10-Q

Table Of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 1-8951

M.D.C. HOLDINGS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	84-0622967
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification no.)

4350 South Monaco Street, Suite 500	80237
Denver, Colorado	(Zip code)
(Address of principal executive offices)

(303) 773-1100

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☒  No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ☒  No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐  (Do not check if a smaller reporting company)	Smaller Reporting Company	☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ☐  No  ☒

As of October 31, 2016, 49,033,981 shares of M.D.C. Holdings, Inc. common stock were outstanding. 

M.D.C. HOLDINGS, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2016

INDEX

			Page No.
Part I. Financial Information:
	Item 1.	Unaudited Consolidated Financial Statements:
		Consolidated Balance Sheets at September 30, 2016 and December 31, 2015	1
		Consolidated Statements of Operations and Comprehensive Income for the three and nine months ended September 30, 2016 and 2015	2
		Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015	3
		Notes to Unaudited Consolidated Financial Statements	4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	42
	Item 4.	Controls and Procedures	43
Part II. Other Information:
	Item 1.	Legal Proceedings	44
	Item 1A.	Risk Factors	44
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
	Item 3.	Defaults Upon Senior Securities	45
	Item 4.	Mine Safety Disclosures	45
	Item 5.	Other Information	45
	Item 6.	Exhibits	46
	Signature		46

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Table Of Contents

PART I

ITEM 1.     Unaudited Consolidated Financial Statements

M.D.C. HOLDINGS, INC.

Consolidated Balance Sheets.

	September 30,		December 31,
	2016		2015
	(Dollars in thousands, except
	per share amounts)
	(Unaudited)
ASSETS
Homebuilding:
Cash and cash equivalents	$	129,278	$	144,342
Marketable securities		57,116		92,387
Restricted cash		4,621		3,750
Trade and other receivables		43,082		23,314
Inventories:
Housing completed or under construction		976,372		747,036
Land and land under development		870,733		1,016,926
Total inventories		1,847,105		1,763,962
Property and equipment, net		28,749		28,226
Deferred tax asset, net		85,128		99,107
Metropolitan district bond securities (related party)		29,132		25,911
Prepaid and other assets		66,195		65,394
Total homebuilding assets		2,290,406		2,246,393
Financial Services:
Cash and cash equivalents		34,180		36,646
Marketable securities		22,105		11,307
Mortgage loans held-for-sale, net		117,989		115,670
Other assets		9,590		5,883
Total financial services assets		183,864		169,506
Total Assets	$	2,474,270	$	2,415,899
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	54,117	$	40,472
Accrued liabilities		122,227		122,886
Revolving credit facility		15,000		15,000
Senior notes, net		841,359		840,524
Total homebuilding liabilities		1,032,703		1,018,882
Financial Services:
Accounts payable and accrued liabilities		56,934		52,114
Mortgage repurchase facility		92,011		88,611
Total financial services liabilities		148,945		140,725
Total Liabilities		1,181,648		1,159,607
Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding		-		-
Common stock, $0.01 par value; 250,000,000 shares authorized; 49,033,981 and 48,888,424 issued and outstanding at September 30, 2016 and December 31, 2015, respectively		490		489
Additional paid-in-capital		922,132		915,746
Retained earnings		350,414		324,342
Accumulated other comprehensive income		19,586		15,715
Total Stockholders' Equity		1,292,622		1,256,292
Total Liabilities and Stockholders' Equity	$	2,474,270	$	2,415,899

The accompanying Notes are an integral part of these Unaudited Consolidated Financial Statements.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Operations and Comprehensive Income

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per share amounts)
	(Unaudited)
Homebuilding:
Home sale revenues	$	575,722		$	454,740		$	1,541,337		$	1,293,457
Land sale revenues		2,290			906			4,930			1,816
Total home and land sale revenues		578,012			455,646			1,546,267			1,295,273
Home cost of sales		(481,511	)		(375,948	)		(1,287,373	)		(1,079,609	)
Land cost of sales		(2,318	)		(819	)		(4,197	)		(1,944	)
Inventory impairments		(4,700	)		(4,351	)		(6,300	)		(4,701	)
Total cost of sales		(488,529	)		(381,118	)		(1,297,870	)		(1,086,254	)
Gross margin		89,483			74,528			248,397			209,019
Selling, general and administrative expenses		(61,904	)		(57,444	)		(182,621	)		(162,757	)
Interest and other income		1,869			838			5,358			5,412
Other expense		(1,558	)		(350	)		(2,463	)		(2,539	)
Other-than-temporary impairment of marketable securities		(215	)		(2,176	)		(934	)		(2,176	)
Homebuilding pretax income		27,675			15,396			67,737			46,959
Financial Services:
Revenues		17,408			12,841			44,248			34,852
Expenses		(7,955	)		(5,464	)		(21,739	)		(15,830	)
Interest and other income		1,035			885			2,648			2,885
Other-than-temporary impairment of marketable securities		(111	)		-			(111	)		-
Financial services pretax income		10,377			8,262			25,046			21,907
Income before income taxes		38,052			23,658			92,783			68,866
Provision for income taxes		(11,693	)		(8,880	)		(29,948	)		(25,670	)
Net income	$	26,359		$	14,778		$	62,835		$	43,196
Other comprehensive income (loss) related to available for sale securities, net of tax		1,028			(226	)		3,871			722
Comprehensive income	$	27,387		$	14,552		$	66,706		$	43,918
Earnings per share:
Basic	$	0.54		$	0.30		$	1.28		$	0.88
Diluted	$	0.54		$	0.30		$	1.28		$	0.88
Weighted average common shares outstanding
Basic		48,854,412			48,785,973			48,844,613			48,756,265
Diluted		49,009,949			49,070,291			48,855,014			48,982,975
Dividends declared per share	$	0.25		$	0.25		$	0.75		$	0.75

The accompanying Notes are an integral part of these Unaudited Consolidated Financial Statements.

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M.D.C. HOLDINGS, INC.

Consolidated Statements of Cash Flows

	Nine Months Ended
	September 30,
	2016			2015
	(Dollars in thousands)
	(Unaudited)
Operating Activities:
Net income	$	62,835		$	43,196
Adjustments to reconcile net income to net cash used in operating activities:
Stock-based compensation expense		6,636			6,589
Depreciation and amortization		3,702			3,084
Inventory impairments		6,300			4,701
Other-than-temporary impairment of marketable securities		1,045			2,176
Loss (gain) on sale of marketable securities		(911	)		126
Amortization of discount / premiums on marketable debt securities, net		-			100
Deferred income tax expense		11,357			24,782
Net changes in assets and liabilities:
Restricted cash		(871	)		(1,984	)
Trade and other receivables		(21,679	)		(575	)
Mortgage loans held-for-sale		(2,319	)		19,759
Housing completed or under construction		(229,739	)		(89,841	)
Land and land under development		141,131			(25,805	)
Other assets		(4,573	)		(8,072	)
Accounts payable and accrued liabilities		18,183			(4,722	)
Net cash used in operating activities		(8,903	)		(26,486	)
Investing Activities:
Purchases of marketable securities		(28,272	)		(46,886	)
Maturities of marketable securities		-			1,510
Sales of marketable securities		56,873			94,910
Purchases of property and equipment		(3,865	)		(830	)
Net cash provided by investing activities		24,736			48,704
Financing Activities:
Advances (payments) on mortgage repurchase facility, net		3,400			(17,067	)
Advances on revolving credit facility		-			-
Dividend payments		(36,763	)		(36,646	)
Proceeds from exercise of stock options		-			665
Net cash used in financing activities		(33,363	)		(53,048	)
Net decrease in cash and cash equivalents		(17,530	)		(30,830	)
Cash and cash equivalents:
Beginning of period		180,988			153,825
End of period	$	163,458		$	122,995

The accompanying Notes are an integral part of these Unaudited Consolidated Financial Statements.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

1.             Basis of Presentation

The Unaudited Consolidated Financial Statements of M.D.C. Holdings, Inc. ("MDC," “the Company," “we,” “us,” or “our” which refers to M.D.C. Holdings, Inc. and its subsidiaries) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of MDC at September 30, 2016 and for all periods presented. These statements should be read in conjunction with MDC’s Consolidated Financial Statements and Notes thereto included in MDC’s Annual Report on Form 10-K for the year ended December 31, 2015.

2.             Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which is a comprehensive new revenue recognition model. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for our interim and annual reporting periods beginning January 1, 2018, and is to be adopted using either a full retrospective or modified retrospective transition method. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We do not plan to early adopt the guidance and are currently evaluating the method of adoption and impact the update will have on our consolidated financial statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis (“ASU 2015-02”), which amends the consolidation requirements in Accounting Standards Codification (“ASC”) Topic 810, Consolidation, primarily related to limited partnerships and variable interest entities. ASU 2015-02 was effective for our interim and annual reporting periods beginning January 1, 2016 and did not have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which makes a number of changes to the current GAAP model, including changes to the accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under ASU 2016-01, we will primarily be impacted by the changes to accounting for equity instruments with readily determinable fair values as they will no longer be permitted to be classified as available-for-sale (changes in fair value reported through other comprehensive income) and instead, all changes in fair value will be reported in earnings. ASU 2016-01 is effective for our interim and annual reporting periods beginning January 1, 2018 and is to be applied using a modified retrospective transition method. Early adoption of the applicable guidance from ASU 2016-01 is not permitted. We are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”), which requires a lessee to recognize a right-of-use asset and a corresponding lease liability for virtually all leases. The liability will be equal to the present value of lease payments while the right-of-use asset will be based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU 2016-02 expands the disclosure requirements for lessees. ASU 2016-02 is effective for our interim and annual reporting periods beginning January 1, 2019 and is to be applied using a modified retrospective transition method. Early adoption is permitted. We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which amends ASC Topic 718, Compensation – Stock Compensation (“ASC 718”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for our interim and annual reporting periods beginning January 1, 2017, and is to be applied using a retrospective transition method. Early adoption is permitted. We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

In June 2016, the FASB issued ASU 2016-13,Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments(“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held. The amendments in ASU 2016-13 eliminate the probable threshold for initial recognition of a credit loss in current GAAP and reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 is effective for our interim and annual reporting periods beginning January 1, 2021, and is to be applied using a modified retrospective transition method. Earlier adoption is permitted. We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force) (“ASU 2016-15”), which amends ASC Topic 230, Statement of Cash Flows, to clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amendments in ASU 2016-15 are intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU 2016-15 is effective for our interim and annual reporting periods beginning January 1, 2018, and is to be applied using a retrospective transition method. Earlier adoption is permitted. We do not plan to early adopt the guidance and do not believe the guidance will have a material impact on our financial statements upon adoption.

3.             Segment Reporting

An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, to evaluate performance and make operating decisions. We have identified our CODM as two key executives—the Chief Executive Officer and the Chief Operating Officer.

We have identified each homebuilding division as an operating segment. Our homebuilding operating segments have been aggregated into the reportable segments noted below because they are similar in the following regards: (1) economic characteristics; (2) housing products; (3) class of homebuyer; (4) regulatory environments; and (5) methods used to construct and sell homes. Our homebuilding reportable segments are as follows:

● West (Arizona, California, Nevada and Washington)

● Mountain (Colorado and Utah)

● East (Virginia, Florida and Maryland, which includes Pennsylvania and New Jersey)

Our financial services business consists of the operations of the following operating segments: (1) HomeAmerican Mortgage Corporation (“HomeAmerican”); (2) Allegiant Insurance Company, Inc., A Risk Retention Group (“Allegiant”); (3) StarAmerican Insurance Ltd. (“StarAmerican”); (4) American Home Insurance Agency, Inc.; and (5) American Home Title and Escrow Company. Due to its contributions to consolidated pretax income, we consider HomeAmerican to be a reportable segment (“mortgage operations”). The remaining operating segments have been aggregated into one reportable segment (“other”) because they do not individually exceed 10 percent of: (1) consolidated revenue; (2) the greater of (a) the combined reported profit of all operating segments that did not report a loss or (b) the positive value of the combined reported loss of all operating segments that reported losses; or (3) consolidated assets.

Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating divisions by centralizing key administrative functions such as finance, treasury, information technology, insurance, risk management, litigation, and human resources. Corporate also provides the necessary administrative functions to support MDC as a publicly traded company. A portion of the expenses incurred by Corporate are allocated to the homebuilding operating segments based on their respective percentages of assets, and to a lesser degree, a portion of Corporate expenses are allocated to the financial services segments. A majority of Corporate’s personnel and resources are primarily dedicated to activities relating to the homebuilding segments, and, therefore, the balance of any unallocated Corporate expenses is included in our homebuilding operations.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

The following table summarizes home and land sale revenues for our homebuilding operations and revenues for our financial services operations.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Homebuilding
West	$	284,589	$	229,743	$	745,995	$	624,261
Mountain		192,876		147,166		521,034		428,080
East		100,547		78,737		279,238		242,932
Total home and land sale revenues	$	578,012	$	455,646	$	1,546,267	$	1,295,273
Financial Services
Mortgage operations	$	11,294	$	7,999	$	28,866	$	21,752
Other		6,114		4,842		15,382		13,100
Total financial services revenues	$	17,408	$	12,841	$	44,248	$	34,852

The following table summarizes pretax income (loss) for our homebuilding and financial services operations:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding
West	$	18,392		$	16,708		$	43,830		$	40,808
Mountain		18,856			12,849			49,688			35,239
East		(2,267	)		(691	)		3,600			(1,093	)
Corporate		(7,306	)		(13,470	)		(29,381	)		(27,995	)
Total homebuilding pretax income	$	27,675		$	15,396		$	67,737		$	46,959
Financial Services
Mortgage operations	$	6,723		$	5,354		$	16,491		$	12,243
Other		3,654			2,908			8,555			9,664
Total financial services pretax income	$	10,377		$	8,262		$	25,046		$	21,907
Total pretax income	$	38,052		$	23,658		$	92,783		$	68,866

The following table summarizes total assets for our homebuilding and financial services operations. The assets in our West, Mountain and East segments consist primarily of inventory while the assets in our Corporate segment primarily include our cash and cash equivalents, marketable securities and deferred tax assets. The assets in our financial services segment consist mostly of cash and cash equivalents, marketable securities and mortgage loans held-for-sale.

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Homebuilding assets
West	$	1,083,419	$	991,393
Mountain		588,976		536,831
East		285,528		324,457
Corporate		332,483		393,712
Total homebuilding assets	$	2,290,406	$	2,246,393
Financial services assets
Mortgage operations	$	129,545	$	123,176
Other		54,319		46,330
Total financial services assets	$	183,864	$	169,506
Total assets	$	2,474,270	$	2,415,899

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

4.             Earnings Per Share     

ASC Topic 260, Earnings Per Share (“ASC 260”), requires a company that has participating security holders (for example, holders of unvested restricted stock that has nonforfeitable dividend rights) to utilize the two-class method for calculating earnings per share (“EPS”) unless the treasury stock method results in lower EPS. The two-class method is an allocation of earnings/(loss) between the holders of common stock and a company’s participating security holders. Under the two-class method, earnings/(loss) for the reporting period are allocated between common shareholders and other security holders based on their respective rights to receive distributed earnings (i.e., dividends) and undistributed earnings (i.e., net income/(loss)). Our common shares outstanding are comprised of shareholder owned common stock and participating security holders consisting of shareholders of unvested restricted stock. Basic EPS is calculated by dividing income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding, excluding participating shares in accordance with ASC 260. To calculate diluted EPS, basic EPS is further adjusted to include the effect of potential dilutive stock options outstanding. The table below shows basic and diluted EPS calculations:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per share amounts)
Numerator
Net income	$	26,359		$	14,778		$	62,835		$	43,196
Less: distributed earnings allocated to participating securities		(45	)		(25	)		(124	)		(73	)
Less: undistributed earnings allocated to participating securities		(49	)		(6	)		(83	)		(15	)
Net income attributable to common stockholders (numerator for basic earnings per share)		26,265			14,747			62,628			43,108
Add back: undistributed earnings allocated to participating securities		49			6			83			15
Less: undistributed earnings reallocated to participating securities		(49	)		(6	)		(83	)		(15	)
Numerator for diluted earnings per share under two class method	$	26,265		$	14,747		$	62,628		$	43,108
Denominator
Weighted-average common shares outstanding		48,854,412			48,785,973			48,844,613			48,756,265
Add: dilutive effect of stock options		155,537			284,318			10,401			226,710
Denominator for diluted earnings per share under two class method		49,009,949			49,070,291			48,855,014			48,982,975
Basic Earnings Per Common Share	$	0.54		$	0.30		$	1.28		$	0.88
Diluted Earnings Per Common Share	$	0.54		$	0.30		$	1.28		$	0.88

Diluted EPS for the three and nine months ended September 30, 2016 excluded options to purchase approximately 5.3 million and 6.4 million shares, respectively, of common stock because the effect of their inclusion would be anti-dilutive. For the same periods in 2015, diluted EPS excluded options to purchase approximately 3.4 million and 3.9 million shares, respectively.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

5.             Accumulated Other Comprehensive Income

The following table sets forth our changes in accumulated other comprehensive income (“AOCI”):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016		2015
	(Dollars in thousands)
Unrealized gains (losses) on available-for-sale marketable securities (1) :
Beginning balance	$	5,344		$	1,589		$	3,657	$	2,775
Other comprehensive income (loss) before reclassifications		1,156			(2,853	)		2,559		(3,753	)
Amounts reclassified from AOCI (2)		(201	)		1,714			83		1,428
Ending balance	$	6,299		$	450		$	6,299	$	450
Unrealized gains on available-for-sale metropolitan district bond securities (1) :
Beginning balance	$	13,214		$	9,814		$	12,058	$	7,680
Other comprehensive income before reclassifications		73			913			1,229		3,047
Ending balance	$	13,287		$	10,727		$	13,287	$	10,727
Total ending AOCI	$	19,586		$	11,177		$	19,586	$	11,177

⁽¹⁾ All amounts net-of-tax.

