We nearly doubled our net income, increasing our bottom line by 88% over 2019, resulting in a very strong return on equity of 22%.
We achieved record revenue of $3 billion, an increase of 22% over 2019.
Record closings of 7,709 homes, 22% better than a year ago.
Very strong gross margins that reached 23% in the fourth quarter and 22.2% for the full year, a 260 basis point improvement over 2019.
And our full year pre-tax income percentage improved 360 basis points to 10.2%.
Specifically, since 2012, our revenues have grown at a compounded annual rate of 19%, and our pre-tax income has grown at an even more impressive compound annual rate of 49%.
New contracts for the year improved by 39% to a record 9,427 homes sold.
During the quarter, we sold 2,128 homes, a fourth quarter record and 27% better than a year ago.
At the end of 2020, our Smart Series was being offered in all 15 of our housing markets, comprised 62 of our total communities or 31% of total and accounted for more than 35% of total company sales.
We fully expect the sale of our Smart Series homes to grow further within our markets and likely approach 40%-plus of total M/I sales in the coming year.
And in terms of demand and traffic as we begin 2021, housing conditions continue to be very robust throughout all 15 of our markets.
Our year-end backlog increased 64% in units to 4,389 homes, and the dollar value increased by 74% to an all-time company record of $1.8 billion.
We experienced strong performance in the fourth quarter across both the Northern and Southern regions, with new contracts in the Southern region increasing by 31% for the quarter and 21% in the Northern region.
Our closings or deliveries increased 16% over last year's fourth quarter in the Southern region and increased 19% over last year's fourth quarter in the Northern region.
Our owned and controlled lot position in the Southern region increased by 23% compared to a year ago and increased by 12% in the Northern region compared to last year.
37% of our owned and controlled lots are in the Northern region with the balance, 63%, in the Southern region.
Companywide, we own and control approximately 40,000 lots, up 19% from last year, which equates to about a four to five year supply.
Perhaps more important, over half of the lots that we own and control or about 57% are controlled under option contracts and not yet on our books.
We had 112 communities in the Southern region at the end of the quarter, down from 129 a year ago.
And we had 90 communities in the Northern region at the end of the quarter, down from 96 a year ago.
But it's also important to recognize that nearly 1/3 of our communities are now offering our Smart Series homes.
First, our financial condition is very strong with $1.3 billion of equity at December 31 and a book value of $44 per share.
We ended 2020 with a cash balance of $261 million and 0 borrowings under our $500 million unsecured revolving credit facility.
This resulted in a 34% debt-to-cap ratio, down from 38% a year ago and a net debt-to-cap ratio of 23%.
As far as financial results, new contracts for 2020 increased 39% to 9,427, an all-time record compared to 6,773 for last year.
Our new contracts were up 14% in October, up 36% in November and up 35% in December for a 27% improvement in the quarter compared to last year's fourth quarter.
Our sales pace was 3.5 in the fourth quarter compared to 2.5 in last year's fourth quarter.
And our cancellation rate for this year's fourth quarter was 10%.
As to our buyer profile, about 53% of our fourth quarter sales were to first-time buyers compared to 49% a year ago.
In addition, 43% of our fourth quarter sales were inventory homes compared to 44% in last year's fourth quarter.
Our community count was 202 at the end of the year compared to 225 at the end of 2019, and the breakdown by region is 90 in the Northern region and 112 in the Southern region.
During the quarter, we opened 18 new communities while closing 23.
And for the year, we opened 69 new communities and closed 92.
We delivered a record 2,242 homes in the fourth quarter, delivering 50% of our backlog compared to 66% a year ago.
Secondly, we have been selling spec homes nearly as fast as we can get them started, which leads to lower spec home inventories, especially those which are closer to completion and could contribute to closings within 90 days.
Revenue increased 22% in the fourth quarter of this year, reaching a fourth quarter record $906 million.
And our average closing price for the fourth quarter was $389,000, a 3% increase when compared to last year's fourth quarter average closing price of $377,000.
Our backlog average sale price is $419,000, up 6% from a year ago, and our backlog average sale price of our Smart Series is $322,000.
We recorded $8.4 million of impairment charges in the fourth quarter compared to $5 million in last year's fourth quarter.
