EDGAR 10-K Filing

Company CIK: 906163
Filing Year: 2022
Filename: 906163_10-K_2022_0000906163-22-000008.json

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ITEM 1. BUSINESS
Item 1. Business.
General
NVR, Inc., a Virginia corporation, was formed in 1980 as NVHomes, Inc. Our primary business is the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis. To more fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business. We conduct our homebuilding activities directly. Our mortgage banking operations are operated primarily through a wholly owned subsidiary, NVR Mortgage Finance, Inc. (“NVRM”). Unless the context otherwise requires, references to “NVR”, “we”, “us” or “our” include NVR, Inc. and its consolidated subsidiaries.
We are one of the largest homebuilders in the United States. We operate in thirty-four metropolitan areas in fourteen states, and Washington, D.C. Our homebuilding operations include the construction and sale of single-family detached homes, townhomes and condominium buildings under three trade names: Ryan Homes, NVHomes and Heartland Homes. Our Ryan Homes product is marketed primarily to first-time and first-time move-up buyers. Ryan Homes operates in thirty-four metropolitan areas located in Maryland, Virginia, Washington, D.C., West Virginia, Pennsylvania, New York, North Carolina, South Carolina, Florida, Ohio, New Jersey, Delaware, Indiana, Illinois and Tennessee. Our NVHomes and Heartland Homes products are marketed primarily to move-up and luxury buyers. NVHomes operates in Delaware and the Washington, D.C., Baltimore, MD and Philadelphia, PA metropolitan areas. Heartland Homes operates in the Pittsburgh, PA metropolitan area. During 2021, approximately 16% of our home settlements accounting for approximately 22% of our homebuilding revenue occurred in the Washington, D.C. metropolitan area.
We generally do not engage in land development (see discussion below of our land development activities). Instead, we typically acquire finished building lots from various third party land developers pursuant to fixed price finished lot purchase agreements (“LPAs”) that require deposits that may be forfeited if we fail to perform under the LPAs. The deposits required under the LPAs are in the form of cash or letters of credit in varying amounts and typically range up to 10% of the aggregate purchase price of the finished lots.
We believe that our lot acquisition strategy avoids the financial requirements and risks associated with direct land ownership and land development. We may, at our option, choose for any reason and at any time not to perform under these LPAs by delivering notice of our intent not to acquire the finished lots under contract. Our sole legal obligation and economic loss for failure to perform under these LPAs is limited to the amount of the deposit pursuant to the liquidated damage provision contained within the LPAs. We do not have any financial guarantees or completion obligations and we typically do not guarantee lot purchases on a specific performance basis under these LPAs. None of the creditors of any of the development entities with which we have entered these LPAs have recourse to our general credit. We generally seek to maintain control over a supply of lots believed to be suitable to meet our five-year business plan.
In addition to constructing homes primarily on a pre-sold basis and utilizing what we believe is a conservative lot acquisition strategy, we focus on obtaining and maintaining a leading market position in each market we serve. This strategy allows us to gain valuable efficiencies and competitive advantages in our markets, which we believe contributes to minimizing the adverse effects of regional economic cycles and provides growth opportunities within these markets. Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build. As a result, in certain specific strategic circumstances we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development. Once we acquire control of raw ground, we determine whether to sell the raw parcel to a developer and enter into an LPA with the developer to purchase the finished lots or hire a developer to develop the land on our behalf. While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so. We expect, however, to continue to acquire substantially all of our finished lot inventory using LPAs with forfeitable deposits. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K for additional discussion of lots controlled. In addition, see Notes 3, 4 and 5 in the accompanying consolidated financial statements included herein for additional information regarding LPAs, joint ventures and land under development, respectively.
In addition to building and selling homes, we provide a number of mortgage-related services through our mortgage banking operations. Through operations in each of our homebuilding markets, NVRM originates mortgage loans almost exclusively for our homebuyers. NVRM generates revenues primarily from origination fees, gains on sales of loans and title fees. NVRM sells all of the mortgage loans it closes into the secondary markets on a servicing released basis.
Segment information for our homebuilding and mortgage banking businesses is included in Note 2 in the accompanying consolidated financial statements.
Homebuilding
Products
We offer single-family detached homes, townhomes and condominium buildings with many different home designs. These home designs have a variety of elevations and numerous other options. Our homes combine traditional, transitional, cottage or urban exterior designs with contemporary interior designs and amenities, generally include two to four bedrooms and range from approximately 1,000 to 10,000 finished square feet. During 2021, the prices at which we settled homes ranged from approximately $140,000 to $2 million and averaged $403,900. During 2020, our average price of homes settled was $370,800.
Markets
Our four reportable homebuilding segments operate in the following geographic regions:
Mid Atlantic: Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East: New Jersey and Eastern Pennsylvania
Mid East: New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East: North Carolina, South Carolina, Florida and Tennessee
Backlog
Backlog, which represents homes sold but not yet settled with the customer, totaled 12,730 units and approximately $5.8 billion at December 31, 2021 compared to 11,549 units and approximately $4.6 billion at December 31, 2020. The average price of homes in backlog increased to $454,200 at December 31, 2021 from $396,200 at December 31,2020. Backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as the customer’s failure to obtain mortgage financing, inability to sell an existing home, job loss or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Expressed as the total of all cancellations during the period as a percentage of gross sales during the period, our cancellation rate was 9.2%, 14.9% and 14.6% in 2021, 2020, and 2019, respectively. Additionally, approximately 3% in 2021, and 6% in both 2020 and 2019, of a reporting quarter’s opening backlog balance cancelled during the quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur in future periods. Other than those units that are cancelled, and subject to potential construction delays resulting from COVID-19 related restrictions and/or continued supply chain disruptions, we expect to settle substantially all of our December 31, 2021 backlog during 2022. See “Risk Factors” in Item 1A and “Seasonality” in Item 7 of this Form 10-K.
Further discussion of settlements, new orders and backlog activity by our homebuilding reportable segment for each of the last three years can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K.
Construction
We utilize independent subcontractors under fixed price contracts to perform construction work on our homes. We use many independent subcontractors in our various markets and we are not dependent on any single subcontractor or on a small number of subcontractors.
Sales and Marketing
Our preferred marketing method is for customers to visit a furnished model home featuring many built-in options and a landscaped lot. The garages of these model homes are usually converted into temporary sales centers where alternative facades and floor plans are displayed and designs for other models are available for review. Sales representatives are compensated predominantly on a commission basis.
Regulation
We and our subcontractors must comply with various federal, state and local zoning, building, environmental, advertising and consumer credit statutes, rules and regulations, as well as other regulations and requirements in connection with our construction and sales activities. All of these regulations have increased the cost to produce and market our products, and in some instances, have delayed our developers’ ability to deliver finished lots to us. Counties and cities in which we build homes have at times declared moratoriums on the issuance of building permits and imposed other restrictions in the areas in which sewage treatment facilities and other public facilities do not reach minimum standards. In addition, our homebuilding operations are regulated in certain areas by restrictive zoning and density requirements that limit the number of homes that can be built within the boundaries of a particular area. To date, restrictive zoning laws and the imposition of moratoriums have not had a material adverse effect on our construction activities.
Competition and Market Factors
The housing industry is highly competitive. We compete with numerous homebuilders of varying size, ranging from local to national in scope, some of which have greater financial resources than we do. We also face competition from the home resale market. Our homebuilding operations compete primarily on the basis of price, location, design, quality, service and reputation. Historically, we have been one of the market leaders in each of the markets where we build homes.
The housing industry is cyclical and is affected by consumer confidence levels, prevailing economic conditions and interest rates. Other factors that affect the housing industry and the demand for new homes include: the availability and the cost of land, labor and materials; changes in consumer preferences; demographic trends; and the availability of mortgage finance programs. See “Risk Factors” in Item 1A of this Form 10-K for additional information regarding these risks.
We are dependent upon building material suppliers for a continuous flow of raw materials. Whenever possible, we utilize standard products available from multiple sources. In the past, such raw materials have been generally available to us in adequate supply, however, during 2021 increased construction activity and demand for building materials, coupled with the ongoing effects of the COVID-19 pandemic, has led to supply chain disruptions and longer construction cycle times.
Mortgage Banking
We provide a number of mortgage related services to our homebuilding customers through our mortgage banking operations. Our mortgage banking operations also include separate subsidiaries that broker title insurance and perform title searches in connection with mortgage loan closings for which they receive commissions and fees. Because NVRM originates mortgage loans almost exclusively for our homebuilding customers, NVRM is dependent on our homebuilding segment. In 2021, NVRM closed approximately 17,700 loans with an aggregate principal amount of approximately $6.1 billion as compared to approximately 16,700 loans with an aggregate principal amount of approximately $5.3 billion in 2020.
NVRM sells all of the mortgage loans it closes to investors in the secondary markets on a servicing released basis, typically within 30 days from the loan closing. NVRM is an approved seller/servicer for Fannie Mae (“FNMA”) and Freddie Mac ("FHLMC") mortgage loans and an approved seller/issuer of Ginnie Mae (“GNMA”), Department of Veterans Affairs (“VA”) and Federal Housing Administration (“FHA”) mortgage loans.
Regulation
NVRM is subject to the rules and regulations of FNMA, GNMA, FHLMC, VA and FHA. These rules and regulations restrict certain activities of NVRM. NVRM is currently eligible and expects to remain eligible to participate in such programs. In addition, NVRM is subject to regulation at the state and federal level, including regulations issued by the Consumer Financial Protection Bureau (the “CFPB”) with respect to specific origination, selling and servicing practices.
Competition and Market Factors
NVRM’s main competition comes from national, regional, and local mortgage bankers, mortgage brokers, credit unions and banks in each of these markets. NVRM competes primarily on the basis of customer service, variety of products offered, interest rates offered, prices of ancillary services and relative financing availability and costs.
Pipeline
NVRM’s mortgage loans in process that had not closed had an aggregate principal balance of approximately $3.9 billion as of December 31, 2021 compared to approximately $3.4 billion as of December 31, 2020. NVRM’s cancellation rate was approximately 41%, 40% and 36% in 2021, 2020 and 2019, respectively. We can provide no assurance that our historical loan cancellation rates are indicative of the actual loan cancellation rate that may occur in future periods. See “Risk Factors” in Item 1A in this Form 10-K for additional information about factors that could increase our cancellation rate.
Human Capital
As of December 31, 2021, we had approximately 6,600 full time employees, of whom approximately 5,600 worked in our homebuilding operations, and approximately 1,000 worked in our mortgage banking operations, compared to December 31, 2020, when we had approximately 6,100 full time employees, of whom approximately 5,100 worked in our homebuilding operations, and approximately 1,000 worked in our mortgage banking operations. None of our employees are covered by collective bargaining agreements.
Our employees are our most important asset. We are committed to hiring and developing an inclusive workplace with a strong diversity of backgrounds and perspectives. All of our employees must adhere to our code of ethics and standards of business conduct that sets standards for appropriate behavior in the workplace. Our compensation philosophy has been consistent for over 20 years and is designed to motivate and retain highly qualified and experienced employees.