⁽²⁾ See separate table below for details about these reclassifications

The following table sets forth the activity related to reclassifications out of accumulated other comprehensive income related to available for sale securities:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Affected Line Item in the Statements of Operations	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding: Interest and other income	$	555		$	(620	)	$	817		$	(495	)
Homebuilding: Other-than-temporary impairment of marketable securities		(215	)		(2,176	)		(934	)		(2,176	)
Financial services: Interest and other income		94			31			94			368
Financial services: Other than temporary impairment of marketable securities		(111	)		-			(111	)		-
Income before income taxes		323			(2,765	)		(134	)		(2,303	)
Provision for income taxes		(122	)		1,051			51			875
Net income	$	201		$	(1,714	)	$	(83	)	$	(1,428	)

6.             Fair Value Measurements

ASC Topic 820, Fair Value Measurements (“ASC 820”), defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs, other than quoted prices in active markets, that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

The following table sets forth the fair values and methods used for measuring the fair values of financial instruments on a recurring basis:

		Fair Value
		September 30,		December 31,
Financial Instrument	Hierarchy	2016		2015
		(Dollars in thousands)
Marketable equity securities (available-for-sale)	Level 1	$	79,221	$	103,694
Mortgage loans held-for-sale, net	Level 2	$	117,989	$	115,670
Metropolitan district bond securities (related party) (available-for-sale)	Level 3	$	29,132	$	25,911

The following methods and assumptions were used to estimate the fair value of each class of financial instruments as of September 30, 2016 and December 31, 2015.

Cash and cash equivalents, restricted cash, trade and other receivables, prepaid and other assets, accounts payable, accrued liabilities and borrowings on our revolving credit facility. Fair value approximates carrying value.

Marketable securities.  As of September 30, 2016 and December 31, 2015, we only held marketable equity securities. However, during 2015, we also held marketable debt securities. Our equity securities consist of holdings in corporate equities, preferred stock, exchange traded funds and holdings in mutual fund securities (which are primarily invested in debt securities). Our debt securities consisted primarily of fixed and floating rate interest earning debt securities, which included, among others, United States government and government agency debt and corporate debt. As of September 30, 2016 and December 31, 2015, all of our equity securities were treated as available-for-sale investments and as such, are recorded at fair value with all changes in fair value initially recorded through AOCI, subject to an assessment to determine if an unrealized loss, if applicable, is other-than-temporary.

Each quarter we assess all of our securities in an unrealized loss position for a potential other-than-temporary impairment (“OTTI”). If the unrealized loss is determined to be other-than-temporary, an OTTI is recorded to the other-than-temporary impairment of marketable securities line in the homebuilding section of our consolidated statements of operations and comprehensive income. During the three months and nine months ended September 30, 2016, we recorded pretax OTTIs of $0.3 million and $1.0 million, respectively, for certain of our equity securities that were in an unrealized loss position as of the end of each respective period, compared to $2.2 million for both the three and nine months ended September 30, 2015.

The following tables set forth the cost and fair value of our marketable equity securities:

	September 30, 2016
	Amortized Cost		OTTI			Net Amortized Cost		Fair Value
	(Dollars in thousands)
Homebuilding equity securities	$	48,225	$	(958	)	$	47,267	$	57,116
Financial services equity securities		21,905		(112	)		21,793		22,105
Total marketable equity securities	$	70,130	$	(1,070	)	$	69,060	$	79,221

	December 31, 2015
	Amortized Cost		OTTI			Net Amortized Cost		Fair Value
	(Dollars in thousands)
Homebuilding equity securities	$	89,738	$	(3,969	)	$	85,769	$	92,387
Financial services equity securities		12,026		-			12,026		11,307
Total marketable equity securities	$	101,764	$	(3,969	)	$	97,795	$	103,694

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

As of September 30, 2016 and December 31, 2015, our marketable equity securities were in net unrealized gain positions totaling $10.2 million and $5.9 million, respectively. Our individual marketable equity securities that were in unrealized loss positions, excluding those that were impaired as part of any OTTI, aggregated to an unrealized loss of $0.5 million and $0.9 million as of September 30, 2016 and December 31, 2015, respectively. The table below sets forth the aggregated unrealized losses for individual equity securities that were in unrealized loss positions but did not have OTTIs recognized. We do not believe the decline in the value of these marketable securities as of September 30, 2016 is other-than-temporary.

	September 30, 2016							December 31, 2015
	Number of Securities in an Unrealized Loss Position		Aggregate Unrealized Loss Position			Aggregate Fair Value of Securities in an Unrealized Loss Position		Number of Securities in an Unrealized Loss Position		Aggregate Unrealized Loss Position			Aggregate Fair Value of Securities in an Unrealized Loss Position
	(Dollars in thousands)
Marketable equity securities		2	$	(450	)	$	2,548		4	$	(882	)	$	6,116

The table below sets forth gross realized gains and losses from the sale of available-for-sale marketable securities. We record the net amount of these gains and losses to either other expense or interest and other income, dependent upon whether there is a net realized loss or gain, respectively, in the homebuilding section or financial services section of our consolidated statements of operations and comprehensive income.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Gross realized gains on sales of available-for-sale securities
Equity securities	$	740		$	980		$	2,210		$	1,855
Debt securities		-			42			-			413
Total	$	740		$	1,022		$	2,210		$	2,268
Gross realized losses on sales of available-for-sale securities
Equity securities	$	(91	)	$	(1,604	)	$	(1,299	)	$	(2,161	)
Debt securities		-			(6	)		-			(233	)
Total	$	(91	)	$	(1,610	)	$	(1,299	)	$	(2,394	)
Net realized gain (loss) on sales of available-for-sale securities	$	649		$	(588	)	$	911		$	(126	)

Mortgage loans held-for-sale, net.  Our mortgage loans held-for-sale, which are measured at fair value on a recurring basis, include (1) mortgage loans held-for-sale that are under commitments to sell and (2) mortgage loans held-for-sale that are not under commitments to sell. At September 30, 2016 and December 31, 2015, we had $90.5 million and $92.6 million, respectively, of mortgage loans held-for-sale under commitments to sell. The fair value for those loans was based on quoted market prices for those mortgage loans, which are Level 2 fair value inputs. At September 30, 2016 and December 31, 2015, we had $27.4 million and $23.1 million, respectively, of mortgage loans held-for-sale that were not under commitments to sell. The fair value for those loans was primarily based upon the estimated market price received from an outside party, which is a Level 2 fair value input.    

Gains on sales of mortgage loans, net, are included as a component of revenues in the financial services section of our consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2016, we recorded net gains on the sales of mortgage loans of $10.0 million and $22.5 million, respectively, compared to $3.4 million and $12.2 million for the same periods in the prior year, respectively.

Metropolitan district bond securities (related party).  The metropolitan district bond securities (the “Metro Bonds”) are included in the homebuilding section of our consolidated balance sheets. We acquired the Metro Bonds from a quasi-municipal corporation in the state of Colorado (the “Metro District”), which was formed to help fund and maintain the infrastructure associated with a master-planned community being developed by our Company. Cash flows received by the Company from these securities reflect principal and interest payments from the Metro District, which are generally received in the fourth quarter, and are supported by an annual levy on the taxable assessed value of real estate and personal property within the Metro District’s boundaries. The stated year of maturity for the Metro Bonds is 2037. However, if the unpaid principal and all accrued interest are not paid off by the year 2037, the Company will continue to receive principal and interest payments in perpetuity until the unpaid principal and accrued interest is paid in full.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

In accordance with ASC Topic 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”), we adjust the bond principal balance using an interest accretion model that utilizes future cash flows expected to be collected. Furthermore, as this investment is accounted for as an available-for-sale asset, we update its fair value on a quarterly basis, with the adjustment being recorded through AOCI. The fair value is based upon a discounted future cash flow model, which uses Level 3 inputs. The primary unobservable inputs used in our discounted cash flow model are (1) the forecasted number of homes to be closed, as they drive increases to the tax paying base for the Metro District, (2) the forecasted assessed value of those closed homes and (3) the discount rate. Cash receipts, which are scheduled to be received in the fourth quarter, reduce the carrying value of the Metro Bonds. The increases in the value of the Metro Bonds during the past two years are based on a larger percentage of future cash flows coming from homes that have closed, which utilize a lower discount rate as those cash flows have a reduced amount of risk. The table below provides quantitative data, as of September 30, 2016, regarding each unobservable input and the sensitivity of fair value to potential changes in those unobservable inputs.

	Quantitative Data				Sensitivity Analysis
Unobservable Input	Range			Weighted Average	Movement in Fair Value from Increase in Input	Movement in Fair Value from Decrease in Input
Number of homes closed per year	0	to	127	102	Increase	Decrease
Average sales price	$400,000	to	$1.3 million	$527,000	Increase	Decrease
Discount rate	5%	to	12%	9.0%	Decrease	Increase

The table set forth below summarizes the activity for our Metro Bonds:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Balance at beginning of period	$	28,604	$	22,259	$	25,911	$	18,203
Increase in fair value (recorded in other comprehensive income)		117		1,472		1,982		4,815
Change due to accretion of principal		411		343		1,239		1,056
Cash receipts		-		-		-		-
Balance at end of period	$	29,132	$	24,074	$	29,132	$	24,074

Mortgage Repurchase Facility. The debt associated with our mortgage repurchase facility (see Note 18 for further discussion) is at floating rates that approximate current market rates and have relatively short-term maturities, generally within 30 days. The fair value approximates carrying value and is based on Level 2 inputs.

Senior Notes. The estimated values of the senior notes in the following table are based on Level 2 inputs, which primarily reflect estimated prices for our senior notes and were obtained from multiple pricing sources.

	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
5⅝% Senior Notes due February 2020, net	$	246,689	$	268,688	$	246,032	$	257,813
5½% Senior Notes due January 2024		248,345		263,883		248,209		252,188
6% Senior Notes due January 2043		346,325		315,887		346,283		276,938
Total	$	841,359	$	848,458	$	840,524	$	786,939

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

7.             Inventories

The following table sets forth, by reportable segment, information relating to our homebuilding inventories:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Housing completed or under construction:
West	$	534,423	$	365,867
Mountain		306,681		253,578
East		135,268		127,591
Total housing completed or under construction		976,372		747,036
Land and land under development:
West		487,001		580,682
Mountain		252,838		259,484
East		130,894		176,760
Total land and land under development		870,733		1,016,926
Total inventories	$	1,847,105	$	1,763,962

Our inventories are primarily associated with communities where we intend to construct and sell homes, including models and unsold homes (defined as homes under construction without a sales contract). Costs capitalized to land and land under development primarily include: (1) land costs; (2) land development costs; (3) entitlement costs; (4) capitalized interest; (5) engineering fees; and (6) title insurance, real property taxes and closing costs directly related to the purchase of the land parcel. Components of housing completed or under construction primarily include: (1) land costs transferred from land and land under development; (2) direct construction costs associated with a house; (3) real property taxes, engineering fees, permits and other fees; (4) capitalized interest; and (5) indirect construction costs, which include field construction management salaries and benefits, utilities and other construction related costs. Land costs are transferred from land and land under development to housing completed or under construction at the point in time that construction of a home on an owned lot begins.

In accordance with ASC Topic 360, Property, Plant, and Equipment (“ASC 360”), homebuilding inventories, excluding those classified as held for sale, are carried at cost unless events and circumstances indicate that the carrying value of the underlying subdivision may not be recoverable.  We evaluate inventories for impairment at each quarter end on a subdivision level basis as each such subdivision represents the lowest level of identifiable cash flows. In making this determination, we review, among other things, the following for each subdivision:

• actual and trending “Operating Margin” (which is defined as home sale revenues less home cost of sales and all direct incremental costs associated with the home closing, including sales commissions) for homes closed;

• estimated future undiscounted cash flows and Operating Margin;

• forecasted Operating Margin for homes in backlog;

• actual and trending net and gross home orders;

• base sales price and home sales incentive information for homes closed, homes in backlog and homes available for sale;

• market information for each sub-market, including competition levels, home foreclosure levels, the size and style of homes currently being offered for sale and lot size; and

• known or probable events indicating that the carrying value may not be recoverable.

If events or circumstances indicate that the carrying value of our inventory may not be recoverable, assets are reviewed for impairment by comparing the undiscounted estimated future cash flows from an individual subdivision (including capitalized interest) to its carrying value. If the undiscounted future cash flows are less than the subdivision’s carrying value, the carrying value of the subdivision is written down to its then estimated fair value. We generally determine the estimated fair value of each subdivision by determining the present value of the estimated future cash flows at discount rates, which are Level 3 inputs, that are commensurate with the risk of the subdivision under evaluation. The evaluation for the recoverability of the carrying value of the assets for each individual subdivision can be impacted significantly by our estimates of future home sale revenues, home construction costs, and development costs per home, all of which are Level 3 inputs.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

If land is classified as held for sale, in accordance with ASC 360, we measure it at the lower of the carrying value or fair value less estimated costs to sell. In determining fair value, we primarily rely upon the most recent negotiated price which is a Level 2 input. If a negotiated price is not available, we will consider several factors including, but not limited to, current market conditions, recent comparable sales transactions and market analysis studies. If the fair value less estimated costs to sell is lower than the current carrying value, the land is impaired down to its estimated fair value less costs to sell.

Impairments of homebuilding inventory by segment for the three and nine months ended September 30, 2016 and 2015 are shown in the table below. In addition to the impairments shown below, using Level 2 inputs, we recorded $1.1 million of impairments on our land held for sale during the three and nine months ended September 30, 2015. No such impairments were recorded during the same periods in 2016.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
West	$	-	$	-	$	1,400	$	-
Mountain		-		250		-		250
East		4,700		2,975		4,900		3,325
Total inventory impairments	$	4,700	$	3,225	$	6,300	$	3,575

The table below provides quantitative data, for the periods presented, used in determining the fair value of the impaired inventory.

	Impairment Data								Quantitative Data
Three Months Ended	Total Subdivisions Tested		Inventory Impairments		Fair Value of Inventory After Impairments		Number of Subdivisions Impaired		Discount Rate
	(Dollars in thousands)
March 31, 2016		14	$	-	$	-		-		N/A
June 30, 2016		17	$	1,600	$	6,415		2	12%	to	15%
September 30, 2016		25	$	4,700	$	12,295		2	15%	to	18%
March 31, 2015		22	$	350	$	3,701		1		8.7%
June 30, 2015		22	$	-	$	-		-		N/A
September 30, 2015		18	$	3,225	$	14,836		5	12%	to	15%

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

8.            Capitalization of Interest

We capitalize interest to inventories during the period of development in accordance with ASC Topic 835, Interest (“ASC 835”). Homebuilding interest capitalized as a cost of inventories is included in cost of sales during the period that related units or lots are delivered. To the extent our homebuilding debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred. For all periods presented, our qualified assets exceeded our homebuilding debt and as such, all interest incurred has been capitalized. Qualified homebuilding assets consist of all lots and homes, excluding finished unsold homes or finished models, within projects that are actively selling or under development. The table set forth below summarizes homebuilding interest activity.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding interest incurred	$	13,187		$	13,265		$	39,511		$	39,821
Less: Interest capitalized		(13,187	)		(13,265	)		(39,511	)		(39,821	)
Homebuilding interest expensed	$	-		$	-		$	-		$	-
Interest capitalized, beginning of period	$	77,150		$	78,857		$	77,541		$	79,231
Plus: Interest capitalized during period		13,187			13,265			39,511			39,821
Less: Previously capitalized interest included in home and land cost of sales		(15,922	)		(12,878	)		(42,637	)		(39,808	)
Interest capitalized, end of period	$	74,415		$	79,244		$	74,415		$	79,244

9.             Homebuilding Prepaid and Other Assets

The following table sets forth the components of homebuilding prepaid and other assets:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Land option deposits	$	7,360	$	11,997
Deferred marketing costs		35,335		31,152
Prepaid expenses		7,539		6,500
Goodwill		6,008		6,008
Deferred debt issuance costs, net		4,721		5,570
Other		5,232		4,167
Total	$	66,195	$	65,394

10.          Homebuilding Accrued Liabilities and Financial Services Accounts Payable and Accrued Liabilities

The following table sets forth information relating to homebuilding accrued liabilities:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Customer and escrow deposits	$	30,875	$	20,717
Warranty accrual		18,709		15,328
Accrued compensation and related expenses		24,723		25,492
Accrued interest		11,031		23,234
Land development and home construction accruals		7,705		11,465
Other accrued liabilities		29,184		26,650
Total accrued liabilities	$	122,227	$	122,886

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

The following table sets forth information relating to financial services accounts payable and accrued liabilities:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Insurance reserves	$	48,153	$	45,811
Accounts payable and other accrued liabilities		8,781		6,303
Total accounts payable and accrued liabilities	$	56,934	$	52,114

11.          Warranty Accrual

Our homes are sold with limited third-party warranties. We record accruals for general and structural warranty claims, as well as accruals for known, unusual warranty-related expenditures. Our warranty accruals are recorded based upon historical payment experience in an amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. The determination of the warranty accrual rate for closed homes and the evaluation of our warranty accrual balance at period end are based on an internally developed analysis that includes known facts and interpretations of circumstances, including, among other things, our trends in historical warranty payment levels and warranty payments for claims not considered to be normal and recurring.

Our warranty accrual is included in accrued liabilities in the homebuilding section of our consolidated balance sheets and adjustments to our warranty accrual are recorded as an increase or reduction to home cost of sales in the homebuilding section of our consolidated statements of operations and comprehensive income.

