You have big shoes to fill and hope you are with us, at least 15 years like Brent.
As we have previously announced, effective January 1, Phillippe Lord will transition to the CEO role and I will retire after 35 years and become Executive Chairman of Meritage's Board.
Phillippe and I have worked closely together for 12 years.
We delivered our highest quarterly orders, our strongest absorption since 2005, record quarterly closing revenue and our best quarterly closing gross margins since 2014 despite record high lumber prices, while also achieving our lowest net debt to capital in our company's history.
We sold 3,851 homes this quarter, which was 71% more than the third quarter of 2019 and surpassed the quarterly record we had just set in the previous quarter this year.
In Q3 of 2020 we accelerated our land investments by spending nearly $300 million and put a record 9,000 new lots under control.
While the accelerated sales trend resulted in some early community closeouts this quarter we are still on pace to achieving 300 active communities by early to mid-2022.
Our absorption pace for the quarter was up 94% year-over-year.
Five out of nine states had absorption increases over 100% year-over-year this quarter.
Entry-level represents 60% of our average active communities during this quarter compared to 42% a year ago, which puts us near our target ratio of 65% to 35% between entry-level and first move-up.
Absorption in our entry-level communities were 75% higher than last year and nearly 1.5 times the pace of first move-up communities.
Entry-level comprised almost 70% of total orders for the third quarter, up from 54% in the third quarter last year.
Our first move-up communities also experienced improved demand year-over-year with absorptions 86% higher than a year ago.
Slide 7, the outsized demand in Q2 and Q3 of 2020 led to 23 early community closeouts this quarter.
During 2019 we put 17,000 new lots under control which translates to 134 new communities.
We put approximately 16,000 new lots under control in just the first nine months of 2020 almost as much as all of 2019 and nearly 80% more than 2018's 9,000 new lots.
This translates into about 123 new communities put under control during the first nine months of this year with dozens more to come in the fourth quarter.
At September 30, 2020 with nearly 48,000 total lots outstanding representing 4.4 years of lots supplied based on a trailing 12-month closings, we've increased our land book by almost 30% from September 30, 2019.
Year-to-date September 30, 2020 our new lots under control were 81% entry-level with an average community size of 130 new lots.
We are scheduled to open up more than 150 communities in 2021 compared to opening 75 communities in all of 2019 and approximately 100 communities projected for full year 2020 after being shut down for six weeks due to COVID-19.
At a pace of 50 sales per year and an average of 300 communities could reasonably produce 15,000 sales in 2022.
Our central region comprising Texas led in terms of order growth this quarter with an 82% increase in orders over the third quarter of 2019 despite a 14% decline in average community count.
Entry-level communities representing 63% of central region's average active communities during the third quarter of 2020.
Our orders in the West region were up 68% over the third quarter of 2019, driven by an 88% increase in absorption with 10% fewer average communities.
Entry-level communities represent 63% of the West region's average active communities during the quarter.
California produced the largest year-over-year growth in orders at 158% for the quarter and the highest absorptions of all nine states we operate in, selling an average of seven per month during the quarter of 2020, which was an increase of 137% in absorptions year-over-year.
Average community count in California also increased 9% year-over-year for the third quarter of 2020.
Our each region experienced order growth of 63% on an 87% increase in absorptions year-over-year for the quarter, offsetting a 30% decline in average community count.
50% of our average active communities in the East region were entry-level during the quarter.
We generated 56% earnings growth year-over-year in the third quarter of 2020 compared to the same period in 2019 as we had significant growth across all key metrics with 21% closing revenue growth, 170 bps increase in home closing gross margin and a 70 bps improvement in SG&A as a percentage of home closing revenue.
This quarter's closings were up 24% year-over-year, with 71% of closings coming from previously started spec inventory.
At September 30, 2020 approximately 14% of total specs were completed, less than the last couple of quarters understandably as we're selling more specs in earlier stages of production.
Although this dynamic is also driving a decrease in our backlog conversion rate over the last several quarters, our backlog conversion rate for the third quarter was 68%, which is slightly up year-over-year evidence that our construction pace is keeping up with sales.
We generated over $1.1 billion of revenue in Q3 2020 as the year-over-year increases in closing volume reflecting our record high sales more than offset the decline in ASP home closings resulting from the shift in product mix toward entry-level.
Our closing gross margin improved 170 bps to 21.5% for the third quarter of 2020 from 19.8% a year ago.
The additional closing volume and the efficiencies achieved from our streamlined operations and national purchasing savings contributed to a 31% year-over-year increase in total closing profit.
SG&A as a percentage of home closing revenue was 10.1% for the current quarter which was a 70 bps improvement over 10.8% in 2019 due to greater leverage of fixed expenses and efficiencies and higher closing volume as well as cost savings from technology enhancements particularly as related to sales and marketing efforts.
We also benefited from a lower tax rate with the extension of the energy tax credits into 2020 under the Taxpayer Certainty and Disaster Tax Relief Act enacted in December 2019, our effective tax rate was 19.5% for the third quarter this year versus 24.4% last year.
Our third quarter diluted earnings per share of $2.84 also benefited from our repurchase of 1 million shares in the first quarter of 2020.
To highlight just a few items for year-to-date results September 30, 2020, on a year-over-year basis we generated an 86% increase in net earnings, orders were up 40%, closings were up 26%.
We had a 250 bps increase in home closing gross margin and a 90 bps improvement in SG&A as a percentage of home closing revenue.
Moving on to slide 10, our balance sheet continues to be very strong even as we step up investments in land acquisition and development, we have plenty of liquidity including $610 million of cash, nothing drawn on our credit facility and a lower net-debt-to-cap -- in the lowest net-debt-to-cap in our company's history at 15.7%.
We grew our spec inventory back to an average of 11.2 specs per communities this quarter after dipping in the second quarter to about 9.3.
We spent nearly $300 million on land and development this quarter our highest spend in a single quarter in our history.
For the first nine months of 2020 we spent nearly $760 million on land acquisition and development, which was more than 28% higher in the same period of last year.
About 58% of our total lot inventory at September 30, 2020 was owned and 42% was optioned which improved compared to September 30, 2019 with 66% owned and 34% optioned.
Turning to slide 13, to summarize, Meritage Homes today is a different company than when I co-founded it in 1985.
We are focused on growth by accelerating land investments to get to our goal of 300 community count by early to mid-2022.
After 91 quarters of your thoughtful and brilliant questions, I'm not sure how we'll close without the anxiety of the quarterly full body scan.

Summary:
We sold 3,851 homes this quarter, which was 71% more than the third quarter of 2019 and surpassed the quarterly record we had just set in the previous quarter this year.
We generated 56% earnings growth year-over-year in the third quarter of 2020 compared to the same period in 2019 as we had significant growth across all key metrics with 21% closing revenue growth, 170 bps increase in home closing gross margin and a 70 bps improvement in SG&A as a percentage of home closing revenue.
Our closing gross margin improved 170 bps to 21.5% for the third quarter of 2020 from 19.8% a year ago.
Our third quarter diluted earnings per share of $2.84 also benefited from our repurchase of 1 million shares in the first quarter of 2020.