We also ended the quarter with $2.6 billion of cash and a net debt to capital ratio below 2%.
Reflecting a lot of hard work by an amazing team, PulteGroup realized a 6% increase in full-year closings to 24,624 homes and a corresponding 7% increase in full-year home sale revenues to $10.6 billion.
Benefiting from our ability to expand Homebuilding gross and operating margins along with dramatic gains in our financial services business, we converted the 7% topline growth into a 29% increase in pre-tax income of $1.7 billion.
Our outstanding results extend beyond our income statement as we generated $1.8 billion in operating cash flow in 2020 after investing $2.9 billion in land and development during the year.
Beyond investing in land, we increased our dividend by 17%, effective with the payment we made this month and repurchased a $171 million of our common shares in 2020, despite having suspended the program for six months because of the pandemic.
I am also extraordinarily proud to note that consistent with our focus on generating high returns over the housing cycle, we realized a 23.7% return on equity for the year.
We said for years that we thought housing starts needed to be around 1.5 million to meet the natural demand created by growth in population and household formations.
We finally reached 1.5 million starts in 2020, but we have under built relative to this number for years.
We enter 2021 with more than 15,000 houses in backlog, 180,000 lots under control, of which half are controlled via option and long-standing relationships with suppliers and trade partners.
The combination of these factors should allow us to increase 2021 deliveries by more than 20% over the last year.
Given high expectations for the Company's operating performance and our balance sheet strength at year-end, I believe we are exceptionally well-positioned to execute on all of our capital allocation priorities, more specifically, we are targeting land acquisition and development spend of $3.7 billion in 2021.
This is an increase of roughly $800 million over our 2020 investment, but we think appropriate given the growth in our operations.
For our fourth quarter, home sale revenues increased 5% over last year to $3.1 billion.
The increase in revenues for the period was driven primarily by a 4% increase in average sales price to $446,000 as closings were up 1% to 6,860 homes.
Consistent with these dynamics, our fourth-quarter closings in 2020 consisted of 32% first-time, 46% move-up, and 22% active adult.
In the fourth quarter of 2019, closings were comprised of 31% first-time, 45% move up, and 24% active adult.
Our net new orders for the fourth quarter increased 24% over last year to 7,056 homes, while our average community count for the period was down 2% from last year to 846.
In the fourth quarter, first-time orders increased 27% to 2,084 homes, move-up orders increased 17% in 2,994 homes, while active adult orders increased 33% to 1,978 homes.
In fact, our Q4 active adult orders were less than 100 units below the all-time quarterly high we reported in the third quarter of this year.
Our fourth quarter cancellation rate was 12% which is down from 14% last year.
Based on the strength of our sales, our year-end backlog increased 44% over last year to 15,158 homes.
Backlog value at year-end was $6.8 billion compared with $4.5 billion last year.
At the end of the fourth quarter, we had a total of 12,370 homes under construction, of which 1,949 or 16% were spec.
With 12,000 -- 12,370 homes under construction at year-end, we expect deliveries in the first quarter of 2021 to be between 6,300 and 6,600 homes.
At the midpoint, this would be a 20% increase in closings over last year.
This growth rate is in line with what we expect for the full year as we are targeting deliveries to increase approximately 22% to 30,000 homes for all of 2021.
Given the strength of our move up and active adult sales along with price increases realized across all buyer groups, our average sales price and backlog was up 4% over last year to $448,000.
Based on the prices in backlog, we expect our average sales price on closings to be in the range of $430,000 to $435,000 both for the first quarter and for the full year 2021.
Reflecting the benefits of the favorable pricing environment and our ongoing work to run a more efficient Homebuilding operation, our fourth quarter gross margin of 25% was up 220 basis points over last year and 50 basis points from the third quarter of this year.
As a result, we expect gross margins to remain high and be approximately 24.5% for both the first quarter and the full year.
Our reported SG&A expense for the fourth quarter was $280 million 9.1% of home sale revenues.