The table set forth below summarizes accrual, adjustment and payment activity related to our warranty accrual for the three and nine months ended September 30, 2016 and 2015. For the three and nine months ended September 30, 2016 we recorded adjustments of $1.8 million and $5.1 million, respectively, to increase our warranty accrual primarily due to higher than expected recent warranty related expenditures. For the nine months ended September 30, 2015, we reduced our warranty reserve by $0.2 million, while for the three months ended September 30, 2015 there was no adjustment.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	17,217		$	17,253		$	15,328		$	18,346
Expense provisions		2,390			1,536			6,147			3,980
Cash payments		(2,723	)		(2,708	)		(7,828	)		(6,032	)
Adjustments		1,825			-			5,062			(213	)
Balance at end of period	$	18,709		$	16,081		$	18,709		$	16,081

12.          Insurance Reserves

The establishment of reserves for estimated losses associated with (1) insurance policies issued by Allegiant, (2) re-insurance agreements issued by StarAmerican, and (3) self-insured retentions for our homebuilding subsidiaries are based on actuarial studies that include known facts and interpretations of circumstances, including our experience with similar cases and historical trends involving claim payment patterns, pending levels of unpaid claims, product mix or concentration, claim severity, frequency patterns depending on the business conducted, and changing regulatory and legal environments. It is possible that future changes in the insurance payment experience used in estimating our ultimate insurance losses could have a material impact on our insurance reserves.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

The table set forth below summarizes the insurance reserve activity for the three and nine months ended September 30, 2016 and 2015. The insurance reserve is included as a component of accrued liabilities in the financial services section of the consolidated balance sheets.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	46,900		$	47,389		$	45,811		$	50,470
Expense provisions		1,888			1,652			5,222			4,501
Cash payments, net of recoveries		(635	)		(2,356	)		(2,880	)		(6,786	)
Adjustments		-			-			-			(1,500	)
Balance at end of period	$	48,153		$	46,685		$	48,153		$	46,685

The adjustment to decrease our insurance reserve during the nine months ended September 30, 2015 primarily resulted from a decrease in insurance claim payment severity and frequency relative to prior period estimates.

In the ordinary course of business, we make payments from our insurance reserves to settle litigation claims arising primarily from our homebuilding activities. These payments are irregular in both their timing and their magnitude. As a result, the cash payments, net of recoveries shown for the three and nine months ended September 30, 2016 and 2015 are not necessarily indicative of what future cash payments will be for subsequent periods.

13.          Income Taxes

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and use that rate to provide for income taxes for the current year-to-date reporting period. Our overall effective income tax rates were 30.7% and 32.3% for the three and nine months ended September 30, 2016, respectively, compared to 37.5% and 37.3% for the three and nine months ended September 30, 2015, respectively. The rates for the three and nine months ended September 30, 2016 resulted in income tax expense of $11.7 million and $29.9 million, respectively, compared to income tax expense of $8.9 million and $25.7 million for the three and nine months ended September 30, 2015. The year-over-year improvements in our effective tax rates are primarily the result of our estimated 2016 full year effective tax rate including (1) an estimate for energy credits versus no such estimate as of September 30, 2015 as the credit for both 2015 and 2016 was not approved by the U.S. Congress until December of 2015 and (2) a domestic manufacturing deduction whereas we were not eligible for this deduction in the prior year due to our net operating loss carryforwards.

At September 30, 2016 and December 31, 2015 we had deferred tax assets, net of valuation allowances and deferred tax liabilities, of $85.1 million and $99.1 million, respectively. The valuation allowances were related to: (1) various state net operating loss carryforwards where realization is more uncertain at this time due to the limited carryforward periods that exist in certain states; and (2) the portion of the amount by which the carrying value of our Metro Bonds for tax purposes exceeds our carrying value for book purposes, as we believe realization of that portion is more uncertain at this time.

14.          Senior Notes

The carrying value of our senior notes as of September 30, 2016 and December 31, 2015, net of any unamortized debt issuance costs or discount, were as follows:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
5⅝% Senior notes due February 2020, net	$	246,689	$	246,032
5½% Senior notes due January 2024		248,345		248,209
6% Senior notes due January 2043		346,325		346,283
Total senior notes	$	841,359	$	840,524

Our senior notes are not secured and, while the senior note indentures contain some restrictions on secured debt and other transactions, they do not contain financial covenants. Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our homebuilding segment subsidiaries.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

15.          Stock Based Compensation

We account for share-based awards in accordance with ASC 718, which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at fair value on the date of grant. The following table sets forth share-based award expense activity for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Stock option grant expense	$	328	$	3,544	$	5,621	$	5,043
Restricted stock awards expense		145		454		1,015		1,546
Total stock based compensation	$	473	$	3,998	$	6,636	$	6,589

On May 18, 2015, the Company granted a non-qualified stock option to each of the Chief Executive Officer and the Chief Operating Officer for 1,000,000 shares of common stock under the Company’s 2011 Equity Incentive Plan. The terms of each option provide that, over a five year period, one third of the option shares will vest as of each of the third, fourth, and fifth anniversary dates of the grant of the option; provided that all unvested option shares will vest immediately in the event the closing price of the Company’s stock, as reported by the New York Stock Exchange, in any 20 out of 30 consecutive trading days closes at a price equal to or greater than 120% of the closing price on the date of grant (the “market-based condition”). The option exercise price is equal to the closing price of the Company’s common stock on the date of grant, which was $28.45 and the expiration date of each option is May 18, 2025. In accordance with ASC 718, the market-based awards were assigned a fair value of $5.62 per share (total value of $11.2 million) on the date of grant using a Monte Carlo simulation model and, as calculated under that model, all expense was recorded on a straight-line basis through the end of the 2016 second quarter. Included in the stock based compensation expense for the three and nine months ended September 30, 2016, shown in the table above, was $0 and $5.0 million, respectively, of stock option grant expense related to these market-based option grants. For the three and nine months ended September 30, 2015, $2.5 million and $3.7 million, respectively, of stock option grant expense was related to these market-based option grants.

On July 25, 2016, the Company granted long term performance stock unit awards (“PSUs”) to each of the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer under the Company’s 2011 Equity Incentive Plan. The PSUs will be earned based upon the Company’s performance, over a three year period commencing July 1, 2016 and ending June 30, 2019 (the “Performance Period”), measured by increasing home sale revenues over the Base Period. The “Base Period” for the awards is July 1, 2015 to June 30, 2016. The awards are conditioned upon the Company achieving an average gross margin from home sales percentage (excluding impairments) of at least fifteen percent (15%) over the Performance Period. Target goals of 100,000 shares for each of the Chief Executive Officer and the Chief Operating Officer and 25,000 shares for the Chief Financial Officer (the “Target Goals”) will be earned if the Company’s three year average home sale revenues over the Performance Period (“Performance Revenues”) exceed the home sale revenues over the Base Period (“Base Revenues”) by at least 10% but less than 20%. If Performance Revenues exceed the Base Revenues by at least 5% but less than 10%, 50% of the Target Goals will be earned. If Performance Revenues exceed the Base Revenues by at least 20%, 200% of the Target Goals will be earned.

In accordance with ASC 718, the PSUs are valued at the fair value on the date of grant. The grant date fair value of these awards was $24.08 per share and the maximum potential expense that would be recognized by the Company if the maximum of the performance targets were met would be approximately $10.8 million. ASC 718 prohibits recognition of expense associated with performance based stock awards until achievement of the performance targets are probable of occurring. As of September 30, 2016, the Company concluded that achievement of the performance targets had not met the level of probability required to record compensation expense at that time and, as such, no compensation expense was recognized related to the grant of these awards during the 2016 third quarter.

16.          Commitments and Contingencies

Surety Bonds and Letters of Credit. We are required to obtain surety bonds and letters of credit in support of our obligations for land development and subdivision improvements, homeowner association dues, warranty work, contractor license fees and earnest money deposits. At September 30, 2016, we had outstanding surety bonds and letters of credit totaling $179.3 million and $58.9 million, respectively, including $32.6 million in letters of credit issued by HomeAmerican. The estimated cost to complete obligations related to these bonds and letters of credit were approximately $53.8 million and $31.9 million, respectively. All letters of credit as of September 30, 2016, excluding those issued by HomeAmerican, were issued under our unsecured revolving credit facility (see Note 18 for further discussion of the revolving credit facility). We expect that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the obligations are performed, the related performance bonds and letters of credit should be released and we should not have any continuing obligations. However, in the event any such performance bonds or letters of credit are called, our indemnity obligations could require us to reimburse the issuer of the performance bond or letter of credit.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

We have made no material guarantees with respect to third-party obligations.

Mortgage Loan Loss Reserves. In the normal course of business, we establish reserves for potential losses associated with HomeAmerican’s sale of mortgage loans to third-parties. These reserves are created to address repurchase and indemnity claims by third-party purchasers of the mortgage loans, which claims arise primarily out of, but are not limited to, allegations of homebuyer fraud at the time of origination of the loan, missing documentation, loan processing defects or defective appraisals. These reserves are based upon, among other things: (1) pending claims received from third-party purchasers associated with previously sold mortgage loans; (2) a current assessment of the potential exposure associated with future claims of loan processing defects or homebuyer fraud in mortgage loans originated in prior periods; and (3) historical loss experience. In addition to reserves established for mortgage loans previously sold to third-parties, we establish reserves for loans that we have been required to repurchase. Our mortgage loan reserves are reflected as a component of accrued liabilities in the financial services section of the consolidated balance sheets, and the associated expenses are included in expenses in the financial services section of the consolidated statements of operations and comprehensive income.

The following table summarizes the mortgage loan loss reserve activity for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016		2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	160	$	1,058		$	201		$	810
Expense provisions		6		39			6			764
Cash payments		-		(325	)		-			(325	)
Adjustments		-		(568	)		(41	)		(1,045	)
Balance at end of period	$	166	$	204		$	166		$	204

Legal Reserves. Because of the nature of the homebuilding business, we have been named as defendants in various claims, complaints and other legal actions arising in the ordinary course of business, including product liability claims and claims associated with the sale and financing of homes. In the opinion of management, the outcome of these ordinary course matters will not have a material adverse effect upon our financial condition, results of operations or cash flows.

Lot Option Contracts. In the normal course of business, we enter into lot option purchase contracts (“Option Contracts”), generally through a deposit of cash or a letter of credit, for the right to purchase land or lots at a future point in time with predetermined terms. The use of such land option and other contracts generally allow us to reduce the risks associated with direct land ownership and development, reduces our capital and financial commitments, and minimizes the amount of land inventories on our consolidated balance sheets. Our obligation with respect to Option Contracts is generally limited to forfeiture of the related deposits. At September 30, 2016, we had cash deposits and letters of credit totaling $6.9 million and $2.4 million, respectively, at risk associated with the option to purchase 2,504 lots.

17.          Derivative Financial Instruments

The derivative instruments we utilize in the normal course of business are interest rate lock commitments and forward sales of mortgage-backed securities, both of which typically are short-term in nature. Forward sales of mortgage-backed securities are utilized to hedge changes in fair value of our interest rate lock commitments as well as mortgage loans held-for-sale not under commitments to sell. For forward sales of mortgage-backed securities, as well as interest rate lock commitments that are still outstanding at the end of a reporting period, we record the changes in fair value of the derivatives in revenues in the financial services section of our consolidated statements of operations and comprehensive income with an offset to other assets or accounts payable and accrued liabilities in the financial services section of our consolidated balance sheets, depending on the nature of the change.

At September 30, 2016, we had interest rate lock commitments with an aggregate principal balance of $105.8 million. Additionally, we had $26.8 million of mortgage loans held-for-sale at September 30, 2016 that had not yet been committed to a mortgage purchaser. In order to hedge the changes in fair value of our interest rate lock commitments and mortgage loans held-for-sale that had not yet been committed to a mortgage purchaser, we had forward sales of securities totaling $88.5 million at September 30, 2016.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

For the three and nine months ended September 30, 2016, we recorded net gains on our derivatives of $0.1 million and $1.1 million, respectively, compared to $0.9 and $1.5 million for the same periods in 2015.

18.          Lines of Credit

Revolving Credit Facility. We have an unsecured revolving credit agreement (“Revolving Credit Facility”) with a group of lenders, which may be used for general corporate purposes. This agreement has an aggregate commitment of $550 million (the “Commitment”) and was amended on December 18, 2015 to extend the maturity to December 18, 2020. Each lender may issue letters of credit in an amount up to 50% of its commitment. The facility permits an increase in the maximum Commitment amount to $1.0 billion upon our request, subject to receipt of additional commitments from existing or additional lenders and the consent of the designated agent and the co-administrative agent. As defined in the Revolving Credit Facility agreement, interest rates on outstanding borrowings are equal to the highest of: (1) 0.0% or (2) a specified eurocurrency rate, federal funds effective rate or prime rate, plus a margin that is determined based on our credit ratings and leverage ratio. At any time at which our leverage ratio, as of the last day of the most recent calendar quarter, exceeds 55%, the aggregate principal amount of all consolidated senior debt borrowings outstanding may not exceed the borrowing base. There is no borrowing base requirement if our leverage ratio, as of the last day of the most recent calendar quarter, is 55% or less.

The Revolving Credit Facility is fully and unconditionally guaranteed, jointly and severally, by most of our homebuilding segment subsidiaries. The facility contains various representations, warranties and covenants that we believe are customary for agreements of this type. The financial covenants include a consolidated tangible net worth test and a leverage test, along with a consolidated tangible net worth covenant, all as defined in the facility agreement. A failure to satisfy the foregoing tests does not constitute an event of default, but can trigger a “term-out” of the facility. A breach of the consolidated tangible net worth covenant (but not the consolidated tangible net worth test) or a violation of anti-corruption or sanctions laws would result in an event of default.

The Revolving Credit Facility is subject to acceleration upon certain specified events of default, including breach of the consolidated tangible net worth covenant, a violation of anti-corruption or sanctions laws, failure to make timely payments, breaches of certain representations or covenants, failure to pay other material indebtedness, or another person becoming beneficial owner of 50% or more of our outstanding common stock. We believe we were in compliance with the representations, warranties and covenants included in the Revolving Credit Facility as of September 30, 2016.

We incur costs associated with unused commitment fees pursuant to the terms of the Revolving Credit Facility. At September 30, 2016 and December 31, 2015, there were $26.2 million and $22.5 million, respectively, in letters of credit outstanding, which reduced the amounts available to be borrowed under the Revolving Credit Facility. At both September 30, 2016 and December 31, 2015, we had $15.0 million in outstanding borrowings under the Revolving Credit Facility. As of September 30, 2016, availability under the Revolving Credit Facility was approximately $508.8 million.

Mortgage Repurchase Facility. HomeAmerican entered into an Amended and Restated Master Repurchase Agreement (the “Mortgage Repurchase Facility”) with U.S. Bank National Association(“USBNA”), effective September 16, 2016. The Mortgage Repurchase Facility amends and restates the prior Master Repurchase Agreement with USBNA dated as of November 12, 2008, as amended, which contained similar terms. The Mortgage Repurchase Facility increases the facility amount from $50 million to $75 million, extends the expiration date to September 15, 2017, adjusts the facility’s sublimits, expands the types of eligible loans, and reduces the facility fee. The Mortgage Repurchase Facility provides liquidity to HomeAmerican by providing for the sale of eligible mortgage loans to USBNA with an agreement by HomeAmerican to repurchase the mortgage loans at a future date. Until such mortgage loans are transferred back to HomeAmerican, the documents relating to such loans are held by USBNA, as custodian, pursuant to the Custody Agreement (“Custody Agreement”), dated as of November 12, 2008, by and between HomeAmerican and USBNA. In the event that an eligible mortgage loan becomes ineligible, as defined under the Mortgage Repurchase Facility, HomeAmerican may be required to repurchase the ineligible mortgage loan immediately. The maximum aggregate commitment of the Mortgage Repurchase Facility was temporarily increased on September 27, 2016 from $75 million to $110 million and was effective through October 26, 2016. The Mortgage Repurchase Facility also had a temporary increase in the maximum aggregate commitment from $50 million to $90 million from December 23, 2015 through January 31, 2016. At September 30, 2016 and December 31, 2015, there were $92.0 million and $88.6 million, respectively, of mortgage loans that HomeAmerican was obligated to repurchase under the Mortgage Repurchase Facility. Mortgage loans that HomeAmerican is obligated to repurchase under the Mortgage Repurchase Facility are accounted for as a debt financing arrangement and are reported as mortgage repurchase facility in the consolidated balance sheets. Advances under the Mortgage Repurchase Facility carry a price range that is LIBOR-based. The Mortgage Repurchase Facility contains various representations, warranties and affirmative and negative covenants that we believe are customary for agreements of this type. The negative covenants include, among others, (i) a minimum Adjusted Tangible Net Worth requirement, (ii) a maximum Adjusted Tangible Net Worth ratio, (iii) a minimum adjusted net income requirement, and (iv) a minimum Liquidity requirement. The foregoing capitalized terms are defined in the Mortgage Repurchase Facility. We believe HomeAmerican was in compliance with the representations, warranties and covenants included in the Mortgage Repurchase Facility as of September 30, 2016.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

19.          Supplemental Guarantor Information

Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by the following subsidiaries (collectively, the "Guarantor Subsidiaries"), which are 100%-owned subsidiaries of the Company.

● M.D.C. Land Corporation

● RAH of Florida, Inc.

● Richmond American Construction, Inc.

● Richmond American Homes of Arizona, Inc.

● Richmond American Homes of Colorado, Inc.

● Richmond American Homes of Delaware, Inc.

● Richmond American Homes of Florida, LP

● Richmond American Homes of Illinois, Inc.

● Richmond American Homes of Maryland, Inc.

● Richmond American Homes of Nevada, Inc.

● Richmond American Homes of New Jersey, Inc.

● Richmond American Homes of Pennsylvania, Inc.

● Richmond American Homes of Utah, Inc.

● Richmond American Homes of Virginia, Inc.

● Richmond American Homes of Washington, Inc.

The senior note indentures do not provide for a suspension of the guarantees, but do provide that any Guarantor may be released from its guarantee so long as (1) no default or event of default exists or would result from release of such guarantee, (2) the Guarantor being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (3) the Guarantors released from their guarantees in any year-end period comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (4) such release would not have a material adverse effect on the homebuilding business of the Company and its subsidiaries and (5) the Guarantor is released from its guarantee(s) under all Specified Indebtedness (other than by reason of payment under its guarantee of Specified Indebtedness). Upon delivery of an officers’ certificate and an opinion of counsel stating that all conditions precedent provided for in the indenture relating to such transactions have been complied with and the release is authorized, the guarantee will be automatically and unconditionally released. “Specified Indebtedness” means indebtedness under the senior notes, the Company’s Indenture dated as of December 3, 2002, the Revolving Credit Facility, and any refinancing, extension, renewal or replacement of any of the foregoing.