We provide tools for the advancement of our employees by offering training and development opportunities that align with each employee’s responsibilities and career path. We strive to promote employees from within our workforce, as we believe this provides
both long-term success and continuity to our operations and growth for our employees. Our focus is demonstrated by the tenure of our executives and our regional and division leaders.
During the past year, we hired additional employees to meet the strong housing demand and generally increased our employees’ compensation and benefits packages. To protect our employees and homebuyers during the COVID-19 pandemic, we implemented safety protocols, such as social distancing on job sites, doing virtual house tours, working remotely and other health and safety standards as required by federal, state and local government agencies. We believe our employees adapted and have successfully managed the business during the pandemic.
Available Information
We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the “SEC”). These filings are available to the public over the internet at the SEC’s website at www.sec.gov.
Our principal internet website can be found at www.nvrinc.com. We make available free of charge on or through our website, access to our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports as soon as reasonably practicable after such material is electronically filed, or furnished, to the SEC.
Our website also includes a corporate governance section which contains our Corporate Governance Guidelines (which includes our Directors’ Independence Standards), Code of Ethics and Standards of Business Conduct, Board Committee Charters, Policies and Procedures for the Consideration of Board of Director Candidates, and Policies and Procedures Regarding Communications with the NVR, Inc. Board of Directors, the Independent Lead Director and the Non-Management Directors as a Group.
Forward-Looking Statements
Some of the statements in this Form 10-K, as well as statements made by us in periodic press releases or other public communications, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates” or the negative thereof or other comparable terminology. All statements other than of historical facts are forward looking statements. Forward-looking statements contained in this document include those regarding market trends, NVR’s financial position, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to the following: the economic impact of COVID-19 and related supply chain disruptions, general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by NVR and NVR’s customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by NVR in its homebuilding operations; shortages of labor; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which NVR has little or no control. NVR undertakes no obligation to update such forward-looking statements except as required by law.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Our business is affected by the risks generally incident to the residential construction business, including, but not limited to:
•actual and expected direction of interest rates, which affect the availability of mortgage financing for potential purchasers of homes;
•the availability of adequate land in desirable locations on favorable terms;
•employment levels, consumer confidence and spending and unexpected changes in customer preferences; and
•changes in the national economy and in the local economies of the markets in which we operate.
All of these risks are discussed in detail below.
Business and Industry Risks
An economic downturn or decline in economic conditions could adversely affect our business and our results of operations.
Demand for new homes is sensitive to economic changes driven by conditions such as employment levels, job growth, consumer confidence, inflation and interest rates. If the housing industry suffers a downturn, our sales may decline which could have a material adverse effect on our profitability, stock performance, ability to service our debt obligations and future cash flows.
Interest rate movements, inflation and other economic factors can negatively impact our business.
High rates of inflation generally affect the homebuilding industry adversely because of their adverse impact on interest rates. High interest rates not only increase the cost of borrowed funds to homebuilders but also have a significant adverse effect on housing demand and on the affordability of permanent mortgage financing to prospective purchasers. We are also subject to potential volatility in the price of commodities that impact costs of materials used in our homebuilding business. Increases in prevailing interest rates could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Our financial results also are affected by the risks generally incident to our mortgage banking business, including interest rate levels, the impact of government regulation on mortgage loan originations and servicing and the need to issue forward commitments to fund and sell mortgage loans. Our homebuilding customers account for almost all of our mortgage banking business. The volume of our continuing homebuilding operations therefore affects our mortgage banking business.
Our mortgage banking business also is affected by interest rate fluctuations. We also may experience marketing losses resulting from daily increases in interest rates to the extent we are unable to match interest rates and amounts on loans we have committed to originate with forward commitments from third parties to purchase such loans. Increases in interest rates may have a material adverse effect on our mortgage banking revenue, profitability, stock performance, ability to service our debt obligations and future cash flows.
Our operations may also be adversely affected by other economic factors within our markets such as negative changes in employment levels, job growth, wage growth, consumer confidence and household formation and availability of mortgage financing, one or all of which could result in reduced demand or price depression from current levels. Such negative trends could have a material adverse effect on homebuilding operations.
These factors and thus, the homebuilding and mortgage banking businesses, have at times in the past been cyclical in nature. Any downturn in the national economy or the local economies of the markets in which we operate could have a material adverse effect on our sales, profitability, stock performance and ability to service our debt obligations. In particular, during 2021, approximately 16% of our home settlements, which accounted for 22% of our homebuilding revenues, occurred in the Washington, D.C. metropolitan area. Thus, we are dependent to a significant extent on the economy and demand for housing in that market.
Because almost all of our customers require mortgage financing, the availability of suitable mortgage financing could impair the affordability of our homes, lower demand for our products, and limit our ability to fully deliver our backlog.
Our business and earnings depend on the ability of our potential customers to obtain mortgages for the purchase of our homes. In addition, many of our potential customers must sell their existing homes in order to buy a home from us. The tightening of credit standards and the availability of suitable mortgage financing could prevent customers from buying our homes and could prevent buyers of our customers’ homes from obtaining mortgages they need to complete that purchase, either of which could result in potential customers’ inability to buy a home from us. If potential customers or the buyers of our customers’ current homes are not able to obtain suitable financing, the result could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
If our ability to sell mortgages to investors is impaired, we may be required to fund these commitments ourselves, or we may not be able to originate loans at all.
Our mortgage banking business sells all of the loans it originates into the secondary market, usually within 30 days from the date of closing, and has up to $150 million available under a repurchase agreement to fund mortgage closings. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in Item 7 of this Form 10-K for more information about the repurchase agreement. In the event that disruptions to the secondary markets tighten or eliminate the available liquidity within the secondary markets for mortgage loans, or the underwriting requirements by our secondary market investors continue to become more stringent, our ability to sell future mortgages could decline and we could be required, among other things, to fund our commitments to our buyers with our own financial resources, which is limited, or require our home buyers to find another source of financing. The result of such secondary market disruption could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
If the market value of our inventory or controlled lot position declines, our profit could decrease and we may incur losses.
Inventory risk can be substantial for homebuilders. The market value of building lots and housing inventories can fluctuate significantly as a result of changing market conditions. In addition, inventory carrying costs can be significant and can result in losses in a poorly performing community or market. We must continuously acquire lots for expansion into new markets as well as for replacement and expansion within our current markets, which we generally accomplish by entering into LPAs and paying forfeitable deposits under the LPAs to developers for the contractual right to acquire the lots. In the event of adverse changes in economic, market or community conditions, we may cease further building activities in certain communities or restructure existing LPAs, resulting in forfeiture of some or all of any remaining land contract deposit paid to the developer. We may also have significant impairments of land under development. The forfeiture of land contract deposits or inventory impairments may result in a loss that could have a material adverse effect on our profitability, stock performance, ability to service our debt obligations and future cash flows.
We face competition in our homebuilding and mortgage banking operations.
The homebuilding industry is highly competitive. We compete with numerous homebuilders of varying size, ranging from local to national in scope, some of whom have greater financial resources than we do. We face competition:
•for suitable and desirable lots at acceptable prices;
•from selling incentives offered by competing builders within and across developments; and
•from the existing home resale market.
Our homebuilding operations compete primarily on the basis of price, location, design, quality, service and reputation.
The mortgage banking industry is also competitive. Our main competition comes from national, regional and local mortgage bankers, credit unions, banks and mortgage brokers in each of these markets. Our mortgage banking operations compete primarily on the basis of customer service, variety of products offered, interest rates offered, prices of ancillary services and relative financing availability and costs.
We might not be able to continue to compete successfully in our homebuilding or mortgage banking operations. An inability to effectively compete may have an adverse impact on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Our inability to secure and control an adequate inventory of lots could adversely impact our operations.
The results of our homebuilding operations depend upon our continuing ability to control an adequate number of homebuilding lots in desirable locations. There can be no assurance that an adequate supply of building lots will continue to be available to us on terms similar to those available in the past, or that we will not be required to devote a greater amount of capital to controlling building lots than we have historically. An insufficient supply of building lots in one or more of our markets, an inability of our developers to deliver finished lots in a timely fashion due to their inability to secure financing to fund development activities or for other reasons, or our inability to purchase or finance building lots on reasonable terms could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
A shortage of building materials or labor, or increases in materials or labor costs may adversely impact our operations.
The homebuilding business has from time to time experienced building material and labor shortages, including fluctuating lumber prices and supply. In addition, strong construction market conditions could restrict the labor force available to our subcontractors and us in one or more of our markets. Significant increases in costs resulting from these shortages, or delays in construction of homes, could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
We rely on subcontractors to construct our homes. The failure of our subcontractors to properly construct our homes may be costly.
We engage subcontractors to perform the actual construction of our homes. Despite our quality control efforts, we may discover that our subcontractors have engaged in improper construction practices. The occurrence of such events could require us to repair the homes in accordance with our standards and as required by law. The cost of satisfying our legal obligations in these instances may be significant, and we may be unable to recover the cost of repair from subcontractors, suppliers and insurers.
Product liability litigation and warranty claims may adversely impact our operations.
Construction defect and home warranty claims are common and can represent a substantial risk for the homebuilding industry. The cost of insuring against construction defect and product liability claims, as well as the claims themselves, can be high. In addition, insurance companies limit coverage offered to protect against these claims. Further restrictions on coverage availability, or significant increases in premium costs or claims, could have a material adverse effect on our financial results.
We are subject to litigation proceedings that could harm our business if an unfavorable ruling were to occur.
From time to time, we are involved in litigation and other legal proceedings relating to claims arising from our operations in the normal course of business. As described in, but not limited to, Item 3, “Legal Proceedings” of this Form 10-K, we are currently subject to certain legal proceedings. Litigation is subject to inherent uncertainties, and unfavorable rulings may occur. These or other litigation or legal proceedings could materially affect our ability to conduct our business in the manner that we expect or otherwise adversely affect us should an unfavorable ruling occur.
If the underwriting quality of our mortgage originations is found to be deficient, our profit could decrease and we may incur losses.
We originate several different loan products to our customers to finance the purchase of their home. We sell all of the loans we originate into the secondary mortgage market generally within 30 days from the date of closing. All of the loans that we originate are
underwritten to the standards and specifications of the ultimate investor. Insofar as we underwrite our originated loans to those standards, we bear no increased concentration of credit risk from the issuance of loans, except in certain limited instances where repurchases or early payment default occur. In the event that a substantial number of the loans that we have originated fall into default and the investors to whom we sold the loans determine that we did not underwrite the loans in accordance with their requirements, we could be required to repurchase the loans from the investor or indemnify the investor for any losses incurred. Any resulting losses could have a material adverse effect on our profitability, stock performance, ability to service our debt obligations and future cash flows.
We may be subject to claims on mortgage loans sold to third parties.