And our operating gross margins, excluding impairments for the fourth quarter, was $24.1 million, up 420 basis points year-over-year and up 120 basis points from 2020's third quarter.
And for the full year of 2020, our operating gross margin was 22.5% versus last year's 19.8%.
Our construction costs increased by about 3% in the fourth quarter, with the biggest impact from lumber.
And our fourth quarter and full year SG&A expenses were 11.7% of revenue, a 40 basis points improvement compared to 2019.
Interest expense decreased $3.5 million for the quarter compared to the same period last year and decreased $11.7 million for the 12 months of this year.
And interest incurred for the quarter was $10 million compared to $12.5 million a year ago.
And for the year, interest incurred was $40 million versus $49 million a year ago.
Our pre-tax income was 10.2% versus 6.6% last year, and our return on equity was 22% versus 14% a year ago.
During the fourth quarter, we generated $127 million of EBITDA compared to $75 million in last year's fourth quarter.
And for the full year 2020, we generated $383 million of EBITDA, up 60% over last year.
Despite a significant amount of reinvestment into our business, we generated $168 million of positive cash flow from operations in 2020 compared to $66 million last year.
We have $21 million in capitalized interest on our balance sheet.
This is about 1% of our total assets.
And our effective tax rate was 21% in this year's fourth quarter compared to 19% in last year's fourth quarter.
Our annual effective rate this year was 22.6% compared to 23.2% for 2019.
And we expect 2021's effective tax rate to be around 24%.
Our earnings per diluted share for the quarter increased 88% to $2.71 per share from $1.44 per share in last year's fourth quarter and increased 83% for the year to $8.23 from $4.48 per share last year.
Our mortgage and title operations achieved record fourth quarter results in 2020, including record pre-tax income of $14.8 million, up $8.4 million or 131% over 2019.
And record revenue of $25.6 million, which was up 62% over last year due to a higher volume of loans closed and sold along with significantly higher pricing margins.
For the year, pre-tax income was $50.5 million and revenue was $87 million, both all-time records.
The loan-to-value on our first mortgages for the fourth quarter was 83% in 2020, up from 2019's fourth quarter of 82%.
74% of the loans closed in the fourth quarter were conventional and 26% were FHA/VA compared to 76% and 24%, respectively, for 2019's same period.
Our average mortgage amount increased to $319,000 in 2020's fourth quarter compared to $303,000 in 2019.
The number of loans originated increased 25% from 1,398 to an all-time quarterly record of 1,746, and the volume of loans sold increased by 15%.
Our borrower profile remains solid with an average down payment of over 15%.
For the quarter, the average borrower credit score on mortgages originated was 745, a slight decline from 747 last quarter.
Our mortgage operation captured over 85% of our business in the fourth quarter, an increase from 84% one year ago.
At December 31, we had a total of $226 million outstanding under these facilities, which expire in May and October this year.
Due to our typical high-volume of fourth quarter closings, we include a seasonal increase in our warehouse facilities, which provides temporary availability of $275 million through February 4, 2021.
After which time, total availability returns to $215 million.
As far as the balance sheet, total homebuilding inventory at 12/31/20 was $1.9 billion, an increase of $147 million over December '19 levels.
During 2020, we spent $415 million on land purchases and $318 million on land development for total land spending of $733 million, which was up from $600 million in 2019.
In 2020, we purchased about 11,500 lots, of which 77% were raw with about 150 average lots per community.
In 2019, we purchased about 7,500 lots, of which 63% were raw with about 100 average lots per community.
We have a strong land position at 12/31/20, controlling almost 40,000 lots, up 19% from a year ago.
And of the lots controlled, 43% are owned.
And at the end of the year, we had 225 completed inventory homes, about one per community and 1,131 total inventory homes.
At 12/31/19, we had 668 completed inventory homes and 1,459 total inventory homes.

Summary:
Our year-end backlog increased 64% in units to 4,389 homes, and the dollar value increased by 74% to an all-time company record of $1.8 billion.
We delivered a record 2,242 homes in the fourth quarter, delivering 50% of our backlog compared to 66% a year ago.
Our earnings per diluted share for the quarter increased 88% to $2.71 per share from $1.44 per share in last year's fourth quarter and increased 83% for the year to $8.23 from $4.48 per share last year.