We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor and Non-Guarantor Subsidiaries is presented below.

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

Supplemental Condensed Combining Balance Sheet

	September 30, 2016
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	124,730	$	4,548	$	-	$	-		$	129,278
Marketable securities		57,116		-		-		-			57,116
Restricted cash		-		4,621		-		-			4,621
Trade and other receivables		6,517		38,979		-		(2,414	)		43,082
Inventories:
Housing completed or under construction		-		976,372		-		-			976,372
Land and land under development		-		870,733		-		-			870,733
Total inventories		-		1,847,105		-		-			1,847,105
Intercompany receivables		1,609,686		2,803		5,467		(1,617,956	)		-
Investment in subsidiaries		258,979		-		-		(258,979	)		-
Property and equipment, net		26,121		2,628		-		-			28,749
Deferred tax asset, net		83,839		-		-		1,289			85,128
Metropolitan district bond securities (related party)		29,132		-		-		-			29,132
Prepaid and other assets		6,153		60,042		-		-			66,195
Total homebuilding assets		2,202,273		1,960,726		5,467		(1,878,060	)		2,290,406
Financial Services:
Cash and cash equivalents		-		-		34,180		-			34,180
Marketable securities		-		-		22,105		-			22,105
Intercompany receivables		-		-		39,479		(39,479	)		-
Mortgage loans held-for-sale, net		-		-		117,989		-			117,989
Other assets		-		-		10,879		(1,289	)		9,590
Total financial services assets		-		-		224,632		(40,768	)		183,864
Total Assets	$	2,202,273	$	1,960,726	$	230,099	$	(1,918,828	)	$	2,474,270
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	54,117	$	-	$	-		$	54,117
Accrued liabilities		5,543		113,535		145		3,004			122,227
Advances and notes payable to parent and subsidiaries		47,749		1,579,856		26,267		(1,653,872	)		-
Revolving credit facility		15,000		-		-		-			15,000
Senior notes, net		841,359		-		-		-			841,359
Total homebuilding liabilities		909,651		1,747,508		26,412		(1,650,868	)		1,032,703
Financial Services:
Accounts payable and other liabilities		-		-		62,352		(5,418	)		56,934
Advances and notes payable to parent and subsidiaries		-		-		3,563		(3,563	)		-
Mortgage repurchase facility		-		-		92,011		-			92,011
Total financial services liabilities		-		-		157,926		(8,981	)		148,945
Total Liabilities		909,651		1,747,508		184,338		(1,659,849	)		1,181,648
Equity:
Total Stockholders' Equity		1,292,622		213,218		45,761		(258,979	)		1,292,622
Total Liabilities and Stockholders' Equity	$	2,202,273	$	1,960,726	$	230,099	$	(1,918,828	)	$	2,474,270

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

Supplemental Condensed Combining Balance Sheet

	December 31, 2015
					Non-
			Guarantor		Guarantor			Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries			Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	141,245	$	3,097	$	-		$	-		$	144,342
Marketable securities		92,387		-		-			-			92,387
Restricted cash		-		3,750		-			-			3,750
Trade and other receivables		5,304		20,297		-			(2,287	)		23,314
Inventories:
Housing completed or under construction		-		747,036		-			-			747,036
Land and land under development		-		1,016,926		-			-			1,016,926
Total inventories		-		1,763,962		-			-			1,763,962
Intercompany receivables		1,509,551		2,850		5,291			(1,517,692	)		-
Investment in subsidiaries		267,191		-		-			(267,191	)		-
Property and equipment, net		26,073		2,153		-			-			28,226
Deferred tax asset, net		97,083		-		-			2,024			99,107
Metropolitan district bond securities (related party)		25,911		-		-			-			25,911
Prepaid and other assets		5,973		59,421		-			-			65,394
Total homebuilding assets		2,170,718		1,855,530		5,291			(1,785,146	)		2,246,393
Financial Services:
Cash and cash equivalents		-		-		36,646			-			36,646
Marketable securities		-		-		11,307			-			11,307
Intercompany receivables		-		-		39,234			(39,234	)		-
Mortgage loans held-for-sale, net		-		-		115,670			-			115,670
Other assets		-		-		7,907			(2,024	)		5,883
Total financial services assets		-		-		210,764			(41,258	)		169,506
Total Assets	$	2,170,718	$	1,855,530	$	216,055		$	(1,826,404	)	$	2,415,899
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	40,472	$	-		$	-		$	40,472
Accrued liabilities		11,527		108,445		(33	)		2,947			122,886
Advances and notes payable to parent and subsidiaries		47,375		1,480,589		25,536			(1,553,500	)		-
Revolving credit facility		15,000		-		-			-			15,000
Senior notes, net		840,524		-		-			-			840,524
Total homebuilding liabilities		914,426		1,629,506		25,503			(1,550,553	)		1,018,882
Financial Services:
Accounts payable and accrued liabilities		-		-		57,348			(5,234	)		52,114
Advances and notes payable to parent and subsidiaries		-		-		3,426			(3,426	)		-
Mortgage repurchase facility		-		-		88,611			-			88,611
Total financial services liabilities		-		-		149,385			(8,660	)		140,725
Total Liabilities		914,426		1,629,506		174,888			(1,559,213	)		1,159,607
Equity:
Total Stockholders' Equity		1,256,292		226,024		41,167			(267,191	)		1,256,292
Total Liabilities and Stockholders' Equity	$	2,170,718	$	1,855,530	$	216,055		$	(1,826,404	)	$	2,415,899

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

Supplemental Condensed Combining Statement of Operations

	Three Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	578,012		$	-		$	-		$	578,012
Home and land cost of sales		-			(483,829	)		-			-			(483,829	)
Inventory impairments		-			(4,700	)		-			-			(4,700	)
Total cost of sales		-			(488,529	)		-			-			(488,529	)
Gross margin		-			89,483			-			-			89,483
Selling, general, and administrative expenses		(8,268	)		(53,452	)		-			(184	)		(61,904	)
Equity income of subsidiaries		30,711			-			-			(30,711	)		-
Interest and other income		1,478			500			1			(110	)		1,869
Other expense		1			(1,559	)		-			-			(1,558	)
Other-than-temporary impairment of marketable securities		(215	)		-			-			-			(215	)
Homebuilding pretax income (loss)		23,707			34,972			1			(31,005	)		27,675
Financial Services:
Financial services pretax income		-			-			10,083			294			10,377
Income before income taxes		23,707			34,972			10,084			(30,711	)		38,052
(Provision) benefit for income taxes		2,652			(10,616	)		(3,729	)		-			(11,693	)
Net income	$	26,359		$	24,356		$	6,355		$	(30,711	)	$	26,359
Other comprehensive income related to available for sale securities, net of tax		1,028			-			310			(310	)		1,028
Comprehensive income	$	27,387		$	24,356		$	6,665		$	(31,021	)	$	27,387

	Three Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	455,646		$	-		$	-		$	455,646
Home and land cost of sales		-			(376,667	)		(100	)		-			(376,767	)
Inventory impairments		-			(4,351	)		-			-			(4,351	)
Total cost of sales		-			(381,018	)		(100	)		-			(381,118	)
Gross margin		-			74,628			(100	)		-			74,528
Selling, general, and administrative expenses		(11,651	)		(45,620	)		-			(173	)		(57,444	)
Equity income of subsidiaries		23,070			-			-			(23,070	)		-
Interest and other income		539			298			2			(1	)		838
Interest expense		155			-			-			(155	)		-
Other expense		(2	)		(348	)		-			-			(350	)
Other-than-temporary impairment of marketable securities		(2,176	)		-			-			-			(2,176	)
Homebuilding pretax income (loss)		9,935			28,958			(98	)		(23,399	)		15,396
Financial Services:
Financial services pretax income		-			-			7,933			329			8,262
Income before income taxes		9,935			28,958			7,835			(23,070	)		23,658
(Provision) benefit for income taxes		4,843			(10,874	)		(2,849	)		-			(8,880	)
Net income	$	14,778		$	18,084		$	4,986		$	(23,070	)	$	14,778
Other comprehensive income related to available for sale securities, net of tax		(226	)		-			1,198			(1,198	)		(226	)
Comprehensive income	$	14,552		$	18,084		$	6,184		$	(24,268	)	$	14,552

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

Supplemental Condensed Combining Statement of Operations

	Nine Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,546,267		$	-		$	-		$	1,546,267
Home and land cost of sales		-			(1,291,270	)		(300	)		-			(1,291,570	)
Inventory impairments		-			(6,300	)		-			-			(6,300	)
Total cost of sales		-			(1,297,570	)		(300	)		-			(1,297,870	)
Gross margin		-			248,697			(300	)		-			248,397
Selling, general, and administrative expenses		(31,598	)		(150,492	)		-			(531	)		(182,621	)
Equity income of subsidiaries		80,990			-			-			(80,990	)		-
Interest and other income		3,970			1,652			4			(268	)		5,358
Other expense		(2	)		(2,461	)		-			-			(2,463	)
Other-than-temporary impairment of marketable securities		(934	)		-			-			-			(934	)
Homebuilding pretax income (loss)		52,426			97,396			(296	)		(81,789	)		67,737
Financial Services:
Financial services pretax income		-			-			24,247			799			25,046
Income before income taxes		52,426			97,396			23,951			(80,990	)		92,783
(Provision) benefit for income taxes		10,409			(31,438	)		(8,919	)		-			(29,948	)
Net income	$	62,835		$	65,958		$	15,032		$	(80,990	)	$	62,835
Other comprehensive income related to available for sale securities, net of tax		3,871			-			680			(680	)		3,871
Comprehensive income	$	66,706		$	65,958		$	15,712		$	(81,670	)	$	66,706

	Nine Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,295,273		$	-		$	-		$	1,295,273
Home and land cost of sales		-			(1,081,453	)		(100	)		-			(1,081,553	)
Inventory impairments		-			(4,701	)		-			-			(4,701	)
Total cost of sales		-			(1,086,154	)		(100	)		-			(1,086,254	)
Gross margin		-			209,119			(100	)		-			209,019
Selling, general, and administrative expenses		(29,211	)		(133,125	)		-			(421	)		(162,757	)
Equity income of subsidiaries		60,310			-			-			(60,310	)		-
Interest and other income		3,830			1,573			7			2			5,412
Interest expense		433			-			-			(433	)		-
Other expense		(5	)		(2,534	)		-			-			(2,539	)
Other-than-temporary impairment of marketable securities		(2,176	)		-			-			-			(2,176	)
Homebuilding pretax income (loss)		33,181			75,033			(93	)		(61,162	)		46,959
Financial Services:
Financial services pretax income		-			-			21,055			852			21,907
Income before income taxes		33,181			75,033			20,962			(60,310	)		68,866
(Provision) benefit for income taxes		10,015			(27,986	)		(7,699	)		-			(25,670	)
Net income	$	43,196		$	47,047		$	13,263		$	(60,310	)	$	43,196
Other comprehensive income related to available for sale securities, net of tax		722			-			918			(918	)		722
Comprehensive income	$	43,918		$	47,047		$	14,181		$	(61,228	)	$	43,918

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M.D.C. HOLDINGS, INC.

Notes to Unaudited Consolidated Financial Statements

Supplemental Condensed Combining Statement of Cash Flows

	Nine Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	(5,918	)	$	(17,581	)	$	14,596		$	-		$	(8,903	)
Net cash provided by (used in) investing activities		26,166			(1,252	)		(9,797	)		9,619			24,736
Financing activities:
Payments from (advances to) subsidiaries		-			20,284			(10,665	)		(9,619	)		-
Mortgage repurchase facility		-			-			3,400			-			3,400
Dividend payments		(36,763	)		-			-			-			(36,763	)
Net cash provided by (used in) financing activities		(36,763	)		20,284			(7,265	)		(9,619	)		(33,363	)
Net increase in cash and cash equivalents		(16,515	)		1,451			(2,466	)		-			(17,530	)
Cash and cash equivalents:
Beginning of period		141,245			3,097			36,646			-			180,988
End of period	$	124,730		$	4,548		$	34,180		$	-		$	163,458

	Nine Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	19,057		$	(73,657	)	$	28,114		$	-		$	(26,486	)
Net cash provided by (used in) investing activities		(21,669	)		(402	)		3,260			67,515			48,704
Financing activities:
Payments from (advances to) subsidiaries		-			75,084			(7,569	)		(67,515	)		-
Mortgage repurchase facility		-			-			(17,067	)		-			(17,067	)
Dividend payments		(36,646	)		-			-			-			(36,646	)
Proceeds from the exercise of stock options		665			-			-			-			665
Net cash provided by (used in) financing activities		(35,981	)		75,084			(24,636	)		(67,515	)		(53,048	)
Net increase in cash and cash equivalents		(38,593	)		1,025			6,738			-			(30,830	)
Cash and cash equivalents:
Beginning of period		119,951			2,691			31,183			-			153,825
End of period	$	81,358		$	3,716		$	37,921		$	-		$	122,995

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ITEM 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with, and is qualified in its entirety by, the Unaudited Consolidated Financial Statements and Notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are based upon management’s experiences, observations, and analyses. Actual results may differ materially from those indicated in such forward-looking statements. Factors that may cause such a difference include, but are not limited to, those discussed in "Item 1A: Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2015 and this Quarterly Report on Form 10-Q.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per share amounts)
Homebuilding:
Home sale revenues	$	575,722		$	454,740		$	1,541,337		$	1,293,457
Land sale revenues		2,290			906			4,930			1,816
Total home and land sale revenues		578,012			455,646			1,546,267			1,295,273
Home cost of sales		(481,511	)		(375,948	)		(1,287,373	)		(1,079,609	)
Land cost of sales		(2,318	)		(819	)		(4,197	)		(1,944	)
Inventory impairments		(4,700	)		(4,351	)		(6,300	)		(4,701	)
Total cost of sales		(488,529	)		(381,118	)		(1,297,870	)		(1,086,254	)
Gross margin		89,483			74,528			248,397			209,019
Gross margin %		15.5	%		16.4	%		16.1	%		16.1	%
Selling, general and administrative expenses		(61,904	)		(57,444	)		(182,621	)		(162,757	)
Interest and other income		1,869			838			5,358			5,412
Other expense		(1,558	)		(350	)		(2,463	)		(2,539	)
Other-than-temporary impairment of marketable securities		(215	)		(2,176	)		(934	)		(2,176	)
Homebuilding pretax income		27,675			15,396			67,737			46,959
Financial Services:
Revenues		17,408			12,841			44,248			34,852
Expenses		(7,955	)		(5,464	)		(21,739	)		(15,830	)
Interest and other income		1,035			885			2,648			2,885
Other-than-temporary impairment of marketable securities		(111	)		-			(111	)		-
Financial services pretax income		10,377			8,262			25,046			21,907
Income before income taxes		38,052			23,658			92,783			68,866
Provision for income taxes		(11,693	)		(8,880	)		(29,948	)		(25,670	)
Net income	$	26,359		$	14,778		$	62,835		$	43,196
Earnings per share:
Basic	$	0.54		$	0.30		$	1.28		$	0.88
Diluted	$	0.54		$	0.30		$	1.28		$	0.88
Weighted average common shares outstanding:
Basic		48,854,412			48,785,973			48,844,613			48,756,265
Diluted		49,009,949			49,070,291			48,855,014			48,982,975
Dividends declared per share	$	0.25		$	0.25		$	0.75		$	0.75
Cash provided by (used in):
Operating Activities	$	13,183		$	(70,995	)	$	(8,903	)	$	(26,486	)
Investing Activities	$	(7,486	)	$	32,115		$	24,736		$	48,704
Financing Activities	$	(13,545	)	$	(18,413	)	$	(33,363	)	$	(53,048	)

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Overview

Industry Conditions

The homebuilding industry has continued down a stable path in 2016, driven by solid levels of employment, consumer confidence, personal income and household formation, coupled with mortgage rates that remain near record lows. We continue to see increasing demand from first-time buyers for more affordable new homes, which we believe has the potential to increase the overall level of national new home sales. However, many markets also continue to see production constraints driven by limited subcontractor availability, resulting in slower build times.

Three Months Ended September 30, 2016

Our net income for the 2016 third quarter was $26.4 million, or $0.54 per diluted share, a 78% increase from $14.8 million, or $0.30 per diluted share, for the same period in the prior year. The increase was primarily driven by an improvement in home sale revenues of 27%, coupled with a 180 basis point improvement in our selling, general and administrative (“SG&A”) expenses as a percentage of home sale revenues (“SG&A rate”), a 26% increase in our financial services pre-tax income, and a 680 basis point reduction in our effective tax rate, partially offset by a 90 basis point decline in our gross margin from home sales.

Home sale revenues were up from $454.7 million in the 2015 third quarter to $575.7 million in the 2016 third quarter. The $121.0 million improvement was primarily the result of a 20% increase in the number of homes delivered and, to a lesser extent, a 6% increase in our average selling price. Our improvement in the number of homes delivered was the result of a 35% year-over-year increase in our beginning homes in backlog. The increase in our average selling price was mostly due to a mix shift to higher-priced communities and, to a lesser extent, price increases implemented over the past twelve months.

Our dollar value of net new home orders increased 17% from the prior year period to $570.3 million, driven primarily by higher net new orders as our monthly sales absorption pace improved 15% year-over-year to 2.7, our highest third quarter absorption pace since 2005.

Nine months ended September 30, 2016

Our net income for the nine months ended September 30, 2016 was $62.8 million, or $1.28 per diluted share, a significant increase from $43.2 million, $0.88 per diluted share, for the prior year period. The increase was primarily due to a 19% improvement in home sale revenues, an 80 basis point improvement in in our SG&A rate, and a 500 basis point reduction in our effective tax rate.

Outlook

We ended the 2016 third quarter with a dollar value of homes in backlog of $1.61 billion, up 37% year-over-year. Though we continue to experience subcontractor availability issues, which have negatively impacted our cycle times, we expect our final quarter of 2016 to have year-over-year top and bottom line growth. This growth should help us continue to expand our return on equity, which is a key focus for us. See "Forward-Looking Statements" below.

