Warranties

12 Months Ended

Dec. 31, 2020

Warranties [Abstract]

Warranties

9. Warranties

Estimated future direct warranty costs are accrued and charged to cost of home sales revenues in the period when the related home sales revenues are recognized. Amounts accrued, which are included in accrued expenses and other liabilities on the consolidated balance sheets, are based upon historical experience rates. We subsequently assess the adequacy of our warranty accrual on a quarterly basis through a model that incorporates historical payment trends and adjust the amounts recorded if necessary. Based on favorable warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $2.4 million, $1.9 million and $3.4 million during the years ended December 31, 2020, 2019 and 2018, respectively, which is included as a reduction to cost of home

sales revenues on our consolidated statements of operations.  Changes in our warranty accrual for the years ended December 31, 2020, 2019, and 2018 are detailed in the table below (in thousands):

	Year ended December 31,
	2020		2019		2018
Beginning balance	$	9,731	$	7,970	$	8,531
Warranty reserve assumed in business combination		—		—		397
Warranty expense provisions		9,592		7,727		6,686
Payments		(3,056)		(4,024)		(4,204)
Warranty adjustment		(2,443)		(1,942)		(3,440)
Ending balance	$	13,824	$	9,731	$	7,970