Our mortgage banking operations may be responsible for losses associated with mortgage loans originated and sold to investors in the event of errors or omissions relating to certain representations and warranties that the loans sold meet certain requirements, including representations as to underwriting standards, the type of collateral, the existence of private mortgage insurance, and the validity of certain borrower representations in connection with the loan. The resolution of claims related to alleged breaches of these representations and warranties and repurchase claims could have a material adverse effect on our financial condition, cash flows and results of operations and could result in losses that exceed existing estimates and accruals. Because of the uncertainties inherent in estimating these matters, there can be no assurance that any amounts reserved will be adequate or that any potential inadequacies will not have a material adverse effect on our results of operations.
The loss of key personnel could adversely impact our business.
We rely on our key personnel to effectively operate and manage our business. Specifically, our future success depends heavily on the performance of our senior management team. Our business may be adversely affected if we are unable to retain key personnel or attract qualified personnel to manage our business.
Our failure to maintain the security of our electronic and other confidential information could expose us to liability and materially adversely affect our financial condition and results of operations.
Privacy, security, and compliance concerns have continued to increase as technology has evolved. As part of our normal business activities, we collect and store certain confidential information, including personal information of homebuyers/borrowers and information about employees, vendors and suppliers. This information is entitled to protection under a number of federal and state laws. We may share some of this information with vendors who assist us with certain aspects of our business, particularly our mortgage and title businesses.
We have implemented systems and processes intended to secure our information technology systems and prevent unauthorized access to or loss of sensitive, confidential and personal data, including through the use of encryption and authentication technologies. Additionally, we have continued to elevate our monitoring capabilities to enhance early detection and rapid response to potential security anomalies. In 2021, we had an external review of our cybersecurity program performed by a third party, which allowed us to enhance our overall program. We also require employees to complete training sessions regarding matters such as cybersecurity threats and data protection on a regular basis. These security measures may not be sufficient for all possible occurrences and may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management or other irregularities. Further, development and maintenance of these measures are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated.
Our failure to maintain the security of the data we are required to protect, including via the penetration of our network security and the misappropriation of confidential and personal information, could result in business disruption, damage to our reputation, financial obligations to third parties, fines, penalties, regulatory proceedings and private litigation with potentially large costs, and also in deterioration in customers’ confidence in us and other competitive disadvantages, and thus could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Volatility in the credit and capital markets may impact our ability to access necessary financing.
If we require working capital greater than that provided by our operations and our credit facility, we may be required to seek to increase the amount available under the facility or seek alternative financing, which might not be available on terms that are favorable or acceptable. If we are required to seek financing to fund our working capital requirements, volatility in credit or capital markets may restrict our flexibility to access financing. If we are at any time unsuccessful in obtaining sufficient capital to fund our planned homebuilding expenditures, we may experience a substantial delay in the completion of homes then under construction, or we may be unable to control or purchase finished building lots. Any delay could result in cost increases and could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Our mortgage banking operations depend in part on the availability, cost and other terms of mortgage financing facilities, and may be adversely affected by any shortage or increased cost of such financing. Additional or replacement financing might not be available on terms that are favorable or acceptable. Our mortgage banking operations are also dependent upon the securitization market for mortgage-backed securities, and could be materially adversely affected by any fluctuation or downturn in such market.
Our current indebtedness may impact our future operations.
As of December 31, 2021 we had $1.5 billion in senior notes outstanding. Our existing indebtedness contains restrictive covenants and any future indebtedness may also contain such covenants. These covenants include, or could include, restrictions on our ability to create, incur, assume or guarantee secured debt, enter into sale and leaseback transactions and conditions related to mergers and/or the sale of assets. Substantial losses by us or other action or inaction by us or our subsidiaries could result in the violation of one or more of these covenants, which could result in decreased liquidity or a default on our current or future indebtedness, thereby having a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Regulatory Risk
Government regulations and environmental matters could negatively affect our operations.
We are subject to various local, state and federal statutes, ordinances, rules and regulations concerning zoning, building design, construction and similar matters, including local regulations that impose restrictive zoning and density requirements in order to limit the number of homes that can eventually be built within the boundaries of a particular area. These regulations may further increase the cost to produce and market our products. In addition, we have from time to time been subject to, and may also be subject in the future to, periodic delays in our homebuilding projects due to building moratoriums in the areas in which we operate or delays in receiving the necessary governmental approvals. Changes in regulations that restrict homebuilding activities in one or more of our principal markets could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
In addition, new housing developments are often subject to various assessments or impact fees for schools, parks, streets, highways and other public improvements. The cost of these assessments is subject to substantial change and could cause increases in the construction cost of our homes, which, in turn, could reduce our profitability.
We are also subject to a variety of local, state and federal statutes, ordinances, rules and regulations concerning the protection of health and the environment. We are subject to a variety of environmental conditions that can affect our business and our homebuilding projects. The particular environmental laws that apply to any given homebuilding site vary greatly according to the location and environmental condition of the site and the present and former uses of the site and adjoining properties. Environmental laws and conditions may result in delays, cause us to incur substantial compliance and other costs, or prohibit or severely restrict homebuilding activity in certain environmentally sensitive regions or areas, thereby adversely affecting our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Increased regulation of the mortgage industry could harm our future sales and earnings.
The mortgage industry remains under intense scrutiny and continues to face increasing regulation at the federal, state and local level. Potential changes to federal laws and regulations could have the effect of limiting the activities of FNMA and FHLMC, the entities that provide liquidity to the secondary mortgage market, which could lead to increases in mortgage interest rates. Tighter underwriting requirements and fee restrictions and the increasingly complex regulatory environment may negatively impact our mortgage loan origination business in the form of lower demand, decreased revenue and increased operating costs.
We are an approved seller/servicer of FNMA and FHLMC mortgage loans and an approved seller/issuer of GNMA, VA and FHA mortgage loans, and are subject to all of those agencies’ rules and regulations. Any significant impairment of our eligibility to sell/service these loans could have a material adverse impact on our mortgage operations. In addition, we are subject to regulation at the state and federal level with respect to specific origination, selling and servicing practices including the Real Estate Settlement and Protection Act. Adverse changes in governmental regulation may have a negative impact on our mortgage loan origination business.
Risks Related to the COVID-19 Pandemic and Other External Risks
Health epidemics, including the recent COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business and operations, and the markets, states and local communities in which we operate.
Our business and operations could be adversely affected by health epidemics, including the COVID-19 pandemic, impacting the markets, states and local communities in which we operate. General uncertainty continues regarding the near-term and long-term impact of the COVID-19 virus on the domestic and international economy and on public health. These developments and other consequences of the outbreak could materially and adversely affect our operations, profitability and cash flows.
The COVID-19 pandemic has had a significant impact on all facets of our business. Our primary focus during the pandemic has been to do everything we can to ensure the safety and well-being of our employees, customers and trade partners. In each of our markets, we continue to operate in accordance with the guidelines issued by the Centers for Disease Control and Prevention, as well as state and local guidelines.
The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. There is uncertainty regarding governmental actions that may occur, and the effects of economic relief efforts on the U.S. economy, either of which could be potential disruptors to our business. Over the long term, these disruptions related to COVID-19 could lower demand for our products, impair our ability to sell and/or build homes in our normal manner, increase our losses on contract land deposits, and negatively impact our lending and secondary mortgage market activities.
While the spread of COVID-19 may eventually be mitigated, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the U.S. economy will recover, either of which could seriously harm our business.
Weather-related and other events beyond our control may adversely impact our operations.
Extreme weather or other events, such as significant snowfalls, hurricanes, tornadoes, earthquakes, forest fires, floods, terrorist attacks or war may affect our markets, our operations and our profitability. These events may impact our physical facilities or those of our suppliers or subcontractors and our housing inventories, causing us material increases in costs, or delays in construction of homes, which could have a material adverse effect upon our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.
Our continued success is dependent on positive perceptions of us and our brands which, if eroded, could adversely affect our business and our relationships with our customers.
We believe that one of the reasons our customers buy from us, our employees choose NVR as a place of employment, and our vendors choose to do business with us is the reputation we have built over many years. To be successful in the future, we must continue to preserve our reputation. Reputational value is based in large part on perceptions, and broad access to social media makes it easy for anyone to provide public feedback that can influence perceptions of the brands under which we do business. It may be difficult to control negative publicity, regardless of whether it is accurate. While reputations may take decades to build, negative incidents can quickly erode trust and confidence, could damage our reputation, reduce the demand for our homes or negatively impact the morale and performance of our employees, all of which could adversely affect our business.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
Our corporate offices are located in Reston, Virginia, where we currently lease approximately 61,000 square feet of office space. The current corporate office lease expires in April 2026.
In connection with the operation of the homebuilding segment, we lease production facilities in the following seven locations: Thurmont, Maryland; Burlington County, New Jersey; Farmington, New York; Kings Mountain, North Carolina; Darlington, Pennsylvania; Portland, Tennessee; and Richmond, Virginia. These facilities range in size from approximately 40,000 square feet to 400,000 square feet and total approximately one million square feet. Each of these leases contains various options for extensions of the lease and for the purchase of the facility. Additionally, certain facility leases have early termination options. These leases currently expire between 2024 and 2040. In addition, we own a production facility of approximately 100,000 square feet in Dayton, Ohio. Our plant utilization was 61% and 56% of total capacity in 2021 and 2020, respectively.
In connection with both our homebuilding and mortgage banking businesses, we also lease office space in multiple locations for homebuilding divisional offices and mortgage banking and title services branches under leases expiring at various times through 2027, none of which are individually material to our business.
We anticipate that, upon expiration of existing production facility and office leases, we will be able to renew them or obtain comparable facilities on terms acceptable to us.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We are involved in various litigation matters arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, these matters are not expected to have a material adverse effect on our financial position, results of operations or cash flows. Legal costs incurred in connection with outstanding litigation matters are expensed as incurred.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
(dollars in thousands, except per share data)
Our shares of common stock are listed and principally traded on the New York Stock Exchange under the trading symbol “NVR.” As of the close of business on February 14, 2022, there were 189 shareholders of record of our common stock.
We have never paid a cash dividend on our shares of common stock and have no current intention to do so in the future.
We had two share repurchase authorizations outstanding during the quarter ended December 31, 2021. On August 4, 2021 and November 3, 2021, we publicly announced the Board of Directors’ approval to repurchase our outstanding common stock in one or more open market and/or privately negotiated transactions, up to an aggregate of $500,000 per authorization. Repurchase activity is conducted pursuant to publicly announced Board authorizations, and is typically executed in accordance with the safe-harbor provisions of Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. In addition, the Board resolutions authorizing us to repurchase shares of our common stock specifically prohibit us from purchasing shares from our officers, directors, Profit Sharing Plan Trust or Employee Stock Ownership Plan Trust. The repurchase authorizations do not have expiration dates. The following table provides information regarding common stock repurchases during the quarter ended December 31, 2021:
Period Total Number
of Shares
Purchased Average
Price Paid
per Share Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs Approximate Dollar Value of
Shares that May Yet
Be Purchased Under
the Plans or
Programs
October 1 - 31, 2021 30,189 $ 4,842.48 30,189 $ 247,017
November 1 - 30, 2021 45,380 $ 5,035.84 45,380 $ 518,491
December 1 - 31, 2021 1,874 $ 5,574.92 1,874 $ 508,043
Total 77,443 $ 4,973.51 77,443
The information required by this item with respect to securities authorized for issuance under equity compensation plans is provided under Item 12 of this Form 10-K.
