Financial Services	9 Months Ended
Sep. 30, 2024
Financial Services [Abstract]
Financial Services	5. Financial Services Our Financial Services are principally comprised of our mortgage lending operations, Inspire Home Loans Inc. (which we refer to as “Inspire”). Inspire is a full-service mortgage lender and primarily originates mortgage loans for our homebuyers. Inspire sells substantially all of the loans it originates either as loans with servicing rights released, or with servicing rights retained, in the secondary mortgage market within a short period of time after origination, generally within 30 days. Inspire primarily finances these loans using its mortgage repurchase facilities. Mortgage loans held for sale and mortgage servicing rights are carried at fair value, with gains and losses from the changes in fair value reflected in financial services revenue on the consolidated statements of operations. Management believes carrying mortgage loans held for sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them. Net gains and losses from the sale of mortgage loans held for sale, which are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale, are also included in financial services revenue on the consolidated statements of operations. Financial services revenue also includes fees earned from originating mortgage loans, which are recognized at the time the mortgage loans are funded, which include origination fees and discount points provided directly to our customers to reduce interest rates based on commitment agreements entered into between our homebuilding and Financial Services segments. Intercompany fees charged directly to the homebuilder are eliminated from financial services revenue on the condensed consolidated statements of operations upon consolidation. As of September 30, 2024 and December 31, 2023, Inspire had mortgage loans held for sale with an aggregate fair value of $257.2 million and $251.9 million, respectively, and an aggregate outstanding principal balance of $257.1 million and $247.7 million, respectively. Net losses on the sale of mortgage loans were $1.1 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, and were $6.9 million and $3.4 million for the three and nine months ended September 30, 2023, respectively. The gain from the change in fair value for mortgage loans held for sale was $0.1 million for the three months ended September 30, 2024, and the loss from the change in fair value for mortgage loans held for sale was $4.1 million for the nine months ended September 30, 2024. Losses from the change in fair value for mortgage loans held for sale were $2.9 million and $4.9 million for the three and nine months ended September 30, 2023, respectively. Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $146.0 million and $49.6 million at September 30, 2024 and December 31, 2023, respectively, and carried a weighted average interest rate of approximately 4.9% and 5.8%, respectively. Interest rate risks related to these obligations are typically mitigated through our interest rate hedging program or by the preselling of loans to investors. Derivative instruments used to economically hedge our market and interest rate risk are carried at fair value. Derivative instruments typically include interest rate lock commitments and forward commitments on mortgage-backed securities. Changes in fair value of these derivatives as well as any gains or losses upon settlement are reflected in financial services revenue on our condensed consolidated statements of operations. Refer to Note 13 – Fair Value Disclosures for further information regarding our derivative instruments.

Financial Services

9 Months Ended

Sep. 30, 2024

5. Financial Services

Our Financial Services are principally comprised of our mortgage lending operations, Inspire Home Loans Inc. (which we refer to as “Inspire”). Inspire is a full-service mortgage lender and primarily originates mortgage loans for our homebuyers. Inspire sells substantially all of the loans it originates either as loans with servicing rights released, or with servicing rights retained, in the secondary mortgage market within a short period of time after origination, generally within 30 days. Inspire primarily finances these loans using its mortgage repurchase facilities.

Mortgage loans held for sale and mortgage servicing rights are carried at fair value, with gains and losses from the changes in fair value reflected in financial services revenue on the consolidated statements of operations. Management believes carrying mortgage loans held for sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them. Net gains and losses from the sale of mortgage loans held for sale, which are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale, are also included in financial services revenue on the consolidated statements of operations. Financial services revenue also includes fees earned from originating mortgage loans, which are recognized at the time the mortgage loans are funded, which include origination fees and discount points provided directly to our customers to reduce interest rates based on commitment agreements entered into between our homebuilding and Financial Services segments. Intercompany fees charged directly to the homebuilder are eliminated from financial services revenue on the condensed consolidated statements of operations upon consolidation.

As of September 30, 2024 and December 31, 2023, Inspire had mortgage loans held for sale with an aggregate fair value of $257.2 million and $251.9 million, respectively, and an aggregate outstanding principal balance of $257.1 million and $247.7 million, respectively. Net losses on the sale of mortgage loans were $1.1 million and $4.9 million for the three and nine months ended September 30, 2024, respectively, and were $6.9 million and $3.4 million for the three and nine months ended September 30, 2023, respectively. The gain from the change in fair value for mortgage loans held for sale was $0.1 million for the three months ended September 30, 2024, and the loss from the change in fair value for mortgage loans held for sale was $4.1 million for the nine months ended September 30, 2024. Losses from the change in fair value for mortgage loans held for sale were $2.9 million and $4.9 million for the three and nine months ended September 30, 2023, respectively.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $146.0 million and $49.6 million at September 30, 2024 and December 31, 2023, respectively, and carried a weighted average interest rate of approximately 4.9% and 5.8%, respectively. Interest rate risks related to these obligations are typically mitigated through our interest rate hedging program or by the preselling of loans to investors. Derivative instruments used to economically hedge our market and interest rate risk are carried at fair value. Derivative instruments typically include interest rate lock commitments and forward commitments on mortgage-backed securities. Changes in fair value of these derivatives as well as any gains or losses upon settlement are reflected in financial services revenue on our condensed consolidated statements of operations. Refer to Note 13 – Fair Value Disclosures for further information regarding our derivative instruments.