Another key focus for us has been increasing the availability of our recently developed series of more affordable home plans, which are designed for the first-time homebuyer segment. We believe this segment is becoming an increasingly important part of the housing market and may be a more significant source of demand for us in future periods.

With overall liquidity of $769.5 million and no senior note maturities until 2020, we believe that our financial position at September 30, 2016 provides us with the ability to grow operations as opportunities arise while still providing adequate protection from the historically volatile and cyclical nature of the housing market and domestic and global economies. See "Forward-Looking Statements" below.

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Homebuilding

Pretax Income

	Three Months Ended												Nine Months Ended
	September 30,						Change						September 30,						Change
	2016			2015			Amount			%			2016			2015			Amount			%
	(Dollars in thousands)
West	$	18,392		$	16,708		$	1,684			10	%	$	43,830		$	40,808		$	3,022			7	%
Mountain		18,856			12,849			6,007			47	%		49,688			35,239			14,449			41	%
East		(2,267	)		(691	)		(1,576	)	N/M				3,600			(1,093	)		4,693		N/M
Corporate		(7,306	)		(13,470	)		6,164			46	%		(29,381	)		(27,995	)		(1,386	)		(5	)%
Total homebuilding pretax income	$	27,675		$	15,396		$	12,279			80	%	$	67,737		$	46,959		$	20,778			44	%

N/M – Not meaningful

For the three months ended September 30, 2016, we recorded homebuilding pretax income of $27.7 million, compared to $15.4 million for the same period in the prior year, an increase of $12.3 million. The improvement in pretax income for the quarter was primarily driven by a 27% year-over-year increase in our home sale revenues and a 180 basis point improvement in our SG&A rate. The year-over-year increases in pretax income for each of our West and Mountain segments were driven primarily by higher home sale revenues of 24% and 30%, respectively, coupled with slight improvements in the SG&A rate for both segments. In our East segment, a 28% increase in home sale revenues was more than offset by a $1.7 million increase in inventory impairments and higher lot option deposit write-offs, resulting in a larger pretax loss compared to the 2015 third quarter. Our Corporate segment experienced a $6.2 million improvement in pretax loss primarily due to declines in both stock-based compensation expense and other-than-temporary impairment of marketable securities.

For the nine months ended September 30, 2016, we recorded homebuilding pretax income of $67.7 million, compared to $47.0 million for the same period in the prior year, an increase of $20.8 million. The increase was primarily attributable to a 19% increase in home sale revenues, coupled with an 80 basis point improvement in our SG&A rate. The improvements in pretax income for each of our West, Mountain and East segments were driven primarily by increases in home sale revenues of 20%, 21% and 15%, respectively. Furthermore, our Mountain and East segments benefited from significant improvements in their SG&A rates. For our Corporate segment the additional $1.4 million of pretax loss was primarily due to higher compensation-related expenses.

Assets

	September 30,		December 31,		Change
	2016		2015		Amount			%
	(Dollars in thousands)
West	$	1,083,419	$	991,393	$	92,026			9	%
Mountain		588,976		536,831		52,145			10	%
East		285,528		324,457		(38,929	)		(12	)%
Corporate		332,483		393,712		(61,229	)		(16	)%
Total homebuilding assets	$	2,290,406	$	2,246,393	$	44,013			2	%

Total homebuilding assets increased slightly at September 30, 2016 compared to December 31, 2015. Homebuilding assets in our West and Mountain segments increased modestly from December 31, 2015 primarily as a result of incremental investments in our work-in-process inventories. The funds for these investments came from our Corporate segment, driving the majority of the $61.2 million decline in our Corporate segment’s assets. The decline in homebuilding assets in our East segment is due to reduced land acquisition activity in this segment during 2016, as our recent returns in this segment have been lower than expected.

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Home and land sale revenues

	Three Months Ended									Nine Months Ended
	September 30,				Change					September 30,				Change
	2016		2015		Amount		%			2016		2015		Amount		%
	(Dollars in thousands)
West	$	284,589	$	229,743	$	54,846		24	%	$	745,995	$	624,261	$	121,734		20	%
Mountain		192,876		147,166		45,710		31	%		521,034		428,080		92,954		22	%
East		100,547		78,737		21,810		28	%		279,238		242,932		36,306		15	%
Total home and land sale revenues	$	578,012	$	455,646	$	122,366		27	%	$	1,546,267	$	1,295,273	$	250,994		19	%

For the 2016 third quarter, home and land sale revenues increased $122.4 million year-over-year to $578.0 million. For the nine months ended September 30, 2016, home and land sale revenues increased $251.0 million from the same period in the prior year to $1.55 billion. The increases for both the three and nine months ended September 30, 2016 compared to the same periods in the prior year were driven primarily by increases in new home deliveries of 20% and 11%, respectively, and increases in our average selling price of 6% and 7%, respectively.

New Home Deliveries

	Three Months Ended September 30,
	2016						2015						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		221	$	64,314	$	291.0		190	$	54,434	$	286.5		16	%		18	%		2	%
California		195		125,601		644.1		161		84,877		527.2		21	%		48	%		22	%
Nevada		177		59,601		336.7		159		60,258		379.0		11	%		(1	)%		(11	)%
Washington		75		35,072		467.6		75		30,174		402.3		0	%		16	%		16	%
West		668		284,588		426.0		585		229,743		392.7		14	%		24	%		8	%
Colorado		343		169,859		495.2		281		132,916		473.0		22	%		28	%		5	%
Utah		55		20,728		376.9		39		13,460		345.1		41	%		54	%		9	%
Mountain		398		190,587		478.9		320		146,376		457.4		24	%		30	%		5	%
Maryland		61		27,297		447.5		55		26,122		474.9		11	%		4	%		(6	)%
Virginia		78		39,795		510.2		51		25,309		496.3		53	%		57	%		3	%
Florida		88		33,455		380.2		69		27,190		394.1		28	%		23	%		(4	)%
East		227		100,547		442.9		175		78,621		449.3		30	%		28	%		(1	)%
Total		1,293	$	575,722	$	445.3		1,080	$	454,740	$	421.1		20	%		27	%		6	%

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	Nine Months Ended September 30,
	2016						2015						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		582	$	170,352	$	292.7		543	$	160,011	$	294.7		7	%		6	%		(1	)%
California		512		319,116		623.3		486		243,407		500.8		5	%		31	%		24	%
Nevada		432		149,861		346.9		404		147,788		365.8		7	%		1	%		(5	)%
Washington		234		106,665		455.8		190		73,055		384.5		23	%		46	%		19	%
West		1,760		745,994		423.9		1,623		624,261		384.6		8	%		20	%		10	%
Colorado		945		463,534		490.5		843		392,779		465.9		12	%		18	%		5	%
Utah		145		53,238		367.2		95		33,600		353.7		53	%		58	%		4	%
Mountain		1,090		516,772		474.1		938		426,379		454.6		16	%		21	%		4	%
Maryland		178		84,742		476.1		168		78,980		470.1		6	%		7	%		1	%
Virginia		193		98,572		510.7		170		82,755		486.8		14	%		19	%		5	%
Florida		251		95,257		379.5		216		81,082		375.4		16	%		17	%		1	%
East		622		278,571		447.9		554		242,817		438.3		12	%		15	%		2	%
Total		3,472	$	1,541,337	$	443.9		3,115	$	1,293,457	$	415.2		11	%		19	%		7	%

The number of homes delivered for both the three and nine months ended September 30, 2016 increased for nearly all of our markets compared to the same periods in 2015 as our beginning backlog for each period was up significantly year-over-year. However, the benefit to deliveries from the improved beginning backlog was somewhat offset by a lower backlog conversion rate mostly due to: (1) a higher percentage of our homes in beginning backlog being in the early phases of construction due to our renewed focus on build-to-order homes; and (2) issues with subcontractor availability in certain of our larger markets, which have negatively impacted our cycle times. Despite these headwinds, we expect to see a sequential improvement in our backlog conversion rate in the 2016 fourth quarter. See "Forward-Looking Statements" below.

For both the three and nine months ended September 30, 2016, most of our markets experienced year-over-year increases in the average selling price of homes delivered. Our California and Washington markets each experienced the most significant increases in average selling price in both periods as both markets benefited from (1) a shift in mix to higher priced communities and (2) price increases implemented over the past twelve months. The average selling prices of homes delivered in our Nevada market declined in both periods primarily due to a shift in mix to lower priced communities.

Gross Margin

For the 2016 third quarter, our gross margin from home sales decreased 90 basis points from the same period in 2015. Our gross margin from home sales for the quarter was negatively impacted by higher land and construction costs, notably in our Nevada market, and an adjustment of $1.8 million to increase our warranty accrual, primarily in our Colorado market.

Our gross margin from home sales for the nine months ended September 30, 2016 decreased 10 basis points year-over-year due primarily to: (1) $5.1 million in warranty adjustments, primarily in our Colorado market, to increase our warranty accrual while we had $0.2 million in positive warranty adjustments during the same period in 2015; and (2) a $1.6 million increase in inventory impairments. These items were mostly offset by the positive impact from a higher percentage of our deliveries coming from build-to-order sales, which typically have higher gross margins when compared to deliveries of homes that were started without a sales contract.

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Inventory Impairments

Impairments of homebuilding inventory by segment for the three and nine months ended September 30, 2016 and 2015 are shown in the table below. In addition to the impairments shown below, we recorded $1.1 million of impairments on our land held for sale during the three and nine months ended September 30, 2015. No such impairments were recorded during the same periods in 2016.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
West	$	-	$	-	$	1,400	$	-
Mountain		-		250		-		250
East		4,700		2,975		4,900		3,325
Total inventory impairments	$	4,700	$	3,225	$	6,300	$	3,575

The table below provides quantitative data, for the periods presented, used in determining the fair value of the impaired inventory.

	Impairment Data								Quantitative Data
Three Months Ended	Total Subdivisions Tested		Inventory Impairments		Fair Value of Inventory After Impairments		Number of Subdivisions Impaired		Discount Rate
	(Dollars in thousands)
March 31, 2016		14	$	-	$	-		-		N/A
June 30, 2016		17	$	1,600	$	6,415		2	12%	to	15%
September 30, 2016		25	$	4,700	$	12,295		2	15%	to	18%
March 31, 2015		22	$	350	$	3,701		1		8.7%
June 30, 2015		22	$	-	$	-		-		N/A
September 30, 2015		18	$	3,225	$	14,836		5	12%	to	15%

Selling, General and Administrative Expenses

	Three Months Ended September 30,									Nine Months Ended September 30,
	2016			2015			Change			2016			2015			Change
	(Dollars in thousands)
General and administrative expenses	$	27,758		$	29,694		$	(1,936	)	$	90,638		$	81,984		$	8,654
General and administrative expenses as a percentage of home sale revenues		4.8	%		6.5	%	(170) bps				5.9	%		6.3	%	(40) bps
Marketing expenses	$	15,262		$	12,548		$	2,714		$	41,728		$	37,866		$	3,862
Marketing expenses as a percentage of home sale revenues		2.7	%		2.8	%	(10) bps				2.7	%		2.9	%	(20) bps
Commissions expenses	$	18,884		$	15,202		$	3,682		$	50,255		$	42,907		$	7,348
Commissions expenses as a percentage of home sale revenues		3.3	%		3.3	%	0 bps				3.3	%		3.3	%	0 bps
Total selling, general and administrative expenses	$	61,904		$	57,444		$	4,460		$	182,621		$	162,757		$	19,864
Total selling, general and administrative expenses as a percentage of home sale revenues (SG&A Rate)		10.8	%		12.6	%	(180) bps				11.8	%		12.6	%	(80) bps

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For the three months ended September 30, 2016, we experienced a $1.9 million decline in general and administrative expenses primarily due to lower stock-based compensation expense. The decline in stock-based compensation expense was the result of expense related to a non-qualified stock option grant made in the middle of the 2015 second quarter to each of our Chief Executive Officer and Chief Operating Officer no longer being required as all required expense had been recognized by June 30, 2016. For the nine months ended September 30, 2016, the $8.7 million increase in our general and administrative expenses was primarily due to increased compensation-related expenses as a result of a higher average headcount.

Our commissions expenses are variable with home sale revenues while a significant portion of our marketing expenses are somewhat variable with home sale revenues. The increase in both periods for these line items is primarily due to our year-over-year increases in home sale revenues.

Other-Than-Temporary Impairment of Marketable Securities

During the three and nine months ended September 30, 2016, we recorded impairments of marketable securities totaling $0.2 million and $0.9 million, respectively, compared to an impairment of $2.2 million for both the three and nine months ended September 30, 2015. The impairments recorded on certain equity securities were based on our determination that the unrealized loss on certain of our equity securities no longer met the criteria to be considered temporary.

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Other Homebuilding Operating Data

Net New Orders:

	Three Months Ended September 30,
	2016								2015								% Change
	Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes			Dollar Value			Average Price			Monthly Absorption Rate *
	(Dollars in thousands)
Arizona		225	$	68,611	$	304.9		2.56		214	$	60,274	$	281.7		2.15		5	%		14	%		8	%		19	%
California		260		154,113		592.7		4.08		184		118,943		646.4		3.07		41	%		30	%		(8	)%		33	%
Nevada		175		59,068		337.5		2.75		110		40,196		365.4		2.99		59	%		47	%		(8	)%		(8	)%
Washington		83		38,400		462.7		2.26		93		40,260		432.9		2.25		(11	)%		(5	)%		7	%		0	%
West		743		320,192		430.9		2.95		601		259,673		432.1		2.53		24	%		23	%		(0	)%		17	%
Colorado		321		147,984		461.0		3.82		273		129,221		473.3		2.39		18	%		15	%		(3	)%		60	%
Utah		35		14,979		428.0		1.41		48		17,282		360.0		2.21		(27	)%		(13	)%		19	%		(36	)%
Mountain		356		162,963		457.8		3.27		321		146,503		456.4		2.36		11	%		11	%		0	%		39	%
Maryland		50		23,125		462.5		1.42		53		26,667		503.2		1.81		(6	)%		(13	)%		(8	)%		(22	)%
Virginia		52		27,270		524.4		2.04		48		22,812		475.3		2.21		8	%		20	%		10	%		(8	)%
Florida		95		36,711		386.4		1.74		86		33,393		388.3		1.98		10	%		10	%		(0	)%		(12	)%
East		197		87,106		442.2		1.71		187		82,872		443.2		1.98		5	%		5	%		(0	)%		(14	)%
Total		1,296	$	570,261	$	440.0		2.72		1,109	$	489,048	$	441.0		2.37		17	%		17	%		(0	)%		15	%

	Nine Months Ended September 30,
	2016								2015								% Change
	Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes		Dollar Value		Average Price		Monthly Absorption Rate *		Homes			Dollar Value			Average Price			Monthly Absorption Rate *
	(Dollars in thousands)
Arizona		684	$	209,013	$	305.6		2.52		689	$	195,546	$	283.8		2.20		(1	)%		7	%		8	%		15	%
California		797		479,030		601.0		4.36		696		402,701		578.6		3.79		15	%		19	%		4	%		15	%
Nevada		634		224,168		353.6		3.31		487		185,313		380.5		4.19		30	%		21	%		(7	)%		(21	)%
Washington		325		156,962		483.0		2.82		314		133,197		424.2		2.66		4	%		18	%		14	%		6	%
West		2,440		1,069,173		438.2		3.20		2,186		916,757		419.4		2.99		12	%		17	%		4	%		7	%
Colorado		1,227		585,152		476.9		4.00		1,173		557,372		475.2		3.19		5	%		5	%		0	%		25	%
Utah		178		68,199		383.1		2.47		177		64,426		364.0		2.89		1	%		6	%		5	%		(15	)%
Mountain		1,405		653,351		465.0		3.71		1,350		621,798		460.6		3.15		4	%		5	%		1	%		18	%
Maryland		208		98,703		474.5		1.89		181		89,213		492.9		2.14		15	%		11	%		(4	)%		(12	)%
Virginia		210		110,047		524.0		2.75		163		80,588		494.4		2.11		29	%		37	%		6	%		30	%
Florida		325		136,220		419.1		2.19		303		112,895		372.6		2.34		7	%		21	%		12	%		(6	)%
East		743		344,970		464.3		2.22		647		282,696		436.9		2.22		15	%		22	%		6	%		0	%
Total		4,588	$	2,067,494	$	450.6		3.11		4,183	$	1,821,251	$	435.4		2.88		10	%		14	%		3	%		8	%

* Calculated as total net new orders in period ÷ average active communities during period ÷ number of months in period

For the three and nine months ended September 30, 2016, the dollar value of net new orders increased 17% and 14%, respectively, compared to the same periods in the prior year, primarily due to increases in net new orders in each period. Our net new orders in both periods were up primarily due to improved monthly sales absorption rates.

For the three months ended September 30, 2016, the $81.2 million increase in the dollar value of net new orders was primarily driven by significant year-over-year improvements in our California, Nevada, and Colorado markets. The increases in California and Colorado were primarily due to increases of 33% and 60%, respectively, in the monthly sales absorption rate, which drove a much higher net new order count. In our Nevada market, a year-over-year increase in average active communities of 75% primarily drove the higher dollar value of net new orders. The slight decreases in average selling prices in most of our markets were primarily due to a shift in mix to lower priced communities. As discussed in prior quarters, we are continuing to roll out our more affordable product. Though we are still in the early phases of this process, we have seen continued increases in the sales of this product as a percentage of our total net new orders.

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Through the first nine months of 2016, all of the markets in which we operate have realized year-over-year improvements in the dollar value of net new orders, driving a $246.2 million increase in the dollar value of net new orders. On the back of solid macro-economic factors, most of our markets have benefited from an improved monthly sales absorption pace in 2016.