STOCK PERFORMANCE GRAPH
The following graph compares the cumulative total return to holders of our common stock since December 31, 2016 with the Dow Jones US Home Construction Index and the S&P 500 Index for that same period, assuming that $100 was invested in NVR stock and the indices on December 31, 2016.
For the Year Ended December 31,
Comparison of 5 Year Cumulative Total Return 2016 2017 2018 2019 2020 2021
NVR, Inc. $ 100 $ 210 $ 146 $ 228 $ 244 $ 354
S&P 500 $ 100 $ 122 $ 116 $ 153 $ 181 $ 233
Dow Jones US Home Construction $ 100 $ 176 $ 121 $ 178 $ 220 $ 335

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Reserved.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(dollars in thousands, except per share data)
Results of Operations
This section of this Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
Overview
Business Environment and Current Outlook
Demand for new homes remained strong across each of our markets throughout 2021, driven by historically low mortgage rates and limited housing supply. As a result, we were able to consistently increase prices throughout the year, allowing us to improve profitability despite rising lumber and other material costs and labor costs. Additionally, strong housing demand has resulted in increased construction activity and demand for building materials and contractor labor, which, coupled with the ongoing effects of the COVID-19 pandemic, has led to supply chain disruptions and longer construction cycle times. We expect to continue to face these disruptions well into 2022 and continue to work closely with our suppliers and trade partners to manage these disruptions.
Although current demand for new homes is strong, there is uncertainty regarding the extent and timing of the supply chain disruption and the effects of the ongoing pandemic and related economic relief efforts on the U.S. economy, inflation, unemployment, consumer confidence, demand for new homes and home affordability. We expect to continue to face cost pressures related to building materials, particularly lumber, as well as labor and land costs. As a result, profit margins will be impacted based on our ability to manage these costs while balancing sales pace and pricing. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet.
Business
Our primary business is the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis. To fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business. We primarily conduct our operations in mature markets. Additionally, we generally grow our business through market share gains in our existing markets and by expanding into markets contiguous to our current active markets. Our four homebuilding reportable segments consist of the following regions:
Mid Atlantic: Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East: New Jersey and Eastern Pennsylvania
Mid East: New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East: North Carolina, South Carolina, Florida and Tennessee
Our lot acquisition strategy is predicated upon avoiding the financial risks associated with direct land ownership and development. We generally do not engage in land development (see discussion below of our land development activities). Instead, we typically acquire finished lots from various third party land developers pursuant to LPAs. These LPAs require deposits, typically ranging up to 10% of the aggregate purchase price of the finished lots, in the form of cash or letters of credit that may be forfeited if we fail to perform under the LPA. This strategy has allowed us to maximize inventory turnover, which we believe enables us to minimize market risk and to operate with less capital, thereby enhancing rates of return on equity and total capital.
In addition to constructing homes primarily on a pre-sold basis and utilizing what we believe is a conservative lot acquisition strategy, we focus on obtaining and maintaining a leading market position in each market we serve. This strategy allows us to gain valuable efficiencies and competitive advantages in our markets, which we believe contributes to minimizing the adverse effects of regional economic cycles and provides growth opportunities within these markets. Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build.
In limited specific strategic circumstances, we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development. Once we acquire control of raw ground, we determine whether to sell the raw parcel to a developer and enter into an LPA with the developer to purchase the finished lots or to hire a developer to develop the land on our behalf. While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so. We expect, however, to continue to acquire substantially all of our finished lot inventory using LPAs with forfeitable deposits.
As of December 31, 2021, we controlled approximately 124,900 lots as discussed below.
Lot Purchase Agreements ("LPAs")
We controlled approximately 122,800 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $521,900 and $10,100, respectively. Included in the number of controlled lots are approximately 4,900 lots for which we have recorded a contract land deposit impairment reserve of approximately $30,000 as of December 31, 2021.
Joint Venture Limited Liability Corporations (“JVs”)
We had an aggregate investment totaling approximately $20,300 in four JVs, expected to produce approximately 2,300 lots. Of the lots to be produced by the JVs, approximately 1,900 lots were controlled by us and approximately 400 lots were either under contract with unrelated parties or currently not under contract.
Land Under Development
We owned land with a carrying value of approximately $12,100 that we intend to develop into approximately 200 finished lots. We had additional funding commitments of approximately $2,700 under a joint development agreement related to one project, a portion of which we expect will be offset by development credits of approximately $800.
See Notes 3, 4 and 5 to the consolidated financial statements included herein for additional information regarding LPAs, JVs and land under development, respectively.
Raw Land Purchase Agreements
In addition to the lots we currently control as discussed above, we have certain properties under contract with land owners that are expected to yield approximately 15,500 lots. Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with cash deposits totaling approximately $5,300 as of December 31, 2021, of which approximately $3,400 is refundable if we do not perform under the contract. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.
Key Financial Results
Our consolidated revenues for the year ended December 31, 2021 totaled $8,951,025, an increase of 19% from $7,536,923 in 2020. Our net income for 2021 was $1,236,719, or $320.48 per diluted share, increases of 37% and 39% compared to 2020 net income and diluted earnings per share, respectively. Our homebuilding gross profit margin percentage was 22.3% in 2021 compared to 19.0% in 2020. Settlements for the year ended December 31, 2021 totaled 21,540 units, an increase of 9% from 2020. New orders, net of cancellations (“New Orders”) during 2021 were 22,721, a decrease of 2% from 2020 while our average New Order sales price increased 15% to $436.1 in 2021. Our backlog of homes sold but not yet settled with the customer as of December 31, 2021 increased on a unit basis by 10% to 12,730 units and increased on a dollar basis by 26% to $5,782,035 when compared to December 31, 2020. Income before tax from our mortgage banking segment totaled $171,604 in 2021, an increase of 23% when compared to $140,073 in 2020 due primarily to an increase in secondary marketing gains on sales of loans.
Homebuilding Operations
The following table summarizes the results of our consolidated homebuilding operations and certain operating activity for each of the last three years:
Year Ended December 31,
2021 2020 2019
Financial data:
Revenues $ 8,701,693 $ 7,328,889 $ 7,220,844
Gross profit margin $ 1,938,578 $ 1,391,488 $ 1,370,982
Gross profit margin percentage 22.3 % 19.0 % 19.0 %
Selling, general and administrative expenses $ 474,808 $ 431,008 $ 447,547
Operating data:
New orders (units) 22,721 23,082 19,536
Average new order price $ 436.1 $ 380.1 $ 368.4
Settlements (units) 21,540 19,766 19,668
Average settlement price $ 403.9 $ 370.8 $ 367.1
Backlog (units) 12,730 11,549 8,233
Average backlog price $ 454.2 $ 396.2 $ 380.2
New order cancellation rate 9.2 % 14.9 % 14.6 %
Consolidated Homebuilding
Homebuilding revenues increased 19% in 2021 compared to 2020, as a result of a 9% increase in both the number of units settled and in the average settlement price year over year. The increase in the number of units settled was attributable to a 40% higher backlog unit balance entering 2021 compared to the backlog unit balance entering 2020, offset partially by a lower backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 4% higher average sales price of units in backlog entering 2021 compared to backlog entering 2020 coupled with a 15% increase in the average sales price of New Orders in the first six months of 2021 compared to the same period in 2020. The gross profit margin percentage in 2021 increased to 22.3% from 19.0% in 2020. Gross profit margins were favorably impacted by the increase in the average settlement price attributable to improved pricing power in prior quarters and improved leveraging of certain operating costs attributable to the increase in settlement activity year over year. These favorable factors were partially offset by higher prices for lumber, certain other commodities and labor year over year.
The number of New Orders decreased 2% while the average sales price of New Orders increased 15% in 2021 when compared to 2020. The number of New Orders in the current year were lower due primarily to a 9% decrease in the average number of active communities year over year. The increase in the average sales price of New Orders was primarily attributable to favorable market conditions which, coupled with low housing inventory levels, drove demand and provided us sustained pricing power since the second half of 2020.
Selling, general and administrative ("SG&A") expenses in 2021 increased by $43,800 compared to 2020, but as a percentage of revenue decreased to 5.5% in 2021 from 5.9% in 2020 due to improved leveraging of SG&A costs. The increase in SG&A expense year over year was attributable primarily to increased incentive compensation attributable to stronger performance year over year, as well as increased personnel costs due to increased headcount.
Our backlog represents homes sold but not yet settled with our customers. Backlog units and dollars were 12,730 units and $5,782,035, respectively, as of December 31, 2021 compared to 11,549 units and $4,575,899, respectively, as of December 31, 2020. Backlog units were higher despite an 11% decrease in New Orders during the six-month period ending December 31, 2021 compared to the same period in 2020, due to a lower backlog turnover rate year over year. Our backlog turnover rate was negatively impacted by a longer production cycle attributable to supply chain disruptions and subcontractor capacity constraints. Backlog dollars were higher due to a 15% increase in the average sales price of New Orders during the six-month period ended December 31, 2021 compared to the same period in 2020.
In addition to the impact of the COVID-19 pandemic, our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the beginning backlog for the current period. Additionally, a substantial majority of our cancellations occur prior to starting construction on a home. Expressed as the total of all cancellations during the period as a percentage of gross New Orders during the period, our cancellation rate was 9.2%, 14.9% and 14.6% in 2021, 2020, and 2019, respectively. Additionally, approximately 3% in 2021 and 6% in both 2020 and 2019, of a reporting quarter’s opening backlog cancelled during the quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur in future years. Other than those units that are cancelled, and subject to potential construction delays resulting from COVID-19 related restrictions and/or continued supply chain disruptions, we expect to settle substantially all of our December 31, 2021 backlog during 2022. See “Risk Factors” in Item 1A of this Form 10-K.
The backlog turnover rate is impacted by various factors, including, but not limited to, changes in New Order activity, internal production capacity, external subcontractor capacity and other external factors over which we do not exercise control.
Reportable Homebuilding Segments
Homebuilding segment profit includes all revenues and income generated from the sale of homes, less the cost of homes sold, SG&A expenses, and a corporate capital allocation charge determined by corporate management. The corporate capital allocation charge eliminates in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment is providing the desired rate of return after covering our cost of capital.
We record impairment charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve at December 31, 2021 and 2020 has been allocated to the reportable segments for the respective years to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $10,100 and $8,100 at December 31, 2021 and 2020, respectively, of letters of credit issued as deposits in lieu of cash.
