We begin 2021 with momentum with our backlog value up over 60% year-over-year and the potential to generate as much as $6 billion in housing revenues this year as we focus on building our scale.
As for the details of the quarter, we generated total revenues of $1.2 billion, and diluted earnings per share of $1.12.
Having said this, we earn more on a per unit basis with a housing gross margin of 21%, excluding inventory related charges, up 110 basis points year-over-year.
The strength of our gross margin was the key factor driving improvement in your operating income per unit to over $44,000, a sequential increase of $7,000 per home.
In the fourth quarter, we increased our land investments by over 60% year-over-year to $650 million.
With disciplined execution, we grew our lot position by 7,000 lots since the third quarter to end the year with over 67,000 lots owned and controlled.
Our lot position is well-diversified both across and within our regions, with our own lots representing 3.8 years of supplies and a higher level of option lots now comprising 40% of our total.
Charlotte is a top 10 homebuilding market and we hired an industry veteran with deep roots and an extensive network to lead this effort, which has allowed us to move quickly on three land deals.
Our top priority is to expand our community count and we successfully opened 38 new communities in the fourth quarter, including 4 communities that opened ahead of schedule.
Looking beyond 2021, we are well-positioned with the lots we own and control to sustain its growth sequentially throughout 2022 and we are committed to growing our community count a minimum of 10% next year; a target that we believe is realistic, given our balance sheet, cash-flow, level of profitability and the infrastructure already in place.
Our monthly absorption pace per community accelerated to 5.6 net orders during the fourth quarter representing a year-over-year increase of 51%.
We achieved this higher pace, even as we increased prices in over 90% of our communities, balancing pace and price in each community to optimize our assets and returns.
Today, we continue to offer these smaller square footage plans, with nearly 60% of our communities offering plans below 1,500 square feet.
Moving just a little off the footage plans, above 75% of our community offer plans that are below 1,600 square feet.
Floor plans in this 1,500 to 1,600 foot range are well suited for millennials.
The existing single-family home inventory has been, and continues to decline, now sitting at just 2.3 months supply and below that level in many of our markets, particularly at our price points.
We believe this last point is very favorable for us given our experience in serving first time buyers, who accounted for 61% of our delivery in the fourth quarter, an increase of eight percentage points year-over-year.
At the time of our last earnings call in September, our net orders were on 32% for the first three weeks of our fourth quarter.
Demand remained strong throughout the quarter, resulting in year-over-year net order growth of 42% to nearly 4,000 homes.
Millennial buyers continue to lead our buyer cohorts, representing 57% of our net orders, increasing six percentage points year-over-year.
In addition, buyers continue to demonstrate a preference for Built-to-Order homes, which represented over 90% of our net orders, compared to just under, 70% in the prior-year period.
Net order growth in the fourth quarter drove a 50% year-over-year increase in our net order value, which in turn fueled the expansion of our backlog value to $3 billion, an increase of 63% year-over year on roughly 7,800 units.
We accelerate our pace and home starts in the fourth quarter by 40% year-over-year and that's continued to do so in the first quarter, as we line our starts to net orders.
Given our strong net order trends throughout the fourth quarter, our backlog continues to be more heavily weighted to the early stages of construction, either un-started or a foundation with those two buckets comprising roughly 55% of our backlog, as compared to about 44%, in the year-ago quarter.
As the net orders in the first quarter of 2021, they are up 44% for the first six weeks over the comparable prior year period.
The growth in the JV's capture rate to 81% in the fourth quarter produced a 20% year-over-year increase in its income, despite the lower deliveries in the quarter, reflecting a more profitable business.
The JV is steadily increasing its contribution to our overall performance and for the full year, generated year-over-year income growth of over 70% to $21 million.
In closing, we finished 2020 strong and we are poised for a tremendous 2021, and the resumption of our growth into a larger more profitable company.
We will expand our scale with our considerable backlog, together with continued robust market conditions contributing to the potential for as much as $6 billion in revenues in 2021.
As a result, we're expecting our operating margin to hit double digits, thereby driving our projected return on equity to above 17% compared to roughly 12% in 2020.
During the fourth quarter, we continued to produce sequential improvement in our key profitability and credit metrics and generated outstanding growth in our net orders, which contributed to a significant year-over-year increase in backlog value to its highest level in 15 years.
In the fourth quarter, our housing revenues of $1.19 billion were down 23% from a year ago, reflecting a decrease in homes delivered that was partially offset by a 5% increase in the overall average selling price of those homes.
Looking ahead to the 2021 first quarter, we expect to generate housing revenues in a range of $1.14 billion to $1.22 billion.
For the 2021 full year, we are forecasting housing revenues in a range of $5.5 billion to $6 billion, up $450 million at the midpoint as compared to our prior guidance.
Having ended our 2020 fiscal year with a backlog value of approximately $3 billion, we believe we are well-positioned to achieve this topline performance.
In the fourth quarter, our overall average selling price of homes delivered increased to approximately $414,000.
For the 2021 first quarter, we are projecting an average selling price of approximately $390,000 due to a regional mix shift of homes delivered.