Excluding the $16 million net pre-tax benefit from adjustments to insurance-related reserves recorded in the fourth quarter, our adjusted SG&A expense was $296 million or 9.7% of home sale revenues.
Last year, our reported fourth quarter SG&A expense was $262 million or 8.9% of home sale revenues.
Excluding insurance reserve adjustment of $31 million last year, our adjusted SG&A expense was $293 million or 10% of home sale revenues.
At present, we expect SG&A expense in the first quarter of 2021 to be in the range of 10.5% to 10.9%, which is down from 11.9% last year.
For the full year, we are targeting an SG&A expense of 10% of home sale revenues down from 10.2% on an adjusted basis last year.
Our financial services operations continued to deliver strong results as we reported fourth quarter pre-tax income of $43 million, which is up from $34 million last year.
It's worth noting that our fourth quarter 2020 results include the $22 million pre-tax charge from adjustments to our mortgage origination reserves as we settled claims tied to mortgages issued prior to the housing collapse.
Our mortgage capture rate for the quarter was 86%, up from 84% last year.
Our reported tax expense for the fourth quarter was $86 million, which represents an effective tax rate of 16.4%, and which reflects the tax benefit of $38 million resulting from energy tax credits and deferred tax valuation allowance adjustments recorded in the period.
In 2021, we expect our tax rate to be approximately 23.5%, including the benefit of energy tax credits we expect to realize this year.
Finishing up my review of the income statement, we reported net income for the fourth quarter of $438 million or $1.62 per share.
Our adjusted net income for the period was $404 million or $1.49 per share.
In the comparable prior-year period, the Company reported net income of $336 million or $1.22 per share and adjusted net income of $312 million or $1.14 per share.
Benefiting from the outstanding financial performance and resulting cash flows generated by our Homebuilding and Financial Services operations, we ended the quarter with $2.6 billion of cash.
In addition, at the end of the year, our gross debt to capital ratio was 29.5% which is down from 33.6% last year, and our net-debt-to-capital ratio was 1.8%.
In the fourth quarter, we repurchased 1.7 million common shares at a cost of $75 million or an average price of $43.69 per share.
For the full year, the company returned $171 million to shareholders through the repurchase of 4.5 million common shares at a cost of $37.58 per share.
First, we will exercise the early redemption feature effective February 1, on $426 million of senior notes originally scheduled to mature on March 1 of this year.
Assuming full execution of the tender, the retirement of the $726 million will save the company approximately $34 million in annual interest charges and on a pro forma basis, lower our gross debt-to-capital ratio to 23.7%.
In the fourth quarter, we invested $942 million in land acquisition and development, which brings our full-year 2020 spend to $2.9 billion.
As Ryan mentioned, given our positive view of the market and the expected strong cash flow generation of the business, we currently expect to increase our investment in land acquisition and development to $3.7 billion in 2021.
And finally, we ended the year with slightly more than 180,000 lots under control, of which 91,000 were owned and 89,000 were controlled through auctions.
I want to highlight that based on these numbers, we've effectively reached our stated goals of having 50% of our land pipeline controlled through options, and given our guidance targeting 30,000 closings in '21, we've also reached our goal of having three years of owned lots.
Among the targets we put in place were: to expand first time to be one-third of our business, to lower our lot position to three years of owned lots, to control 50% of our land pipeline via options, and increase our growth rates while continuing to deliver high returns for our shareholders.
With our goal to increase closings by more than 20% this year, along with investing $3.7 billion in land and our expansion into new markets, we believe we are well-positioned to grow our operations while continuing to deliver high returns.

Summary:
For our fourth quarter, home sale revenues increased 5% over last year to $3.1 billion.
In the fourth quarter, first-time orders increased 27% to 2,084 homes, move-up orders increased 17% in 2,994 homes, while active adult orders increased 33% to 1,978 homes.
Based on the strength of our sales, our year-end backlog increased 44% over last year to 15,158 homes.
Finishing up my review of the income statement, we reported net income for the fourth quarter of $438 million or $1.62 per share.
Our adjusted net income for the period was $404 million or $1.49 per share.