The following tables summarize certain homebuilding operating activity by reportable segment for each of the last three years:
Selected Segment Financial Data:
Year Ended December 31,
2021 2020 2019
Revenues:
Mid Atlantic $ 4,049,871 $ 3,668,542 $ 3,901,573
North East 767,828 538,772 514,804
Mid East 1,891,729 1,524,667 1,501,139
South East 1,992,265 1,596,908 1,303,328
Year Ended December 31,
2021 2020 2019
Gross profit margin:
Mid Atlantic $ 987,926 $ 690,058 $ 734,017
North East 163,990 102,621 100,520
Mid East 391,405 282,443 285,091
South East 469,520 327,483 260,804
Year Ended December 31,
2021 2020 2019
Gross profit margin percentage:
Mid Atlantic 24.4 % 18.8 % 18.8 %
North East 21.4 % 19.0 % 19.5 %
Mid East 20.7 % 18.5 % 19.0 %
South East 23.6 % 20.5 % 20.0 %
Year Ended December 31,
2021 2020 2019
Segment profit:
Mid Atlantic $ 734,941 $ 437,849 $ 478,537
North East 105,432 50,677 51,728
Mid East 271,756 168,605 173,374
South East 329,982 205,029 155,144
Segment Operating Activity:
Year Ended December 31,
2021 2020 2019
Units Average
Price Units Average
Price Units Average
Price
New orders, net of cancellations:
Mid Atlantic 8,749 $ 522.4 9,230 $ 453.8 8,799 $ 424.4
North East 1,685 $ 497.4 1,738 $ 416.6 1,349 $ 390.8
Mid East 5,567 $ 369.3 5,780 $ 330.9 4,628 $ 323.2
South East 6,720 $ 363.6 6,334 $ 307.7 4,760 $ 302.6
Total 22,721 $ 436.1 23,082 $ 380.1 19,536 $ 368.4
Year Ended December 31,
2021 2020 2019
Units Average
Price Units Average
Price Units Average
Price
Settlements:
Mid Atlantic 8,310 $ 487.3 8,363 $ 438.6 9,335 $ 417.9
North East 1,666 $ 460.9 1,375 $ 391.8 1,325 $ 388.5
Mid East 5,414 $ 349.4 4,719 $ 323.1 4,621 $ 324.8
South East 6,150 $ 323.9 5,309 $ 300.8 4,387 $ 297.1
Total 21,540 $ 403.9 19,766 $ 370.8 19,668 $ 367.1
Year Ended December 31,
2021 2020 2019
Units Average
Price Units Average
Price Units Average
Price
Backlog:
Mid Atlantic 4,918 $ 534.8 4,479 $ 470.9 3,612 $ 440.1
North East 969 $ 511.5 950 $ 447.8 587 $ 408.8
Mid East 3,027 $ 381.3 2,874 $ 344.5 1,813 $ 332.0
South East 3,816 $ 393.7 3,246 $ 323.7 2,221 $ 314.6
Total 12,730 $ 454.2 11,549 $ 396.2 8,233 $ 380.2
Operating Data:
Year Ended December 31,
2021 2020 2019
New order cancellation rate:
Mid Atlantic 9.0 % 14.9 % 15.0 %
North East 8.6 % 13.1 % 13.0 %
Mid East 10.2 % 14.5 % 14.1 %
South East 8.8 % 15.8 % 14.9 %
Year Ended December 31,
2021 2020 2019
Average active communities:
Mid Atlantic 155 177 206
North East 34 40 33
Mid East 129 138 134
South East 106 112 97
Total 424 467 470
Homebuilding Inventory:
As of December 31,
2021 2020
Sold inventory:
Mid Atlantic $ 867,892 $ 704,595
North East 154,053 140,461
Mid East 342,011 278,510
South East 439,892 336,902
Total (1) $ 1,803,848 $ 1,460,468
As of December 31,
2021 2020
Unsold lots and housing units inventory:
Mid Atlantic $ 87,412 $ 76,690
North East 14,656 7,941
Mid East 12,892 13,252
South East 14,193 23,220
Total (1) $ 129,153 $ 121,103
(1)Total segment inventory differs from consolidated inventory due to certain consolidation adjustments necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes. These consolidation adjustments are not allocated to our operating segments.
Lots Controlled and Land Deposits:
As of December 31,
2021 2020
Total lots controlled:
Mid Atlantic 47,900 42,100
North East 11,900 10,500
Mid East 23,700 22,000
South East 41,400 31,100
Total 124,900 105,700
As of December 31,
2021 2020
Contract land deposits, net:
Mid Atlantic $ 257,244 $ 212,742
North East 51,257 32,949
Mid East 52,537 49,222
South East 146,246 100,864
Total $ 507,284 $ 395,777
Year Ended December 31,
2021 2020 2019
Contract land deposit impairments (recoveries), net:
Mid Atlantic $ 16 $ 114 $ (141)
North East - 60 1,050
Mid East 10 293 175
South East - 1,045 21
Total $ 26 $ 1,512 $ 1,105
Mid Atlantic
The Mid Atlantic segment had an approximate $297,100, or 68%, increase in segment profit in 2021 compared to 2020, driven by improved gross profit margins and an increase in segment revenues of approximately $381,300, or 10%, year over year. Segment revenues increased due primarily to an 11% increase in the average settlement price year over year. The increase in the average settlement price was primarily attributable to a 7% higher average sales price of units in backlog entering 2021 compared to backlog entering 2020, coupled with a 17% increase in the average sales price of New Orders in the first six months of 2021 compared to the same period in 2020. The Mid Atlantic segment’s gross profit margin percentage increased to 24.4% in 2021 from 18.8% in 2020. Gross profit margins were favorably impacted by the increase in the average settlement price attributable to improved pricing power and improved leveraging of certain operating costs attributable to the increase in settlement activity year over year. These favorable factors were partially offset by higher prices for lumber, certain other commodities and labor year over year.
Segment New Orders decreased 5% while the average sales price of New Orders increased 15% in 2021 compared to 2020. New Orders were negatively impacted primarily by a 13% decrease in the average number of active communities year over year. The increase in the average sales price of New Orders year over year was attributable to favorable market conditions which, coupled with low housing inventory levels, drove demand and have provided us sustained pricing power since the second half of 2020.
North East
The North East segment had an approximate $54,800, or 108%, increase in segment profit in 2021 compared to 2020, driven by an increase in segment revenues of approximately $229,100, or 43%, year over year and improved gross profit margins. The increase in segment revenues was attributable to a 21% increase in the number of units settled and an 18% increase in the average settlement price year over year. The increase in the number of units settled was attributable to a 62% higher backlog unit balance entering 2021 compared to the backlog unit balance entering 2020, offset partially by a lower backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 10% higher average sales price of units in backlog entering 2021 compared to backlog entering 2020, coupled with a 28% increase in the average sales price of New Orders in the first six months of 2021 compared to the same period in 2020. The segment’s gross profit margin percentage increased to 21.4% in 2021 from 19.0% in 2020. Gross profit margins were favorably impacted by the increase in the average settlement price attributable to improved pricing power and improved leveraging of certain operating costs attributable to the increase in settlement activity year over year. These favorable factors were partially offset by higher prices for lumber, certain other commodities and labor year over year.
Segment New Orders decreased 3% while the average sales price of New Orders increased 19% in 2021 compared to 2020. New Orders were negatively impacted primarily by a 13% decrease in the average number of active communities year over year. The increase in the average sales price of New Orders year over year was attributable to favorable market conditions which, coupled with low housing inventory levels, drove demand and provided us sustained pricing power since the second half of 2020.
Mid East
The Mid East segment had an approximate $103,200, or 61%, increase in segment profit in 2021 compared to 2020. The increase in segment profit was driven by an increase of segment revenues of approximately $367,100, or 24%, year over year and improved gross profit margins. Segment revenues increased due to increases in the number of units settled and the average settlement price of 15% and 8%, respectively, year over year. The increase in the number of units settled was largely attributable to a 59% higher backlog unit balance entering 2021 compared to the backlog unit balance entering 2020, offset partially by a lower backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 4% higher average sales price of units in backlog entering 2021 compared to the same period in 2020, coupled with a 13% increase in the average sales price of New Orders in the first six months of 2021 compared to the same period in 2020. The segment’s gross profit margin percentage increased to 20.7% in 2021 from 18.5% in 2020. Gross profit margins were favorably impacted by the increase in the average settlement price attributable to improved pricing power and by improved leveraging of certain operating costs attributable to the increase in settlement activity year over year, offset partially by higher prices for lumber, certain other commodities and labor year over year.
Segment New Orders decreased 4% while the average sales price of New Orders increased 12% in 2021 compared to 2020. New Orders were negatively impacted primarily by a 7% decrease in the average number of active communities in 2021 compared to 2020. The increase in the average sales price of New Orders was attributable to favorable market conditions which, coupled with low housing inventory levels, drove demand and provided us sustained pricing power since the second half of 2020.
South East
The South East segment had an approximate $125,000, or 61%, increase in segment profit in 2021 compared to 2020. The increase in segment profit was primarily driven by an increase in segment revenues of approximately $395,400, or 25%, year over year and improved gross profit margins. The increase in revenues was attributable to a 16% increase in the number of units settled and an 8% increase in the average settlement price year over year. The number of units settled were favorably impacted by a 46% higher backlog unit balance entering 2021 compared to the same period in 2020, offset partially by a lower backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 3% higher average sales price of units in backlog entering 2021 compared to the same period in 2020, coupled with a 16% increase in the average sales price of New Orders in the first six months of 2021 compared to the same period in 2020. The segment’s gross profit margin percentage increased to 23.6% in 2021 from 20.5% in 2020. Gross profit margins were favorably impacted by the increase in the average settlement price attributable to improved pricing power and improved leveraging of certain operating costs attributable to the increase in settlement activity year over year. These favorable factors were partially offset by higher prices for lumber, certain other commodities and labor year over year.
Segment New Orders and the average sales price of New Orders increased 6% and 18%, respectively, in 2021 compared to 2020. New Orders and the average sales price of New Orders were higher due to favorable market conditions which, coupled with low housing inventory levels, drove demand and provided us sustained pricing power since the second half of 2020.
Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations
In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between homebuilding segment profit and homebuilding consolidated profit before tax include unallocated corporate overhead (which includes all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. Our overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to our operating segments. Consolidation adjustments consist of such items to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments. External corporate interest expense is primarily comprised of interest charges on our 3.95% Senior Notes due 2022 and 3.00% Senior Notes due 2030, and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.