Active Subdivisions:

								Average Active Subdivisions							Average Active Subdivisions
	Active Subdivisions							Three Months Ended							Nine Months Ended
	September 30,				%			September 30,				%			September 30,				%
	2016		2015		Change			2016		2015		Change			2016		2015		Change
Arizona		30		31		(3	)%		29		33		(12	)%		30		35		(14	)%
California		21		19		11	%		21		20		5	%		20		20		0	%
Nevada		20		15		33	%		21		12		75	%		21		13		62	%
Washington		14		14		0	%		12		14		(14	)%		13		13		0	%
West		85		79		8	%		83		79		5	%		84		81		4	%
Colorado		28		37		(24	)%		28		38		(26	)%		34		41		(17	)%
Utah		9		8		13	%		8		7		14	%		8		7		14	%
Mountain		37		45		(18	)%		36		45		(20	)%		42		48		(13	)%
Maryland		11		10		10	%		12		10		20	%		12		9		33	%
Virginia		8		8		0	%		9		7		29	%		9		9		0	%
Florida		18		15		20	%		18		15		20	%		17		14		21	%
East		37		33		12	%		39		32		22	%		38		32		19	%
Total		159		157		1	%		158		156		1	%		164		161		2	%

At September 30, 2016, we had 159 active subdivisions, a 1% increase from September 30, 2015. The year-over-year changes for nearly all our markets were primarily driven by the timing of opening new communities versus closing out older communities.

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Cancellation Rate:

																			Cancellations As a Percentage
	Cancellations As a Percentage of Gross Sales																		of Homes in Beginning Backlog
	Three Months Ended September 30,						Change in			Nine Months Ended September 30,						Change in			Three Months Ended September 30,						Change in
	2016			2015			Percentage			2016			2015			Percentage			2016			2015			Percentage
Arizona		26	%		26	%		0	%		24	%		22	%		2	%		19	%		22	%		(3	)%
California		23	%		20	%		3	%		21	%		19	%		2	%		14	%		12	%		2	%
Nevada		26	%		28	%		(2	)%		18	%		17	%		1	%		15	%		15	%		0	%
Washington		17	%		23	%		(6	)%		17	%		17	%		0	%		6	%		17	%		(11	)%
West		24	%		24	%		0	%		20	%		19	%		1	%		14	%		16	%		(2	)%
Colorado		24	%		26	%		(2	)%		19	%		20	%		(1	)%		9	%		11	%		(2	)%
Utah		31	%		19	%		12	%		22	%		16	%		6	%		10	%		10	%		0	%
Mountain		24	%		25	%		(1	)%		20	%		19	%		1	%		9	%		10	%		(1	)%
Maryland		32	%		17	%		15	%		25	%		17	%		8	%		18	%		13	%		5	%
Virginia		30	%		28	%		2	%		20	%		28	%		(8	)%		15	%		22	%		(7	)%
Florida		32	%		30	%		2	%		28	%		25	%		3	%		19	%		21	%		(2	)%
East		31	%		26	%		5	%		25	%		24	%		1	%		17	%		19	%		(2	)%
Total		25	%		25	%		0	%		21	%		20	%		1	%		13	%		14	%		(1	)%

Our cancellations as a percentage of gross sales for each of the three and nine months ended September 30, 2016 were nearly unchanged from the same periods in 2015. While this metric can be useful, we have seen that it can be volatile based on fluctuations in sales and timing of cancellations. When analyzing cancellations over a period of three months, we have found that cancellations as a percentage of homes in beginning backlog to start the quarter provides more predictable results. In regard to this metric, our cancellations as a percent of beginning backlog for the 2016 third quarter were consistent with the same period in the prior year in all markets with the exception of Washington, which decreased significantly as a result of limited inventory and rising prices in that market.

Backlog:

	September 30,
	2016						2015						% Change
	Homes		Dollar Value		Average Price		Homes		Dollar Value		Average Price		Homes			Dollar Value			Average Price
	(Dollars in thousands)
Arizona		423	$	132,929	$	314.3		377	$	109,735	$	291.1		12	%		21	%		8	%
California		627		389,622		621.4		402		253,814		631.4		56	%		54	%		(2	)%
Nevada		397		139,731		352.0		238		94,815		398.4		67	%		47	%		(12	)%
Washington		270		133,367		494.0		179		79,175		442.3		51	%		68	%		12	%
West		1,717		795,649		463.4		1,196		537,539		449.4		44	%		48	%		3	%
Colorado		1,104		530,662		480.7		909		434,371		477.9		21	%		22	%		1	%
Utah		141		53,180		377.2		122		43,551		357.0		16	%		22	%		6	%
Mountain		1,245		583,842		468.9		1,031		477,922		463.6		21	%		22	%		1	%
Maryland		120		56,837		473.6		81		42,999		530.9		48	%		32	%		(11	)%
Virginia		118		64,228		544.3		83		42,494		512.0		42	%		51	%		6	%
Florida		248		111,499		449.6		196		78,900		402.6		27	%		41	%		12	%
East		486		232,564		478.5		360		164,393		456.6		35	%		41	%		5	%
Total		3,448	$	1,612,055	$	467.5		2,587	$	1,179,854	$	456.1		33	%		37	%		2	%

At September 30, 2016, we had 3,448 homes in backlog with a total value of $1.61 billion, representing a year-over-year increase of 861 homes and $432.2 million from September 30, 2015. The increase in the number homes in backlog for each of our markets was driven by a combination of the following factors: (1) an increase in net new order activity over the last twelve months for all our markets, except Utah; (2) a higher percentage of our backlog coming from build-to-order sales, which are generally in backlog for a longer period of time; and (3) limited subcontractor availability, which has extended our cycle times in most of our larger markets.

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Homes Completed or Under Construction (WIP lots):

	September 30,				%
	2016		2015		Change
Unsold:
Completed		81		221		(63	)%
Under construction		298		403		(26	)%
Total unsold started homes		379		624		(39	)%
Sold homes under construction or completed		2,626		1,947		35	%
Model homes		293		273		7	%
Total homes completed or under construction		3,298		2,844		16	%

At the beginning of 2015, we increased our focus on build-to-order sales and started fewer unsold homes, giving our customers the best opportunity to personalize their homes. As a result, our supply of unsold homes has declined by 39% year-over-year from September 30, 2015. However, this decline was more than offset by a 35% increase in sold homes under construction or completed as a result of our higher backlog, and a 7% increase in our model homes, resulting in a 16% increase in our total homes completed or under construction.

Lots Owned and Optioned (including homes completed or under construction):

	September 30, 2016						September 30, 2015
	Lots Owned		Lots Optioned		Total		Lots Owned		Lots Optioned		Total		Total % Change
Arizona		1,515		269		1,784		1,778		205		1,983		(10	)%
California		1,753		75		1,828		1,726		222		1,948		(6	)%
Nevada		2,051		200		2,251		1,938		439		2,377		(5	)%
Washington		853		-		853		842		37		879		(3	)%
West		6,172		544		6,716		6,284		903		7,187		(7	)%
Colorado		4,051		1,347		5,398		4,208		1,036		5,244		3	%
Utah		380		-		380		496		-		496		(23	)%
Mountain		4,431		1,347		5,778		4,704		1,036		5,740		1	%
Maryland		261		143		404		383		304		687		(41	)%
Virginia		429		15		444		693		163		856		(48	)%
Florida		962		455		1,417		1,014		293		1,307		8	%
East		1,652		613		2,265		2,090		760		2,850		(21	)%
Total		12,255		2,504		14,759		13,078		2,699		15,777		(6	)%

Our total owned and optioned lots at September 30, 2016 were 14,759, down 6% from September 30, 2015. The decline in lots controlled in our Maryland and Virginia markets is primarily due to reduced land acquisition activity during 2016, as our recent returns in these markets have been lower than expected. Our total lot supply of approximately 3.1 years (which is based on our last-twelve months deliveries and is within our stated strategic range), coupled with our planned acquisition activity, will support growth in future periods. See "Forward-Looking Statements" below.

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Financial Services

	Three Months Ended									Nine Months Ended
	September 30,				Change					September 30,				Change
	2016		2015		Amount		%			2016		2015		Amount			%
	(Dollars in thousands)
Financial services revenues
Mortgage operations	$	11,294	$	7,999	$	3,295		41	%	$	28,866	$	21,752	$	7,114			33	%
Other		6,114		4,842		1,272		26	%		15,382		13,100		2,282			17	%
Total financial services revenues	$	17,408	$	12,841	$	4,567		36	%	$	44,248	$	34,852	$	9,396			27	%
Financial services pretax income
Mortgage operations	$	6,723	$	5,354	$	1,369		26	%	$	16,491	$	12,243	$	4,248			35	%
Other		3,654		2,908		746		26	%		8,555		9,664		(1,109	)		(11	)%
Total financial services pretax income	$	10,377	$	8,262	$	2,115		26	%	$	25,046	$	21,907	$	3,139			14	%

For the three and nine months ended September 30, 2016, our financial services pretax income was up $2.1 million, or 26%, and $3.1 million, or 14%, respectively, from the same periods in the prior year. The year-over-year increases in pretax income for both periods were primarily due to our mortgage operations segment having: (1) increases in the dollar value of loans locked, originated, and sold; and (2) higher gains on loans locked and sold. For the nine months ended September 30, 2016, our other financial services segment had a slight decline in pretax income as the nine months ended September 30, 2015 benefited from a $1.5 million adjustment to reduce insurance reserves and the same period in 2016 did not benefit from such an adjustment.

The following table sets forth information for our mortgage operations segment relating to mortgage loans originated and capture rate. “Capture rate” is defined as the number of mortgage loans originated by our mortgage operations segment for our homebuyers as a percent of our total home closings.

	Three Months Ended						% or			Nine Months Ended						% or
	September 30,						Percentage			September 30,						Percentage
	2016			2015			Change			2016			2015			Change
	(Dollars in thousands)
Total Originations (including transfer loans):
Loans		862			606			42	%		2,146			1,759			22	%
Principal	$	296,456		$	203,091			46	%	$	747,941		$	589,810			27	%
Capture Rate Data:
Capture rate as % of all homes delivered		66	%		55	%		11	%		61	%		56	%		5	%
Capture rate as % of all homes delivered (excludes cash sales)		69	%		59	%		10	%		64	%		59	%		5	%
Mortgage Loan Origination Product Mix:
FHA loans		21	%		19	%		2	%		20	%		17	%		3	%
Other government loans (VA & USDA)		22	%		23	%		(1	)%		24	%		26	%		(2	)%
Total government loans		43	%		42	%		1	%		44	%		43	%		1	%
Conventional loans		57	%		58	%		(1	)%		56	%		57	%		(1	)%
		100	%		100	%		0	%		100	%		100	%		0	%
Loan Type:
Fixed rate		97	%		96	%		1	%		98	%		96	%		2	%
ARM		3	%		4	%		(1	)%		2	%		4	%		(2	)%
Credit Quality:
Average FICO Score		735			736			(0	)%		736			736			0	%
Other Data:
Average Combined LTV ratio		83	%		85	%		(2	)%		84	%		85	%		(1	)%
Full documentation loans		100	%		100	%		0	%		100	%		100	%		0	%
Loans Sold to Third Parties:
Loans		840			640			31	%		2,144			1,819			18	%
Principal	$	295,818		$	215,023			38	%	$	744,958		$	608,156			22	%

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Income Taxes

For the three and nine months ended September 30, 2016, we had income tax expenses of $11.7 million and $29.9 million, respectively, both of which were based on effective income tax rates of 30.7% and 32.3%, respectively. For the three and nine months ended September 30, 2015, we had income tax expenses of $8.9 million and $25.7 million, respectively, which were based on effective income tax rates of 37.5% and 37.3%, respectively. The year-over-year reductions in our effective tax rates are primarily the result of our estimated 2016 full year effective tax rate including (1) an estimate for energy credits versus no such estimate as of September 30, 2015 as the credit for both 2015 and 2016 was not approved by the U.S. Congress until December 2015, and (2) a domestic manufacturing deduction, whereas we were not eligible for this deduction in the prior year due to our net operating loss carryforwards.

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CRITICAL ACCOUNTING ESTIMATES AND POLICIES

The preparation of financial statements in conformity with accounting policies generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Management evaluates such estimates and judgments on an on-going basis and makes adjustments as deemed necessary. Actual results could differ from these estimates if conditions are significantly different in the future. See "Forward-Looking Statements" below.

Our critical accounting estimates and policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2015.

LIQUIDITY AND CAPITAL RESOURCES

We use our liquidity and capital resources to: (1) support our operations, including the purchase of land, land development and construction of homes; (2) provide working capital; and (3) provide mortgage loans for our homebuyers. Our liquidity includes our cash and cash equivalents, marketable securities, revolving credit facility and mortgage repurchase facility. Additionally, we have an existing effective shelf registration statement that allows us to issue equity, debt or hybrid securities up to $1.50 billion.

We have marketable equity securities that consist primarily of holdings in corporate equities and holdings in mutual fund securities, which are invested mostly in debt securities.

Capital Resources

Our capital structure is primarily a combination of (1) permanent financing, represented by stockholders’ equity; (2) long-term financing, represented by our 5⅝% senior notes due 2020, 5½% senior notes due 2024 and our 6% senior notes due 2043; (3) our Revolving Credit Facility and (4) our Mortgage Repurchase Facility. Because of our current balance of cash, cash equivalents, marketable securities, ability to access the capital markets, and available capacity under both our Revolving Credit Facility and Mortgage Repurchase Facility, we believe that our capital resources are adequate to satisfy our short and long-term capital requirements, including meeting future payments on our senior notes as they become due. See "Forward-Looking Statements" below.

We may from time to time seek to retire or purchase our outstanding senior notes through cash purchases, whether through open market purchases, privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Senior Notes, Revolving Credit Facility and Mortgage Repurchase Facility

Senior Notes. Our senior notes are not secured and, while the senior note indentures contain some restrictions on secured debt and other transactions, they do not contain financial covenants. Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by most of our homebuilding segment subsidiaries. We believe that we are in compliance with the representations, warranties and covenants in the senior note indentures.

Revolving Credit Facility. We have an unsecured revolving credit agreement (“Revolving Credit Facility”) with a group of lenders, which may be used for general corporate purposes. This agreement has an aggregate commitment of $550 million (the “Commitment”) and was amended on December 18, 2015 to extend the maturity to December 18, 2020. Each lender may issue letters of credit in an amount up to 50% of its commitment. The facility permits an increase in the maximum Commitment amount to $1.0 billion upon our request, subject to receipt of additional commitments from existing or additional lenders and the consent of the designated agent and the co-administrative agent. As defined in the Revolving Credit Facility agreement, interest rates on outstanding borrowings are equal to the highest of (1) 0.0% or (2) a specified eurocurrency rate, federal funds effective rate or prime rate, plus a margin that is determined based on our credit ratings and leverage ratio. At any time at which our leverage ratio, as of the last day of the most recent calendar quarter, exceeds 55%, the aggregate principal amount of all consolidated senior debt borrowings outstanding may not exceed the borrowing base. There is no borrowing base requirement if our leverage ratio, as of the last day of the most recent calendar quarter, is 55% or less.

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The Revolving Credit Facility is fully and unconditionally guaranteed, jointly and severally, by most of our homebuilding segment subsidiaries. The facility contains various representations, warranties and covenants that we believe are customary for agreements of this type. The financial covenants include a consolidated tangible net worth test and a leverage test, along with a consolidated tangible net worth covenant, all as defined in the facility agreement. A failure to satisfy the foregoing tests does not constitute an event of default, but can trigger a “term-out” of the facility. A breach of the consolidated tangible net worth covenant (but not the consolidated tangible net worth test) or a violation of anti-corruption or sanctions laws would result in an event of default.

The Revolving Credit Facility is subject to acceleration upon certain specified events of default, including breach of the consolidated tangible net worth covenant, a violation of anti-corruption or sanctions laws, failure to make timely payments, breaches of certain representations or covenants, failure to pay other material indebtedness, or another person becoming beneficial owner of 50% or more of our outstanding common stock. We believe we were in compliance with the representations, warranties and covenants included in the Revolving Credit Facility as of September 30, 2016.

As of September 30, 2016, we had $15.0 million in borrowings and $26.2 million in letters of credit outstanding under the Revolving Credit Facility, leaving a remaining borrowing capacity of $508.8 million.

Mortgage Repurchase Facility. HomeAmerican entered into an Amended and Restated Master Repurchase Agreement (the “Mortgage Repurchase Facility”) with U.S. Bank National Association(“USBNA”), effective September 16, 2016. The Mortgage Repurchase Facility amends and restates the prior Master Repurchase Agreement with USBNA dated as of November 12, 2008, as amended, which contained similar terms. The Mortgage Repurchase Facility increases the facility amount from $50 million to $75 million, extends the expiration date to September 15, 2017, adjusts the facility’s sublimits, expands the types of eligible loans, and reduces the facility fee. The Mortgage Repurchase Facility provides liquidity to HomeAmerican by providing for the sale of eligible mortgage loans to USBNA with an agreement by HomeAmerican to repurchase the mortgage loans at a future date. Until such mortgage loans are transferred back to HomeAmerican, the documents relating to such loans are held by USBNA, as custodian, pursuant to the Custody Agreement (“Custody Agreement”), dated as of November 12, 2008, by and between HomeAmerican and USBNA. In the event that an eligible mortgage loan becomes ineligible, as defined under the Mortgage Repurchase Facility, HomeAmerican may be required to repurchase the ineligible mortgage loan immediately. The maximum aggregate commitment of the Mortgage Repurchase Facility was temporarily increased on September 27, 2016 from $75 million to $110 million and was effective through October 26, 2016. The Mortgage Repurchase Facility also had a temporary increase in the maximum aggregate commitment from $50 million to $90 million from December 23, 2015 through January 31, 2016. At September 30, 2016 and December 31, 2015, there were $92.0 million and $88.6 million, respectively, of mortgage loans that HomeAmerican was obligated to repurchase under the Mortgage Repurchase Facility. Mortgage loans that HomeAmerican is obligated to repurchase under the Mortgage Repurchase Facility are accounted for as a debt financing arrangement and are reported as mortgage repurchase facility in the consolidated balance sheets. Advances under the Mortgage Repurchase Facility carry a price range that is LIBOR-based. The Mortgage Repurchase Facility contains various representations, warranties and affirmative and negative covenants that we believe are customary for agreements of this type. The negative covenants include, among others, (i) a minimum Adjusted Tangible Net Worth requirement, (ii) a maximum Adjusted Tangible Net Worth ratio, (iii) a minimum adjusted net income requirement, and (iv) a minimum Liquidity requirement. The foregoing capitalized terms are defined in the Mortgage Repurchase Facility. We believe HomeAmerican was in compliance with the representations, warranties and covenants included in the Mortgage Repurchase Facility as of September 30, 2016.