We believe our overall average selling price for the 2021 full year will be in the range of $400,000 to $410,000.
Homebuilding operating income for the fourth quarter totaled $115.7 million compared to $162.5 million for the year earlier quarter.
The current quarter included inventory related charges of $11.7 million versus $4.1 million a year ago.
Our homebuilding operating income margin was 9.7% down 80 basis points from the 2019 fourth quarter.
Excluding inventory related charges, our operating margin was 10.7% for both periods as the gross margin improvement in the current year quarter was entirely offset by an increase in our SG&A expense ratio that reflected reduced operating leverage from lower housing revenues.
For the 2021 first quarter, we anticipate our homebuilding operating income margin, excluding the impact of any inventory related charges will be in the range of 9% to 9.3%.
For the 2021 full year, we expect this metric to be in the range of 10.4% to 11%, which represents a year-over-year improvement of 230 basis points at the midpoint.
Our 2020 fourth quarter housing gross profit margin improved 40 basis points to 20%.
Excluding inventory related charges, our gross margin for the quarter increased by 110 basis points to 21% from 19.9% for the prior year quarter.
Assuming no inventory related charges, we are forecasting a housing gross profit margin for the 2021 first quarter in a range of 20% to 20.3%, up more than 200 basis points as compared to the prior year period.
We expect our 2021 full year gross margin, excluding inventory related charges to be in the range of 20.5% to 21.1% with margins of 20% or above in each quarter.
Our selling, general and administrative expense ratio of 10.3% for the fourth quarter was up 120 basis points from a year ago, mainly due to the unfavorable impact of decreased operating leverage from lower housing revenues, partly offset by the effects of our ongoing focus on reducing overhead costs.
We are forecasting our 2021 first quarter SG&A expense ratio to be in the range of 10.8% to 11.2% as we continue to prioritize containing overhead costs and expect to realize favorable leverage impacts from an anticipated year-over-year increase in housing revenues.
We expect that our 2021 full year SG&A expense ratio will be approximately 9.9% to 10.3%.
Our income tax expense of $20 million for the fourth quarter, which was favorably impacted by $8.6 million of federal energy tax credits represented an effective tax rate of approximately 16%.
We currently expect our effective tax rate for both the 2021 first quarter and full year to be approximately 24%.
Overall, we reported net income of $106.1 million or $1.12 per diluted share for the fourth quarter compared to $123.2 million or $1.31 per diluted share for the prior year period.
For the 2020 full year, our net income of $296.2 million or $3.13 per diluted share rose 10% compared to 2019.
Turning now to community count, our fourth quarter average was 234 -- of 234 was down, 8%, from 253 in the corresponding 2019 quarter, primarily due to accelerated close-outs in the second half of the year, driven by strong net order activity in both the third and fourth quarters.
We ended the year with 236 communities, down 6% from a year ago with approximately half of this decline, due to a reduction in the number of communities that were previously classified as land held for future development.
As Jeff mentioned, our goal is to drive an increase in community count of at least 10% in 2022 to support further market share gains and growth in housing revenues.
During the fourth quarter, to drive future community openings, we invested $651 million in land and land development with $376 million or 58% of the total representing land acquisitions.
In 2020, we invested nearly $1.7 billion in land acquisition development and generated $311 million of net operating cash flow.
At year-end, total liquidity was approximately $1.5 billion including $788 million of available capacity under our unsecured revolving credit facility.
Our debt-to-capital ratio was 39.6% at year end and we expect further improvement in 2021 given our anticipated earnings growth.
We expect to generate significant cash flow in the current year to fund levels of land investment sufficient to support our targeted 2021 and 2022 growth in community count and housing revenues.
Our year-end stockholders' equity was $2.67 billion as compared to $2.38 billion at the end of the prior year, and our book value per share increased by nearly 10% to $29.09.
In summary, using the midpoints of our guidance ranges, we expect a 39% year-over-year increase in housing revenues and significant expansion of our operating margin to 10.7%, driven by improvements in both gross margin and our SG&A expense ratio.
These anticipated scale and margin improvements, should drive our return on equity to above 17%, up over 500 basis points year-over-year.

Summary:
As for the details of the quarter, we generated total revenues of $1.2 billion, and diluted earnings per share of $1.12.
Net order growth in the fourth quarter drove a 50% year-over-year increase in our net order value, which in turn fueled the expansion of our backlog value to $3 billion, an increase of 63% year-over year on roughly 7,800 units.
In closing, we finished 2020 strong and we are poised for a tremendous 2021, and the resumption of our growth into a larger more profitable company.
In the fourth quarter, our housing revenues of $1.19 billion were down 23% from a year ago, reflecting a decrease in homes delivered that was partially offset by a 5% increase in the overall average selling price of those homes.
Overall, we reported net income of $106.1 million or $1.12 per diluted share for the fourth quarter compared to $123.2 million or $1.31 per diluted share for the prior year period.
We expect to generate significant cash flow in the current year to fund levels of land investment sufficient to support our targeted 2021 and 2022 growth in community count and housing revenues.