Year Ended December 31,
2021 2020 2019
Homebuilding consolidated gross profit:
Mid Atlantic $ 987,926 $ 690,058 $ 734,017
North East 163,990 102,621 100,520
Mid East 391,405 282,443 285,091
South East 469,520 327,483 260,804
Consolidation adjustments and other (74,263) (11,117) (9,450)
Homebuilding consolidated gross profit $ 1,938,578 $ 1,391,488 $ 1,370,982
Year Ended December 31,
2021 2020 2019
Homebuilding consolidated profit before taxes:
Mid Atlantic $ 734,941 $ 437,849 $ 478,537
North East 105,432 50,677 51,728
Mid East 271,756 168,605 173,374
South East 329,982 205,029 155,144
Reconciling items:
Contract land deposit impairment reserve (1) 22,163 (24,633) 1,644
Equity-based compensation expense (2) (53,587) (47,548) (75,156)
Corporate capital allocation (3) 252,787 239,233 224,468
Unallocated corporate overhead (139,611) (114,921) (105,125)
Consolidation adjustments and other (4) (53,671) 63,025 43,486
Corporate interest expense (51,393) (39,356) (24,221)
Reconciling items sub-total (23,312) 75,800 65,096
Homebuilding consolidated profit before taxes $ 1,418,799 $ 937,960 $ 923,879
(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of contract land deposit impairment charges in Note 3 in the accompanying consolidated financial statements.
(2)The decrease in equity-based compensation expense in 2020 was primarily attributable to stock options issued in 2014 under the 2014 Equity Incentive Plan becoming fully vested in 2019. In addition, there were higher stock option forfeitures in 2020 compared to 2019.
(3)This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance and is as follows for the years presented:
Year Ended December 31,
2021 2020 2019
Corporate capital allocation charge:
Mid Atlantic $ 124,316 $ 124,426 $ 123,130
North East 25,431 22,850 19,755
Mid East 43,686 40,256 37,263
South East 59,354 51,701 44,320
Total corporate capital allocation charge $ 252,787 $ 239,233 $ 224,468
(4) The decrease in consolidation adjustments and other in 2021 compared to 2020 is driven by changes in lumber prices in 2021. Our reportable segments' results include intercompany profits of our production facilities for home packages delivered to our homebuilding divisions. For homes not yet settled, these intercompany profits are reversed through the consolidation adjustments. Due to the significantly higher lumber prices in the first half of 2021, the previously reversed intercompany profits were recognized in subsequent quarters through the consolidation adjustment as homes were settled, and our consolidated homebuilding margins were negatively impacted by the higher lumber costs.
Mortgage Banking Segment
We conduct our mortgage banking activity through NVRM, a wholly owned subsidiary. NVRM focuses almost exclusively on serving the homebuilding segment customer base. The following table summarizes the results of our mortgage banking operations and certain statistical data for each of the last three years:
Year Ended December 31,
2021 2020 2019
Loan closing volume:
Total principal $ 6,073,934 $ 5,317,811 $ 5,164,725
Loan volume mix:
Adjustable rate mortgages 3 % 2 % 8 %
Fixed-rate mortgages 97 % 98 % 92 %
Operating profit:
Segment profit $ 176,251 $ 143,319 $ 105,292
Equity-based compensation expense (4,647) (3,246) (3,376)
Mortgage banking income $ 171,604 $ 140,073 $ 101,916
Capture rate: 89 % 90 % 90 %
Mortgage banking fees:
Net gain on sale of loans $ 205,582 $ 168,720 $ 128,642
Title services 42,958 38,554 38,537
Servicing fees 792 760 641
$ 249,332 $ 208,034 $ 167,820
Loan closing volume in 2021 increased by approximately $756,100, or 14%, from 2020. The increase was primarily attributable to a 6% increase in the number of loans closed year over year due primarily to the aforementioned increase in the homebuilding segment’s number of settlements in 2021 as compared to 2020 and an 8% increase in the average loan amount in 2021 compared to 2020.
Segment profit in 2021 increased by approximately $32,900, or 23%, from 2020. The increase in segment profit was primarily attributable to an increase in mortgage banking fees. Mortgage banking fees increased by approximately $41,300, or 20%, resulting from the aforementioned increase in loan closing volume and an increase in secondary marketing gains on sales of loans.
Mortgage Banking - Other
We sell all of the loans we originate into the secondary mortgage market. Insofar as we underwrite our originated loans to the standards and specifications of the ultimate investor, we have no further financial obligations from the issuance of loans, except in certain limited instances where repurchases or early payment default occur. Those underwriting standards are typically equal to or more stringent than the underwriting standards required by FNMA, GNMA, FHLMC, VA and FHA. Because we sell all of our loans and do not service them, there is often a substantial delay between the time that a loan goes into default and the time that the investor requests us to reimburse them for losses incurred because of the default. We believe that all of the loans that we originate are underwritten to the standards and specifications of the ultimate investor to whom we sell our originated loans. We employ a quality control department to ensure that our underwriting controls are effective, and further assess the underwriting function as part of our assessment of internal controls over financial reporting.
We maintain a reserve for losses on mortgage loans originated that reflects our judgment of the present loss exposure from the loans that we have originated and sold. At December 31, 2021 and 2020, we had repurchase reserves of approximately $21,400 and $20,500, respectively.
NVRM is dependent on our homebuilding operation’s customers for business. If new orders and selling prices of the homebuilding segment decline, NVRM’s operations will also be adversely affected. In addition, NVRM’s operating results may be adversely affected in future periods due to tightening and volatility of the credit markets, changes in investor funding times, increased regulation of mortgage lending practices and increased competition in the mortgage market.
Seasonality
We generally have higher New Order activity in the first half of the year and higher home settlements, revenues and net income in the second half of the year, however, the impact of the pandemic in both 2021 and 2020 on home demand, as well as supply chain disruptions, have affected our typical seasonal New Order and settlement trends.
Effective Tax Rate
Our consolidated effective tax rates in 2021 and 2020 were 22.24% and 16.40%, respectively. The higher effective tax rate in 2021 was attributable primarily to the recognition of a lower income tax benefit related to excess tax benefits from stock option exercises in 2021. Excess tax benefit recognized in 2021 and 2020 were approximately $48,400 and $92,200, respectively.
We expect continued tax rate volatility in future years attributable to the recognition of excess tax benefits from equity plan activity and distributions from the deferred compensation plans.
Recent Accounting Pronouncements Pending Adoption
See Note 1 to the accompanying consolidated financial statements for discussion of recently issued accounting pronouncements applicable to us.
Liquidity and Capital Resources
We fund our operations primarily from our current cash holdings and cash flows generated by operating activities. In addition, we have available a short-term unsecured working capital revolving credit facility and revolving mortgage repurchase facility, as further described below. As of December 31, 2021, we had a strong liquidity position with approximately $2,600,000 in cash and cash equivalents, approximately $284,000 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.
Material Cash Requirements
We believe that our current cash holdings, cash generated from operations, and cash available under our short-term unsecured credit agreement and revolving mortgage repurchase facility, as well as the public debt and equity markets, will be sufficient to satisfy both our short term and long term cash requirements for working capital to support our daily operations and meet commitments under our contractual obligations with third parties. Our material contractual obligations primarily consist of (i) payments due to service our debt and interest on that debt. During 2022, we expect to use cash holdings to repurchase or retire $600,000 in senior notes maturing in September 2022. Future interest payments on our outstanding senior notes total approximately $242,800, with approximately $43,700 due within twelve months, (ii) payment obligations totaling approximately $300,000 under existing LPAs for deposits to be paid to land developers, assuming that contractual development milestones are met by the developers and we exercise our option to acquire finished lots under those LPAs. We expect to make the majority of these payments within the next three years, and (iii) obligations under operating and finance leases related primarily to office space and our production facilities (see Part I, Item 2 and Note 13 of this Form 10-K for additional discussion of our properties and leases, respectively).
In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions. This ongoing repurchase program assists us in accomplishing our primary objective, creating increases in shareholder value. See “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities” in Item 5 of this Form 10-K for disclosure of amounts repurchased during the fourth quarter of 2021. For the year ended December 31, 2021, we repurchased 322,038 shares of our common stock at an aggregate purchase price of $1,538,019. As of December 31, 2021, we had approximately $508,000 available under Board approved repurchase authorizations.
Capital Resources
Senior Notes
As of December 31, 2021, we had a total of $1,500,000 in outstanding Senior Notes, $600,000 of which mature in September 2022 and the remaining $900,000 mature in May 2030. The Senior Notes are senior unsecured obligations and rank equally in right of payment with any of our existing and future unsecured senior indebtedness, will rank senior in right of payment to any of our future indebtedness that is by its terms expressly subordinated to the Senior Notes and will be effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The indenture governing the Senior Notes does not contain any financial covenants; however, it does contain, among other items, and subject to certain exceptions, covenants that restrict our ability to create, incur, assume or guarantee secured debt, enter into sale and leaseback transactions and conditions related to mergers and/or the sale of assets. We were in compliance with all covenants under the Senior Notes at December 31, 2021.
Credit Agreement
We have a unsecured revolving credit agreement (the "Credit Agreement") with a group of lenders which may be used for working capital and general corporate purposes. The Credit Agreement provides for aggregate revolving loan commitments of $300,000 (the "Facility"). Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. In addition, the Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately $16,100 outstanding at December 31, 2021. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Credit Agreement as of December 31, 2021.
Repurchase Agreement
Our mortgage banking subsidiary, NVRM, has an unsecured revolving mortgage repurchase agreement (the "Repurchase Agreement") which is non-recourse to NVR. The purpose of the Repurchase Agreement is to finance the origination of mortgage loans by NVRM. The Repurchase Agreement provides borrowing capacity up to $150,000, subject to certain sublimits. The Repurchase Agreement expires on July 20, 2022. At December 31, 2021, there was no debt outstanding under the Repurchase Agreement and there were no borrowing base limitations.
See Note 9 of this Form 10-K for additional disclosures regarding our Senior Notes, Credit Agreement and Repurchase Agreement.
Cash Flows
For the year ended December 31, 2021, cash, restricted cash and cash equivalents decreased by $172,798. Net cash provided by operating activities was $1,242,393, due primarily to cash provided by earnings in 2021 and net proceeds of $344,750 from mortgage loan activity. Additionally, cash was provided by an increase in customer deposits of $176,705 attributable to the increase in our ending backlog year over year. Cash was primarily used to fund the increase in inventory of $238,284, attributable to an increase in units under construction at December 31, 2021 compared to December 31, 2020.
Net cash used in investing activities in 2021 was $18,179. Cash was used primarily for purchases of property, plant and equipment.
Net cash used by financing activities in 2021 was $1,397,012. Cash was used primarily to repurchase shares of our common stock under our ongoing common stock repurchase program as discussed above. Cash was provided from stock option exercise proceeds totaling $142,370.
For the year ended December 31, 2020, cash, restricted cash and cash equivalents increased by $1,648,978. Net cash provided by operating activities was $925,269, due primarily to cash provided by earnings in 2020 and net proceeds of $212,636 from mortgage loan activity. Additionally, cash was provided by an increase in customer deposits attributable to the increase in our ending backlog year over year. Cash was primarily used to fund the increase in inventory of $362,384, attributable to an increase in units under construction at December 31, 2020 compared to December 31, 2019.
Net cash used in investing activities in 2020 of $3,933 was primarily used for purchases of property, plant and equipment of $16,119, offset partially by the receipt of capital distributions from our unconsolidated JVs totaling $11,625.