Dividends

During the three and nine months ended September 30, 2016 and 2015, we paid dividends of $0.25 per share and $0.75 per share, respectively.

MDC Common Stock Repurchase Program

At September 30, 2016, we were authorized to repurchase up to 4,000,000 shares of our common stock. We did not repurchase any shares of our common stock during the three or nine months ended September 30, 2016.

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Consolidated Cash Flow

During the nine months ended September 30, 2016, we used $8.9 million of cash from operating activities, primarily due to (1) the use of $88.6 million to increase our inventory from December 31, 2015, and (2) a $21.7 million increase to our trade and other receivables. These uses of cash were partially offset by net income of $62.8 million, an $18.2 million increase in accounts payable and accrued liabilities, and $28.1 million in non-cash reconciling items.

During the nine months ended September 30, 2016, we generated $24.7 million of cash from investing activities, primarily attributable to the sale of $56.9 million in marketable securities, partially offset by the purchases of $28.3 million in marketable securities and $3.9 million in property and equipment.

During the nine months ended September 30, 2016, we used $33.4 million in cash for financing activities, primarily related to dividend payments totaling $36.8 million. This was partially offset by net advances totaling $3.4 million on our mortgage repurchase facility.

Off-Balance Sheet Arrangements

Lot Option Purchase Contracts. In the ordinary course of business, we enter into lot option purchase contracts in order to procure lots for the construction of homes. Lot option contracts enable us to control lot positions with a minimal capital investment, which substantially reduces the risks associated with land ownership and development. At September 30, 2016, we had deposits of $6.9 million in the form of cash and $2.4 million in the form of letters of credit that secured option contracts to purchase 2,621 lots for a total estimated purchase price of $267.4 million.

Surety Bonds and Letters of Credit. At September 30, 2016, we had issued and outstanding surety bonds and letters of credit totaling $179.3 million and $58.9 million, respectively, including $32.6 million in letters of credit issued by HomeAmerican. The estimated cost to complete obligations related to these bonds and letters of credit was approximately $53.8 million and $31.9 million, respectively. We expect that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the obligations are performed, the related performance bonds and letters of credit should be released and we should not have any continuing obligations. However, in the event any such performance bonds or letters of credit are called, our indemnity obligations could require us to reimburse the issuer of the performance bond or letter of credit.

We have made no material guarantees with respect to third-party obligations.

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IMPACT OF INFLATION, CHANGING PRICES AND ECONOMIC CONDITIONS

The impact of inflation and changing prices have not changed materially from the disclosure in our December 31, 2015 Annual Report on Form 10-K.

OTHER

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press releases, oral statements made by our officials in the course of presentations about the Company and conference calls in connection with quarterly earnings releases, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects. These forward-looking statements may be identified by terminology such as “likely,” “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained in this Report are reasonable, we cannot guarantee future results. These statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by the forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be considered. Additionally, information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2015 and Item 1A of Part II of this Quarterly Report on Form 10-Q.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Our cash and investment policy and strategy is to achieve an appropriate investment return while preserving principal and managing risk. Our cash and cash equivalents may include immediately available commercial bank deposits, commercial paper, money market funds, certificates of deposit and time deposits. Our marketable securities consist primarily of holdings in mutual fund securities, which invest mostly in floating and fixed rate debt securities, and direct holdings in corporate equities. The market value and/or income derived from our equity securities can be negatively impacted by a number of market risk factors, including changes in interest rates, general economic conditions and equity markets. As of September 30, 2016, we had marketable securities in unrealized loss positions totaling $0.8 million, against which we recorded impairments totaling $0.3 million during the current quarter. For the remaining marketable securities in unrealized loss positions totaling $0.5 million, there can be no assurances that the cost basis of these securities will be recovered in the future. If we elect to sell, or are otherwise were required to sell these securities, we could be required to record losses if the market values do not increase prior to any sales. Such losses, if any, would be recorded as a component of our results of operations.

We are exposed to market risks related to fluctuations in interest rates on mortgage loans held-for-sale, mortgage interest rate lock commitments and debt. Derivative instruments utilized in the normal course of business by HomeAmerican include interest rate lock commitments and forward sales of mortgage-backed securities, which are used to manage the price risk on fluctuations in interest rates on our mortgage loans in inventory and interest rate lock commitments to originate mortgage loans. Such contracts are the only significant financial derivative instruments utilized by MDC. HomeAmerican’s mortgage loans in process for which a rate and price commitment had been made to a borrower that had not closed at September 30, 2016 had an aggregate principal balance of $105.8 million, all of which were under interest rate lock commitments at an average interest rate of 3.48%. In addition, HomeAmerican had mortgage loans held-for-sale with an aggregate principal balance of $114.4 million at September 30, 2016, of which $26.8 million had not yet been committed to a mortgage purchaser and had an average interest rate of 3.47%. In order to hedge the changes in fair value of interest rate lock commitments and mortgage loans held-for-sale which had not yet been committed to a mortgage purchaser, HomeAmerican had forward sales of securities totaling $88.5 million at September 30, 2016.

HomeAmerican provides mortgage loans that generally are sold forward and subsequently delivered to a third-party purchaser between 15 and 40 days. Forward commitments are used for non-trading purposes to sell mortgage loans and hedge price risk due to fluctuations in interest rates on rate-locked mortgage loans in process that have not closed. Due to this economic hedging philosophy, the market risk associated with these mortgages is limited. For forward sales commitments, as well as commitments to originate mortgage loans that are still outstanding at the end of a reporting period, we record the fair value of the derivatives in the consolidated statements of operations and comprehensive income with an offset to either derivative assets or liabilities, depending on the nature of the change.

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We utilize our Revolving Credit Facility, our Mortgage Repurchase Facility and senior notes in our financing strategy. For fixed rate debt, changes in interest rates generally affect the fair value of the debt instrument, but do not affect our earnings or cash flows. We do not have an obligation to prepay our senior notes prior to maturity and, as a result, interest rate risk and changes in fair value do not have an impact on our financial position, results of operations or cash flows. For variable rate debt such as our Revolving Credit Facility and Mortgage Repurchase Facility, changes in interest rates generally do not affect the fair value of the outstanding borrowing on the debt facilities, but does affect our earnings and cash flows. See “Forward-Looking Statements” above.

Item 4.    Controls and Procedures

(a)     Conclusion regarding the effectiveness of disclosure controls and procedures - An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures was performed under the supervision, and with the participation, of our management, including the Chief Executive Officer (principle executive officer) and the Chief Financial Officer (principal financial officer).  Based on that evaluation, our management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

(b) Changes in internal control over financial reporting - There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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M.D.C. HOLDINGS, INC.

FORM 10-Q

PART II

Item 1.   Legal Proceedings

Because of the nature of the homebuilding business, we and certain of our subsidiaries and affiliates have been named as defendants in various claims, complaints and other legal actions arising in the ordinary course of business, including product liability claims and claims associated with the sale and financing of our homes. In the opinion of management, the outcome of these ordinary course matters will not have a material adverse effect upon our financial condition, results of operations or cash flows.

Item 1A. Risk Factors

There have been no significant changes in the risk factors previously identified as being attendant to our business in our Annual Report on Form 10-K for the year ended December 31, 2015. For a more complete discussion of other risk factors that affect our business, see “Risk Factors” in our Form 10-K for the year ended December 31, 2015, which include the following:

● Changes in general economic, real estate and other business conditions may have an adverse effect on the homebuilding and mortgage industries, which could have a negative impact on our business.

● Increased competition levels in the homebuilding and mortgage lending industries could have a negative impact on our homebuilding and mortgage operations.

● If land is not available at reasonable prices or terms, we could be required to scale back our operations in a given market and/or we may operate at lower levels of profitability.

● Supply shortages and other risks related to the demand for skilled labor and building materials could increase costs and delay deliveries.

● If mortgage interest rates rise, if down payment requirements are increased, if loan limits are decreased, or if mortgage financing otherwise becomes less available, it could adversely affect our business.

● Expirations, amendments or changes to tax laws, incentives or credits currently available to our customers may negatively impact our business.

● Increases in our cancellations could have a negative impact on our business.

● A decline in the market value of our homes or carrying value of our land would have a negative impact on our business.

● Natural disasters could cause an increase in home construction costs, as well as delays, and could negatively impact our business.

● Changes in energy prices may have an adverse effect on the economies in certain markets we operate in and our cost of building homes.

● We have financial needs that we meet through the capital markets, including the debt and secondary mortgage markets, and disruptions in these markets could have an adverse impact on the results of our business.

● Our business is subject to numerous federal, state and local laws and regulations concerning land development, construction of homes, sales, mortgage lending, environmental and other aspects of our business. These laws and regulations could give rise to additional liabilities or expenditures, or restrictions on our business.

● In the ordinary course of business, we are required to obtain surety bonds, the unavailability of which could adversely affect our business.

● Decreases in the market value of our investments in marketable securities could have an adverse impact on our business.

● Product liability litigation and warranty claims that arise in the ordinary course of business may be costly.

● Repurchase requirements associated with HomeAmerican’s sale of mortgage loans, could negatively impact our business.

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● Because of the seasonal nature of our business, our quarterly operating results can fluctuate.

● We are dependent on the services of key employees, and the loss of their services could hurt our business.

● The interests of certain controlling shareholders may be adverse to investors

● Information technology failures and data security breaches could harm our business.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

The Company did not repurchase any shares during the three and nine months ended September 30, 2016. Additionally, there were no sales of unregistered equity securities during the period.

Item 3.    Defaults Upon Senior Securities

Not applicable.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

Not applicable.

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Item 6.    Exhibits

10.1	Amended and Restated Master Repurchase Agreement among HomeAmerican Mortgage Corporation and U.S. Bank National Association as Agent and a Buyer, dated as of September 16, 2016 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed September 19, 2016). *
10.2	Form of Performance Share Unit Grant Agreement (2011 Equity Incentive Plan).
31.1	Certification of Chief Executive Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (iv) Notes to the Unaudited Consolidated Financial Statements, tagged as blocks of text.

____________________

* Incorporated by reference.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date:     November 1, 2016	M.D.C. HOLDINGS, INC.
	(Registrant)
	By:	/s/ Robert N. Martin
		Robert N. Martin
		Senior Vice President, Chief Financial Officer and Principal Accounting Officer (principal financial officer and duly authorized officer)

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INDEX TO EXHIBITS

Exhibit Number	Description
10.1	Amended and Restated Master Repurchase Agreement among HomeAmerican Mortgage Corporation and U.S. Bank National Association as Agent and a Buyer, dated as of September 16, 2016 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed September 19, 2016). *
10.2	Form of Performance Share Unit Grant Agreement (2011 Equity Incentive Plan).
31.1	Certification of Chief Executive Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer required by 17 CFR 240.13a-14(a), pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer required by 17 CFR 240.13a-14(b), pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheets as of September 30, 2016 and December 31, 2015, (ii) Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2016 and 2015; and (iv) Notes to the Unaudited Consolidated Financial Statements, tagged as blocks of text.

____________________

* Incorporated by reference.

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EX-10.2

Exhibit 10.2

M.D.C. HOLDINGS, INC.

2011 EQUITY INCENTIVE PLAN

PERFORMANCE SHARE UNIT GRANT AGREEMENT

The Compensation Committee (the “Committee”) of M.D.C. Holdings, Inc., a Delaware corporation (the “Company”), awards performance share units (“PSUs”) under the Company’s 2011 Equity Incentive Plan (the “Plan”) to the Employee named below. This Performance Share Unit Grant Agreement (the “Agreement”) evidences the terms and conditions of the Company’s award and the PSUs constitute “qualified performance based compensation and other stock-based awards” under Sections 9 and 10 of the Plan.

A. NOTICE OF AWARD

Name of Employee: _________________________

Target Number of Performance Share Units Granted: ____ (“Target PSUs”)

Award Date: July 25, 2016

Performance Period: July 1, 2016 through June 30, 2019

Base Period: July 1, 2015 through June 30, 2016

Performance Goal:  The award will be earned based upon the Company’s performance, over a three-year period, measured by increasing home sale revenues, while maintaining a minimum average gross margin from home sales percentage (excluding impairments) of at least fifteen percent (15%) over the Performance Period (this later requirement being referenced as the “GSM Condition”). 

The average annual increase in the Company’s home sale revenues will be calculated: (1) by aggregating the sum of the home sale revenues reported by the Company for the Performance Period in the Company’s regularly prepared financial statements (which may be unaudited for the two quarters ended June 30, 2019) as filed with the Securities and Exchange Commission (the “SEC”); (2) dividing by three; and (3) then computing the amount of the percentage increase, if any, when compared to the home sale revenues for the Base Period in the amount of $1,974,787,000.

Vesting of PSUs: Subject to the terms of this Agreement, PSU’s will vest when the Committee has certified (which certification shall be made as soon as reasonably possible after the end of the Performance Period but in no event later than the tenth business day following the filing with the SEC of the Company’s Form 10-Q for the quarter ended June 30, 2019) that: (a) the Employee has been in continuous employment with the Company or any Affiliate up to and including the last day of the Performance Period (except as otherwise provided below); (b) the Company has filed its financial statements with the SEC for the Performance Period (to and including, the period ending June 30, 2019); and (c) the Performance Goal and any other material terms were satisfied, based on a certification the Committee has received from the Company attesting to the satisfaction of the material terms and conditions of this Agreement and the amount of the award that had been earned based upon attainment of the GSM Condition and achievement of the Performance Goal in accordance with the following table:

Threshold	Target	Maximum
Average increased home sale revenues over Base Period of at least 5% but not more than 10%	Average increased home sale revenues over Base Period of at least 10% but not more than 20%	Average increased home sale revenues over Base Period of 20% or more
50% of Target PSUs Vested	100% of Target PSUs Vested	200% of Target PSUs Vested

Any fractional amounts of units or shares will be rounded down to the nearest whole number. Any PSU’s that do not vest pursuant to the provisions of this Agreement will be forfeited and canceled.

B. PERFORMANCE SHARE UNIT GRANT AGREEMENT

1.     Award. Subject to the terms and conditions of this Agreement and the Plan, as an inducement to Employee to continue employment with the Company, the Company awards to Employee effective as of the Award Date the number of Target PSUs as set forth in the Notice of Award on the cover page of this Agreement, subject to the terms and conditions of the Plan, which is incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan shall govern. All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the Plan.

2.     Type of Award. This is an award of performance share units.

3.     Performance Share Units. Each PSU represents the conditional right to receive one share of the Company’s Common Stock (the “Stock”), subject to the terms and conditions set forth in this Agreement. The number of PSUs that actually vest for the Performance Period will be determined by the level of achievement of the Performance Goal.

4.     Requirements for Vesting of PSUs. Except as otherwise provided in Section 5, Section 6, or in the Plan, and upon satisfaction of the requirements set forth in Part A (Vesting of PSUs), PSUs shall vest.

5.     Termination of Continuous Service. If the Employee’s Service terminates for any reason at any time during the Performance Period, the unvested PSUs shall be automatically forfeited and cancelled upon such termination of Service and the Company shall not have any further obligations to Employee under this Agreement; provided, however that:

a. if the Employee’s Service terminates during the Performance Period as a result of the Employee’s death or Disability, a pro rata portion of the PSUs will vest, at the time specified in Section 4 above, subject to the achievement of the GSM Condition and at least the Threshold level of the Performance Goal (based on the Company’s performance as of the end of the Performance Period), determined by multiplying the PSUs that would otherwise have vested had Employee been employed on the last day of the Performance Period by a fraction, the numerator of which equals the number of days that the Employee was employed during the Performance Period and the denominator of which equals the total number of days in the Performance Period; and

b. if the Employee’s Service terminates during the Performance Period as a result of termination by the Company without Cause or termination by Employee for Good Reason (as defined in the Plan), the PSUs will vest, at the time specified in Section 4 above and subject to achievement of the GSM Condition and at least the Threshold level of the Performance Goal (based on the Company’s performance as of the end of the Performance Period), to the same extent as if the Employee had been employed through and including the last day of the Performance Period.

6.     Change in Control. Upon the occurrence of a “Change in Control Event,” as such term is defined in the Employment or Change in Control Agreement between the Company and the Employee as in effect on the Award Date, the PSUs will become 100% vested as of the date of such Change in Control Event.

7.     Leave of Absence. For purposes of the Award, continuous Service does not terminate when Employee goes on a bona fide employee leave of absence that was approved by the Company or an Affiliate in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, Service will be treated as terminating ninety (90) days after Employee went on the approved leave, unless Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends unless Employee immediately returns to active Service. The Committee determines, in its sole discretion, which leaves of absence count for this purpose, and when Service terminates for all purposes under the Plan.

8.     Settlement of Vested PSUs. Except as other provided herein, at the end of the Performance Period, the Employee (or, in the event of the Employee’s death, the Employee’s beneficiary) will receive one (1) share of Stock for each PSU that vests in accordance with this Award Agreement. PSU’s settled under this Award Agreement are intended to be exempt from Code Section 409A under the exemption for short term deferrals. Accordingly, PSU’s will be settled in shares of Stock promptly but in no later than the tenth business day following the filing with the SEC of the Company’s Form 10-Q for the quarter ended June 30, 2019.

9.     Tax Withholding. The Company or any Affiliate shall have the right to deduct from payments of any kind otherwise due to Employee, any federal, state, local or foreign taxes of any kind required by law to be withheld upon the issuance, vesting or payment of shares with respect to vested PSUs. The Company may withhold taxes from any payments or shares due to Employee or Employee may deliver a check to the Company. Subject to the prior approval of the Company, which may be withheld by the Company, in its sole discretion, Employee may elect to have shares of Stock withheld or to satisfy the minimum statutory withholding obligations, in whole or in part, by delivering to the Company shares of Stock already owned by Employee (for at least six months or any other minimum period required by the Company). The shares withheld or delivered shall have an aggregate Fair Market Value not in excess of the minimum statutory total tax withholding obligations. The Fair Market Value of the shares used to satisfy the withholding obligation shall be determined by the Company as of the date that the amount of tax to be withheld is to be determined (“Tax Date”). Shares used to satisfy any tax withholding obligation must be vested and cannot be subject to any repurchase, forfeiture, or other similar requirements. Any election must be made prior to the Tax Date, shall be irrevocable, made in writing, signed by Employee, and shall be subject to any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.

