales price in backlog increased to $484,000$531,000 at December 31, 20212023 compared to $436,000$523,000 at December 31, 2020 which was2022 primarily due to improved demand in our Northern Region in 2021 compared to prior year.the mix of homes being sold. During the twelve months ended December 31, 2021,2023, we opened 4033 new communities in our Northern region compared to 2934 during 2020.2022. Our monthly absorption rate in our Northern region improved to 3.62.8 per community in 2021,2023 compared to 3.42.5 per community in 2020.2022 as a result of the increase in the number of new contracts during the period compared to prior year, offset, in part, by a smaller increase in the number of average active communities.