Net cash provided by financing activities in 2020 was $727,642, due primarily to the net proceeds received from the issuance of the 2030 Senior Notes totaling $923,905 and by $180,866 in proceeds from stock option exercises in 2020. Cash was used during the period to repurchase 93,346 shares of our common stock at an aggregate purchase price of $371,078 under our ongoing common stock repurchase program discussed above.
At December 31, 2021 and 2020, the homebuilding segment had restricted cash of $60,730 and $28,912, respectively. Restricted cash in each year was attributable to customer deposits for certain home sales.
Critical Accounting Policies and Estimates
General
The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. We continually evaluate the estimates we use to prepare the consolidated financial statements and update those estimates as necessary. In general, our estimates are based on historical experience, on information from third party professionals, and other various assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ materially from those estimates made by management.
Homebuilding Inventory
The carrying value of inventory is stated at the lower of cost or market value. Cost of lots and completed and uncompleted housing units represent the accumulated actual cost of the units. Field construction supervisors’ salaries and related direct overhead expenses are included in inventory costs. Interest costs are not capitalized into inventory, with the exception of land under development and joint venture investments, as applicable. Upon settlement, the cost of the unit is expensed on a specific identification basis. Cost of building materials is determined on a first-in, first-out basis.
Sold inventory is evaluated for impairment based on the contractual sales price compared to the total estimated cost to construct. Unsold inventory is evaluated for impairment by analyzing recent comparable sales prices within the applicable community compared to the costs incurred to date plus the expected costs to complete. Any calculated impairments are recorded immediately in cost of sales.
Contract Land Deposits
We purchase finished lots under LPAs that require deposits that may be forfeited if we fail to perform under the contract. The deposits are in the form of cash or letters of credit in varying amounts and represent a percentage of the aggregate purchase price of the finished lots.
We maintain an allowance for losses on contract land deposits that reflects our judgment of the present loss exposure in the existing contract land deposit portfolio at the end of the reporting period. To analyze contract land deposit impairments, we conduct a loss contingency analysis each quarter. In addition to considering market and economic conditions, we assess contract land deposit impairments on a community-by-community basis pursuant to the purchase contract terms, analyzing quantitative and qualitative information including, as applicable, current sales absorption levels, recent sales’ profit margin, the dollar differential between the contractual purchase price and the current market price for lots, a developer’s performance, a developer’s financial ability or willingness to reduce lot prices to current market prices, if necessary, and the contract’s default status by either us or the developer along with an analysis of the expected outcome of any such default.
Our analysis is focused on whether we can sell houses at an acceptable profit margin and sales pace in a particular community in the current market with which we are faced. Because we do not own the finished lots on which we had placed a contract land deposit, if the above analysis leads to a determination that we cannot sell homes at an acceptable profit margin and sales pace at the current contractual lot price, we then determine whether we will elect to default under the contract, forfeit our deposit and terminate the contract, or whether we will attempt to restructure the LPA, which may require us to forfeit the deposit to obtain contract concessions from a developer. We also assess whether an impairment is present due to collectability issues resulting from a developer’s non-performance because of financial or other conditions.
Although we consider the allowance for losses on contract land deposits reflected on the December 31, 2021 consolidated balance sheet to be adequate (see Note 1 to the accompanying consolidated financial statements included herein), there can be no assurance that this allowance will prove to be adequate over time to cover losses due to unanticipated adverse changes in the economy or other events adversely affecting specific markets or the homebuilding industry.
Warranty/Product Liability Reserves
We establish warranty and product liability reserves to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to our homebuilding business. Liability estimates are determined based on our judgment considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and
subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with our General Counsel and outside counsel retained to handle specific product liability cases. Although we consider the warranty and product liability accrual reflected on the December 31, 2021 consolidated balance sheet to be adequate (see Note 14 to the accompanying consolidated financial statements included herein), there can be no assurance that this accrual will prove to be adequate over time to cover losses due to increased costs for material and labor, the inability or refusal of manufacturers or subcontractors to financially participate in corrective action, unanticipated adverse legal settlements, or other unanticipated changes to the assumptions used to estimate the warranty and product liability accrual.
Equity-Based Compensation
We recognize equity-based compensation expense within our income statement for all share-based payment arrangements, which include non-qualified stock options to purchase shares of NVR common stock ("Options") and restricted share units ("RSUs"). Compensation expense is based on the grant-date fair value of the Options and RSUs granted, and is recognized on a straight-line basis over the requisite service period for the entire award (from the date of grant through the period of the last separately vesting portion of the grant). Options and RSUs which are subject to a performance condition are treated as a separate award from the “service-only” Options and RSUs, and compensation expense is recognized when it becomes probable that the stated performance target will be achieved. We calculate the fair value of our Options, which are non-publicly traded, using the Black-Scholes option-pricing model. The grant date fair value of the RSUs is the closing price of our common stock on the day immediately preceding the date of grant. The reversal of compensation expense previously recognized for grants forfeited is recorded in the period in which the forfeiture occurs.
As noted above, we calculate the fair value of our Options, which are non-publicly traded, using the Black-Scholes option-pricing model. While the Black-Scholes model is a widely accepted method to calculate the fair value of options, its results are dependent on input variables, two of which, expected term and expected volatility, are significantly dependent on management’s judgment. We have concluded that our historical exercise experience is the best estimate of future exercise patterns to determine an Option’s expected term. To estimate expected volatility, we analyze the historical volatility of our common stock over a period equal to the Option’s expected term. Changes in management’s judgment of the expected term and the expected volatility could have a material effect on the grant-date fair value calculated and expensed within the income statement.
In addition, when recognizing equity-based compensation cost related to “performance condition” Option and RSU grants, we are required to make a determination as to whether the performance conditions will be met prior to the completion of the actual performance period. The performance metric is based on our return on capital performance during a specified three year period based on the date of Option grant. While we currently believe that this performance condition will be satisfied at the target level and are recognizing compensation expense related to such Options and RSUs accordingly, our future expected activity levels could cause us to make a different determination, resulting in a change to the compensation expense to be recognized related to performance condition Option and RSU grants that would otherwise have been recognized to date.
Although we believe that the compensation costs recognized in 2021 are representative of the cumulative ratable amortization of the grant-date fair value of unvested Options and RSUs outstanding, changes to the estimated input values such as expected term and expected volatility and changes to the determination of whether performance condition grants will vest, could produce widely different expense valuations and recognition.
Mortgage Repurchase Reserve
We originate several different loan products to our customers to finance the purchase of their home. We sell all of the loans we originate into the secondary mortgage market, on a servicing released basis, typically within 30 days from closing. All of the loans that we originate are underwritten to the standards and specifications of the ultimate investor. Those underwriting standards are typically equal to or more stringent than the underwriting standards required by FNMA, GNMA, FHLMC, VA and FHA. Insofar as we underwrite our originated loans to those standards, we bear no increased concentration of credit risk from the issuance of loans, except in certain limited instances where repurchases or early payment default occur. We employ a quality control department to ensure that our underwriting controls are effectively operating, and further assess the underwriting function as part of our assessment of internal controls over financial reporting. We maintain a reserve for losses on mortgage loans originated that reflects our judgment of the present loss exposure in the loans that we have originated and sold. The reserve is calculated based on an analysis of historical experience and exposure. Although we consider the mortgage repurchase reserve reflected on the December 31, 2021 consolidated balance sheet to be adequate (see Note 16 to the accompanying consolidated financial statements included herein), there can be no assurance that this reserve will prove to be adequate over time to cover losses due to unanticipated changes to the assumptions used to estimate the mortgage repurchase reserve.
Impact of Inflation, Changing Prices and Economic Conditions
See “Risk Factors” included in Item 1A of this Form 10-K for a description of the impact of inflation, changing prices and economic conditions on our business and our financial results. See also the discussion of the current business environment in the Overview section above.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosure About Market Risk.
(dollars in thousands)
Market risk is the risk of loss arising from adverse changes in market prices and interest rates. Our market risk arises from interest rate risk inherent in our financial instruments and debt obligations. Interest rate risk results from the possibility that changes in interest rates will cause unfavorable changes in net income or in the value of interest rate-sensitive assets, liabilities and commitments. Lower interest rates tend to increase demand for mortgage loans for home purchasers, while higher interest rates make it more difficult for potential borrowers to purchase residential properties and to qualify for mortgage loans. We have no market rate sensitive instruments held for speculative or trading purposes.
We are exposed to interest rate risk as it relates to our fixed rate debt, primarily our Senior Notes and our variable rate credit facility and loan repurchase facility. Changes to interest rates generally affect the fair value of fixed-rate debt instruments, but not earnings or cash flows. For variable rate debt, interest rate changes generally will not affect the fair value of the variable debt instruments but will affect earnings and cash flow. At December 31, 2021, there was no debt outstanding under our credit facility or loan repurchase facility. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 9 to the accompanying consolidated financial statements included herein for further discussion of these debt instruments.
Our mortgage banking segment is exposed to interest rate risk as it relates to its lending activities, including originating mortgage loans and providing rate lock commitments to borrowers. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, we enter into optional or mandatory delivery forward sales contracts to sell whole loans and mortgage-backed securities to investors. The forward sales contracts lock-in a range of interest rates and prices for the sale of loans similar to the specific rate lock commitments. We do not engage in speculative or trading derivative activities. All of the mortgage banking segment’s loan portfolio is held for sale and subject to forward sale commitments. See Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 15 to the accompanying consolidated financial statements included herein for further discussion of these items.
The following table represents the contractual balances of our on-balance sheet financial instruments at the expected maturity dates, as well as the fair values of those on-balance sheet financial instruments at December 31, 2021. The expected maturity categories take into consideration the actual and anticipated amortization of principal and do not take into consideration the reinvestment of cash or the refinancing of existing indebtedness. Because we sell all of the mortgage loans we originate into the secondary markets, we have made the assumption that the portfolio of mortgage loans held for sale will mature in the first year.
Maturities (000's)
2022 2023 2024 2025 2026 Thereafter Total Fair
Value
Mortgage banking segment
Interest rate sensitive assets:
Mortgage loans held for sale $ 297,896 - - - - - $ 297,896 $ 302,192
Average interest rate 3.0 % - - - - - 3.0 %
Other:
Forward trades of mortgage-backed securities (a) $ (218) - - - - - $ (218) $ (218)
Forward loan commitments (a) $ 14,159 - - - - - $ 14,159 $ 14,159
Homebuilding segment
Interest rate sensitive assets:
Interest-bearing deposits $ 2,251,298 - - - - - $ 2,251,298 $ 2,251,298
Average interest rate 0.1 % - - - - - 0.1 %
Interest rate sensitive liabilities:
Fixed rate obligations $ 600,000 - - - $ 900,000 $ 1,500,000 $ 1,552,644
Average interest rate 4.0 % - - - 2.7 % 3.2 %
(a)Represents the fair value recorded pursuant to ASC 815, Derivatives and Hedging.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
The financial statements listed in Item 15 are filed as part of this report and are incorporated herein by reference.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”).
Based on that evaluation, the principal executive officer and principal financial officer concluded that the design and operation of these disclosure controls and procedures as of December 31, 2021 were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework in Internal Control - Integrated Framework (2013), our management concluded that our internal control over financial reporting was effective as of December 31, 2021. There have been no changes in our internal control over financial reporting identified in connection with the evaluation referred to above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Our internal control over financial reporting as of December 31, 2021 has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report which is included herein.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
Effective February 16, 2022, Paul W. Praylo no longer serves as Senior Vice President and Chief Operating Officer, and now serves NVR as Area President, a non-executive officer position.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers, and Corporate Governance.
Our executive officers are:
Name Age Title
Paul C. Saville 66 President and Chief Executive Officer
Daniel D. Malzahn 52 Senior Vice President, Chief Financial Officer and Treasurer
Eugene J. Bredow 52 President, NVR Mortgage
Matthew B. Kelpy 48 Vice President and Chief Accounting Officer
The remaining information required by this item will be included under the captions "Proposal No.1 - Election of Directors", "Executive Summary" within "Compensation Discussion and Analysis", "Corporate Governance Principles and Board Matters" and "Delinquent Section 16(a) Reports" within "Security Ownership of Beneficial Owners and Management" in our definitive Proxy Statement for the 2022 Annual Meeting of Shareholders ("2022 Proxy Statement") and is incorporated herein by reference. Our 2022 Proxy Statement is expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2022.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
The information required by this item will be included under the caption "Compensation Discussion and Analysis" in our 2022 Proxy Statement and is incorporated herein by reference. Our 2022 Proxy Statement is expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2022.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table summarizes our equity compensation plans as of December 31, 2021:
Plan category Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights Weighted-average
exercise price of
outstanding options,
warrants and rights Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in the
first column)
Equity compensation plans approved by security holders (1) 551,259 $ 2,351.77 266,212
Equity compensation plans not approved by security holders - $ - -
Total 551,259 $ 2,351.77 266,212
(1)This category includes the restricted share units (“RSUs”) authorized to be issued under the 2010 and 2018 Equity Incentive Plans. At December 31, 2021, there were 16,564 RSUs outstanding. Of the total 266,212 shares remaining available for future issuance under the shareholder approved plans, up to a total of 36,470 may be issued as RSUs. The weighted-average exercise price of outstanding options under security holder approved plans was $2,424.62.
The remaining information required by this item will be included under the caption "Security Ownership of Certain Beneficial Owners and Management" in our 2022 Proxy Statement and is incorporated herein by reference. Our 2022 Proxy Statement is expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2022.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item will be included under the caption "Corporate Governance Principles and Board Matters" in our 2022 Proxy Statement and is incorporated herein by reference. Our 2022 Proxy Statement is expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2022.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services.
The information required by this item will be included under the caption "Proposal No. 2 - Ratification of Appointment of Independent Auditor" in our 2022 Proxy Statement and is incorporated herein by reference. Our 2022 Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2022.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
The following documents are filed as part of this report:
1. Financial Statements
NVR, Inc. - Consolidated Financial Statements
Reports of Independent Registered Public Accounting Firm (KPMG LLP, McLean, VA, Auditor Firm ID: 185)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Shareholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Exhibits
Incorporated by Reference
Exhibit Number Exhibit Description Form File
Number Exhibit
Number Filing Date
3.1 Restated Articles of Incorporation of NVR, Inc.
10-K 3.1 2/25/2011
3.2 Bylaws, as amended, of NVR, Inc.
8-K 3.1 3/17/2016
4.1 Indenture dated as of April 14, 1998 between NVR, Inc., as issuer and the Bank of New York as trustee.
8-K 4.3 4/23/1998
4.2 Form of Note (included in Indenture).
8-K 4.5 4/23/1998
4.3 Fifth Supplemental Indenture dated September 10, 2012 among NVR, Inc. and U.S. Bank Trust National Association.
8-K 4.1 9/10/2012
4.4 Sixth Supplemental Indenture dated as of May 4, 2020 among NVR, Inc. and U.S. Bank Trust National Association.
8-K 4.1 5/4/2020
4.5 Seventh Supplemental Indenture dated September 9, 2020 between NVR, Inc. and U.S. Bank Trust National Association.
8-K 4.1 9/9/2020
4.6 Eighth Supplemental Indenture dated September 17, 2020 between NVR, Inc. and U.S. Bank Trust National Association.
8-K 4.2 9/17/2020
4.7 Form of Global Note.
8-K 4.2 9/10/2012
4.8 Description of Securities of NVR, Inc.
10-K 4.5 2/19/2020
10.1* Amended and Restated Employment Agreement between NVR, Inc. and Paul C. Saville dated November 4, 2015.
10-Q 10.1 11/6/2015
10.2* Amended and Restated Employment Agreement between NVR, Inc. and Daniel D. Malzahn dated November 4, 2015.
10-Q 10.2 11/6/2015
10.3* Amended and Restated Employment Agreement between NVR, Inc. and Eugene J. Bredow dated November 4, 2015.
10-Q 10.4 11/6/2015
10.4* Amendment No. 1 to Employment Agreement between NVR, Inc. and Eugene J. Bredow dated March 1, 2018.
10-Q 10.1 5/1/2018
10.5* Amendment No. 2 to Employment Agreement between NVR, Inc. and Eugene J. Bredow dated April 1, 2019.
10-Q 10.2 5/1/2019
10.6* Employment Agreement between NVR, Inc. and Paul W. Praylo dated January 28, 2019.
10-K 10.8 2/13/2019
10.7* Extension of Employment Agreement between NVR, Inc. and Paul C. Saville date November 4, 2020.
10-Q 10.1 11/4/2020
Incorporated by Reference
Exhibit Number Exhibit Description Form File
Number Exhibit
Number Filing Date
10.8* Extension of Employment Agreement between NVR, Inc. and Daniel D. Malzahn date November 4, 2020.
10-Q 10.2 11/4/2020
10.9* Extension of Employment Agreement between NVR, Inc. and Paul W. Praylo date November 4, 2020.
10-Q 10.3 11/4/2020
10.10* Extension of Employment Agreement between NVR, Inc. and Eugene J. Bredow date November 4, 2020.
10-Q 10.4 11/4/2020
10.11* Profit Sharing Plan of NVR, Inc. and Affiliated Companies.
S-8 333-29241 4.1 6/13/1997
10.12* Employee Stock Ownership Plan of NVR, Inc. 10-K/A 12/31/1994
10.13* Amended and Restated NVR, Inc. Nonqualified Deferred Compensation Plan.
10-Q 10.5 11/6/2015
10.14* First Amendment to NVR, Inc. Nonqualified Deferred Compensation Plan.
10-K 10.36 2/15/2017
10.15* Description of the Board of Directors’ compensation arrangement.
10-K 10.15 2/13/2019
10.16* NVR, Inc. 2018 Equity Incentive Plan
S-8 333-224629 10.1 5/3/2018
10.17* The Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.
8-K 10.1 5/14/2018
10.18* The Form of Non-Qualified Stock Option Agreement (Director time-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.
8-K 10.2 5/14/2018
10.19* The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.
8-K 10.3 5/14/2018
10.20* The Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.
8-K 10.4 5/14/2018
10.21* The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2018 Equity Incentive Plan.
8-K 10.5 5/14/2018
10.22* The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2018 Equity Incentive Plan.
8-K 10.6 5/14/2018
10.23* NVR, Inc. 2014 Equity Incentive Plan.
S-8 333-195756 10.1 5/7/2014
10.24* The Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.
10-K 10.2 2/14/2018
10.25* The Form of Non-Qualified Stock Option Agreement (Director time-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.
8-K 10.2 5/7/2014
10.26* The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.
10-K 10.17 2/14/2018
10.27* The Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.
8-K 10.4 5/7/2014
10.28* NVR, Inc. 2010 Equity Incentive Plan.
S-8 333-166512 10.1 5/4/2010
10.29* The Amended Form of Non-Qualified Stock Option Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive Plan.
10-K 10.29 2/13/2019
Incorporated by Reference
Exhibit Number Exhibit Description Form File
Number Exhibit
Number Filing Date
10.30* The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2010 Equity Incentive Plan.
10-K 10.30 2/13/2019
10.31* The Form of Non-Qualified Stock Option Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive Plan.
8-K 10.2 5/6/2010
10.32* The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive Plan.
10-Q 10.2 7/30/2013
10.33* The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive Plan.
8-K 10.4 5/6/2010
10.34 Amended and Restated Master Repurchase Agreement dated as of August 2, 2011, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.1 1/21/2016
10.35 First Amendment to Amended and Restated Master Repurchase Agreement dated as of August 1, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.2 1/21/2016
10.36 Second Amendment to Amended and Restated Master Repurchase Agreement dated as of November 13, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.3 1/21/2016
10.37 Third Amendment to Amended and Restated Master Repurchase Agreement dated as of November 29, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.4 1/21/2016
10.38 Fourth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 31, 2013, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.5 1/21/2016
10.39 Fifth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 30, 2014, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.6 1/21/2016
10.40 Sixth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 29, 2015, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.7 1/21/2016
10.41 Seventh Amendment to Amended and Restated Master Repurchase Agreement dated as of January 18, 2016, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
8-K 10.8 1/21/2016
10.42 Eighth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 27, 2016, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
10-Q 10.2 7/28/2016
10.43 Ninth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 26, 2017, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
10-Q 10.1 7/28/2017
10.44 Tenth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 25, 2018 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
10-Q 10.1 7/30/2018
Incorporated by Reference
Exhibit Number Exhibit Description Form File
Number Exhibit
Number Filing Date
10.45 Eleventh Amendment to Amended and Restated Master Repurchase Agreement dated as of July 24, 2019 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
10-Q 10.1 7/31/2019
10.46 Twelfth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 8, 2020 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
10-Q 10.1 8/3/2020
10.47 Thirteenth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 21, 2021 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.
10-Q 10.1 8/3/2021
10.48 Credit Agreement dated as of July 15, 2016 among NVR, Inc. and the lenders party hereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arranger and Sole Book Runner.
8-K 10.1 7/18/2016
10.49* Summary of 2022 Executive Officer Incentive Compensation plan. Filed herewith.
21 NVR, Inc. Subsidiaries. Filed herewith.
23 Consent of KPMG LLP (Independent Registered Public Accounting Firm). Filed herewith.
31.1 Certification of NVR’s Chief Executive Officer pursuant to Rule 13a-14(a). Filed herewith.
31.2 Certification of NVR’s Chief Financial Officer pursuant to Rule 13a-14(a). Filed herewith.
32 Certification of NVR’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF XBRL Taxonomy Extension Definition Linkbase Document
101.LAB XBRL Taxonomy Extension Label Linkbase Document
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
* Exhibit is a management contract or compensatory plan or arrangement.