10.     Investment Representations. The Committee may require Employee (or Employee’s estate or heirs) to represent and warrant in writing that the individual is acquiring the shares of Stock for investment and without any present intention to sell or distribute such shares and to make such other representations as are deemed necessary or appropriate by the Company and its counsel.

11.     Continued Service. Neither the Award of PSUs nor this Agreement gives Employee the right to continue Service with the Company or its Affiliates in any capacity. The Company and its Affiliates reserve the right to terminate Employee’s Service at any time and for any reason not prohibited by law.

12.     Stockholder Rights. Unless and until shares of the Stock are issued to Employee pursuant to this Agreement, the Employee shall have no rights of a stockholder with respect to the shares of Stock reflected by the PSU.

13.     Adjustments. The number of PSUs granted under this Agreement shall be proportionately increased or decreased for any increase or decrease in the number of shares of Stock on account of any Corporate Event. The conversion of any convertible securities of the Company shall not be treated as an increase in shares effected without receipt of consideration. In the event of any distribution to the Company’s stockholders of an extraordinary cash dividend or securities of any other entity or other assets (other than ordinary dividends payable in cash or shares of Stock) without receipt of consideration by the Company, the Company shall proportionately adjust the number of PSUs subject to this Agreement. Any fractional amounts will be rounded down to the nearest whole number of PSUs.

14.     Additional Requirements. Employee acknowledges that shares of Stock issued with respect to vested PSUs may bear such legends as the Company deems appropriate to comply with applicable federal, state or other securities laws. No shares shall be issued or delivered pursuant to this Agreement unless there shall have been compliance with all applicable requirements of federal, state and other securities laws, all applicable listing requirements of the New York Stock Exchange, if applicable, and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery. In connection therewith and prior to the issuance of the shares, Employee may be required to deliver to the Company such other documents as may be reasonably necessary to ensure compliance with applicable laws and regulations.

15.     Governing Law. The validity and construction of this Agreement shall be construed in accordance with and governed by the laws of the State of Delaware other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive laws of any other jurisdiction.

16.     Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Company and Employee and their respective heirs, executors, administrators, legal representatives, successors and assigns.

17.     Amendment. The terms and conditions set forth in this Agreement may only be amended by the written consent of the Company and Employee, except to the extent set forth herein or in any other provision set forth in the Plan.

18.     2011 Equity Incentive Plan; Clawback Policy. The Award and shares of Stock reflected by the Award shall be subject to: (a) such additional terms and conditions as may be imposed under the terms of the Plan, a copy of which has been provided to Employee; and (b) the Clawback Policy adopted by the Company’s Corporate Governance/Nominating Committee on January 14, 2015.

19.     Headings; Construction. The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement and each other provision of this Agreement shall be severable and enforceable to the extent permitted by law.

20.     Other Employee Benefits. The amount of any compensation deemed to be received by Employee as a result of this Agreement and the issuance of shares of Stock hereunder, shall not constitute “earnings” or “compensation” with respect to which any other employee benefits of Employee are determined, including without limitation benefits under any pension, profit sharing, 401(k), bonus, life insurance or salary continuation plan, except to the extent specifically provided in such separate plan or agreement.

21.     Interpretation; Administration. The Committee shall have the full power and authority to administer the terms and conditions of this Agreement, to adopt any procedures, make any determinations, correct any defect, supply any omission or reconcile any inconsistency with respect to the terms and conditions of this Agreement in the manner and to the extent it shall deem expedient and it shall be the sole and final judge of such expediency. No member of the Committee shall be liable for any action or determination made in good faith. The determinations, interpretations and other actions of the Committee with respect to this Agreement and the PSUs shall be binding and conclusive for all purposes and on all persons.

22.     Acceptance. The Award and this Agreement are voidable by the Company if the Employee does not accept this Agreement within 30 days after the Agreement is made available, electronically or otherwise, to the Employee by the Company.

Dated: as of the Award Date set forth above.

	M.D.C. HOLDINGS, INC.
	By:	/s/
	Its
EMPLOYEE

Signed:

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Larry A. Mizel, certify that:

1. I have reviewed this report on Form 10-Q of M.D.C. Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 1, 2016	/s/ Larry A. Mizel
	Larry A. Mizel
	Chairman of the Board of Directors and Chief Executive Officer
	(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Robert N. Martin, certify that:

1. I have reviewed this report on Form 10-Q of M.D.C. Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 1, 2016	/s/ Robert N. Martin
	Robert N. Martin
	Senior Vice President, Chief Financial Officer and Principal Accounting Officer
	(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned principal executive officer of M.D.C. Holdings, Inc. (the "Company") hereby certifies that the Report on Form 10-Q of the Company for the period ended September 30, 2016 accompanying this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2016	/s/ Larry A. Mizel
	Larry A. Mizel
	Chief Executive Officer (principal executive officer)

The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Title 18, United States Code, and is not being filed as part of the report or as a separate disclosure document.

EX-32.2

 Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned principal financial officer of M.D.C. Holdings, Inc. (the “Company”) hereby certifies that the Report on Form 10-Q of the Company for the period ended September 30, 2016, accompanying this certification, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 1, 2016	/s/ Robert N. Martin
	Robert N. Martin
	Senior Vice President, Chief Financial Officer and Principal Accounting Officer (principal financial officer)

The foregoing certification is being furnished solely pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Title 18, United States Code, and is not being filed as part of the report or as a separate disclosure document.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
Document Information [Line Items]
Entity Registrant Name	MDC HOLDINGS INC
Entity Central Index Key	0000773141
Trading Symbol	mdc
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		49,033,981
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Homebuilding Segment [Member]
ASSETS
Cash and cash equivalents	$ 129,278	$ 144,342
Marketable securities	57,116	92,387
Restricted cash	4,621	3,750
Trade and other receivables	43,082	23,314
Housing Completed or Under Construction	976,372	747,036
Land and land under development	870,733	1,016,926
Total inventories	1,847,105	1,763,962
Property and equipment, net	28,749	28,226
Deferred tax asset, net	85,128	99,107
Metropolitan district bond securities (related party) (available-for-sale)	29,132	25,911
Prepaid and other assets	66,195	65,394
Total homebuilding assets	2,290,406	2,246,393
Total Assets	2,290,406	2,246,393
LIABILITIES AND EQUITY
Accounts payable	54,117	40,472
Land development and home construction accruals	122,227	122,886
Revolving credit facility	15,000	15,000
Senior notes, net	841,359	840,524
Total homebuilding liabilities	1,032,703	1,018,882
Total Liabilities	1,032,703	1,018,882
Financial Services Segment [Member]
ASSETS
Cash and cash equivalents	34,180	36,646
Marketable securities	22,105	11,307
Total homebuilding assets	183,864	169,506
Mortgage loans held-for-sale, net	117,989	115,670
Other assets	9,590	5,883
Total Assets	183,864	169,506
LIABILITIES AND EQUITY
Total homebuilding liabilities	148,945	140,725
Total accounts payable and accrued liabilities	56,934	52,114
Mortgage repurchase facility	92,011	88,611
Total Liabilities	148,945	140,725
Cash and cash equivalents	163,458	180,988
Deferred tax asset, net	85,100	99,100
Total homebuilding assets	2,474,270	2,415,899
Total Assets	2,474,270	2,415,899
Total homebuilding liabilities	1,181,648	1,159,607
Total Liabilities	1,181,648	1,159,607
Stockholders' Equity
Preferred stock, $0.01 par value; 25,000,000 shares authorized; none issued or outstanding
Common stock, $0.01 par value; 250,000,000 shares authorized; 49,033,981 and 48,888,424 issued and outstanding at September 30, 2016 and December 31, 2015, respectively	490	489
Additional paid-in-capital	922,132	915,746
Retained earnings	350,414	324,342
Accumulated other comprehensive income	19,586	15,715
Total Stockholders' Equity	1,292,622	1,256,292
Total Liabilities and Stockholders' Equity	$ 2,474,270	$ 2,415,899

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	25,000,000	25,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	250,000,000	250,000,000
Common stock, shares issued (in shares)	49,033,981	48,888,424
Common stock, shares outstanding (in shares)	49,033,981	48,888,424

XML

Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Homebuilding Segment [Member]
Home sale revenues	$ 575,722	$ 454,740	$ 1,541,337	$ 1,293,457
Land sale revenues	2,290	906	4,930	1,816
Total home and land sale revenues	578,012	455,646	1,546,267	1,295,273
Home cost of sales	(481,511)	(375,948)	(1,287,373)	(1,079,609)
Land cost of sales	(2,318)	(819)	(4,197)	(1,944)
Inventory impairments	(4,700)	(3,225)	(6,300)	(3,575)
Total cost of sales	(488,529)	(381,118)	(1,297,870)	(1,086,254)
Gross margin	89,483	74,528	248,397	209,019
Selling, general and administrative expenses	(61,904)	(57,444)	(182,621)	(162,757)
Interest and other income	1,869	838	5,358	5,412
Other expense	(1,558)	(350)	(2,463)	(2,539)
Other-than-temporary impairment of marketable securities	(215)	(2,176)	(934)	(2,176)
Pretax income	27,675	15,396	67,737	46,959
Income before income taxes	27,675	15,396	67,737	46,959
Financial Services Segment [Member]
Other-than-temporary impairment of marketable securities	(111)		(111)
Pretax income	10,377	8,262	25,046	21,907
Financial services revenues	17,408	12,841	44,248	34,852
Expenses	(7,955)	(5,464)	(21,739)	(15,830)
Interest and other income	1,035	885	2,648	2,885
Income before income taxes	10,377	8,262	25,046	21,907
Inventory impairments	(4,700)	(3,225)
Other-than-temporary impairment of marketable securities	(300)	(2,200)	(1,045)	(2,176)
Pretax income	38,052	23,658	92,783	68,866
Income before income taxes	38,052	23,658	92,783	68,866
Provision for income taxes	(11,693)	(8,880)	(29,948)	(25,670)
Net income	26,359	14,778	62,835	43,196
Other comprehensive income (loss) related to available for sale securities, net of tax	1,028	(226)	3,871	722
Comprehensive income	$ 27,387	$ 14,552	$ 66,706	$ 43,918
Earnings per share:
Basic (in dollars per share)	$ 0.54	$ 0.30	$ 1.28	$ 0.88
Diluted (in dollars per share)	$ 0.54	$ 0.30	$ 1.28	$ 0.88
Weighted average common shares outstanding
Basic (in shares)	48,854,412	48,785,973	48,844,613	48,756,265
Diluted (in shares)	49,009,949	49,070,291	48,855,014	48,982,975
Dividends declared per share (in dollars per share)	$ 0.25	$ 0.25	$ 0.75	$ 0.75

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Housing Completed or Under Construction [Member]
Net changes in assets and liabilities:
Housing completed or under construction	$ (229,739)	$ (89,841)
Land and Land Under Development [Member]
Net changes in assets and liabilities:
Housing completed or under construction	141,131	(25,805)
Net income	62,835	43,196
Stock-based compensation expense	6,636	6,589
Depreciation and amortization	3,702	3,084
Inventory impairments	6,300	4,701
Other-than-temporary impairment of marketable securities	1,045	2,176
Loss (gain) on sale of marketable securities	(911)	126
Amortization of discount / premiums on marketable debt securities, net		100
Deferred income tax expense	11,357	24,782
Restricted cash	(871)	(1,984)
Trade and other receivables	(21,679)	(575)
Mortgage loans held-for-sale	(2,319)	19,759
Other assets	(4,573)	(8,072)
Accounts payable and accrued liabilities	18,183	(4,722)
Net cash used in operating activities	(8,903)	(26,486)
Investing Activities:
Purchases of marketable securities	(28,272)	(46,886)
Maturities of marketable securities		1,510
Sales of marketable securities	56,873	94,910
Purchases of property and equipment	(3,865)	(830)
Net cash provided by investing activities	24,736	48,704
Financing Activities:
Advances (payments) on mortgage repurchase facility, net	3,400	(17,067)
Advances on revolving credit facility
Dividend payments	(36,763)	(36,646)
Proceeds from exercise of stock options		665
Net cash used in financing activities	(33,363)	(53,048)
Net decrease in cash and cash equivalents	(17,530)	(30,830)
Cash and cash equivalents:
Beginning of period	180,988	153,825
End of period	$ 163,458	$ 122,995

XML

Note 1 - Basis of Presentation

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

1.             Basis of Presentation

The Unaudited Consolidated Financial Statements of M.D.C. Holdings, Inc. ("MDC," “the Company," “we,” “us,” or “our” which refers to M.D.C. Holdings, Inc. and its subsidiaries) have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Accordingly, they do not include all information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. These statements reflect all normal and recurring adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows of MDC at September 30, 2016 and for all periods presented. These statements should be read in conjunction with MDC’s Consolidated Financial Statements and Notes thereto included in MDC’s Annual Report on Form 10-K for the year ended December 31, 2015.

XML

Note 2 - Recently Issued Accounting Standards

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

2.             Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09,

Revenue from Contracts with Customers

("ASU 2014-09"), which is a comprehensive new revenue recognition model. Under ASU 2014-09, a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods and services. ASU 2014-09 is effective for our interim and annual reporting periods beginning January 1, 2018, and is to be adopted using either a full retrospective or modified retrospective transition method. Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. We do not plan to early adopt the guidance and are currently evaluating the method of adoption and impact the update will have on our consolidated financial statements and related disclosures.

In February 2015, the FASB issued ASU 2015-02,

Consolidation

(Topic 810)

: Amendments to the Consolidation Analysis

(“ASU 2015-02”), which amends the consolidation requirements in Accounting Standards Codification (“ASC”) Topic 810,

Consolidation

, primarily related to limited partnerships and variable interest entities. ASU 2015-02 was effective for our interim and annual reporting periods beginning January 1, 2016 and did not have a material impact on our consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01,

Financial Instruments–Overall: Recognition and Measurement of Financial Assets and Financial Liabilities

(“ASU 2016-01”), which makes a number of changes to the current GAAP model, including changes to the accounting for equity investments and financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under ASU 2016-01, we will primarily be impacted by the changes to accounting for equity instruments with readily determinable fair values as they will no longer be permitted to be classified as available-for-sale (changes in fair value reported through other comprehensive income) and instead, all changes in fair value will be reported in earnings. ASU 2016-01 is effective for our interim and annual reporting periods beginning January 1, 2018 and is to be applied using a modified retrospective transition method. Early adoption of the applicable guidance from ASU 2016-01 is not permitted. We are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

In February 2016, the FASB issued ASU 2016-02,

Leases

(“ASU 2016-02”), which requires a lessee to recognize a right-of-use asset and a corresponding lease liability for virtually all leases. The liability will be equal to the present value of lease payments while the right-of-use asset will be based on the liability, subject to adjustment, such as for initial direct costs. In addition, ASU 2016-02 expands the disclosure requirements for lessees. ASU 2016-02 is effective for our interim and annual reporting periods beginning January 1, 2019 and is to be applied using a modified retrospective transition method. Early adoption is permitted. We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

I

n March 2016, the FASB issued ASU 2016-09,

Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting

(“ASU 2016-09”), which amends ASC Topic 718,

Compensation – Stock Compensation

(“ASC 718”). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the accounting for income taxes, classification of excess tax benefits on the statement of cash flows, forfeitures, statutory tax withholding requirements, classification of awards as either equity or liabilities, and classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes. ASU 2016-09 is effective for our interim and annual reporting periods beginning January 1, 2017, and is to be applied using a retrospective transition method. Early adoption is permitted.

We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

In June 2016,

 the FASB issued ASU 2016-13,

Financial Instruments—Credit Losses (Topic 326):

 

Measurement of Credit Losses on Financial Instruments

(“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held. The amendments in ASU 2016-13 eliminate the probable threshold for initial recognition of a credit loss in current GAAP and reflect an entity’s current estimate of all expected credit losses. ASU 2016-13 is effective for our interim and annual reporting periods beginning January 1, 2021, and is to be applied using a modified retrospective transition method. Earlier adoption is permitted.

 We do not plan to early adopt the guidance and we are currently evaluating the impact the update will have on our consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, S

tatement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force)

(“ASU 2016-15”), which amends ASC Topic 230

, Statement of Cash Flows

, to clarify guidance on the classification of certain cash receipts and payments in the statement of cash flows. The amendments in ASU 2016-15 are intended to reduce diversity

in practice in how certain transactions are classified in the statement of cash flows

. ASU 2016-15 is effective for our interim and annual reporting periods beginning January 1, 2018, and is to be applied using a retrospective transition method. Earlier adoption is permitted.

 We do not plan to early adopt the guidance and do not believe the guidance will have a material impact on our financial statements upon adoption.

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Note 3 - Segment Reporting

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

3.            

Segment Reporting

An operating segment is defined as a component of an enterprise for which discrete financial information is available and is reviewed regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, to evaluate performance and make operating decisions. We have identified our CODM as two key executives—the Chief Executive Officer and the Chief Operating Officer.

We have identified each homebuilding division as an operating segment. Our homebuilding operating segments have been aggregated into the reportable segments noted below because they are similar in the following regards: (1) economic characteristics; (2) housing products; (3) class of homebuyer; (4) regulatory environments; and (5) methods used to construct and sell homes. Our homebuilding reportable segments are as follows:

● West (Arizona, California, Nevada and Washington)

● Mountain (Colorado and Utah)

● East (Virginia, Florida and Maryland, which includes Pennsylvania and New Jersey)

Our financial services business consists of the operations of the following operating segments: (1) HomeAmerican Mortgage Corporation (“HomeAmerican”); (2) Allegiant Insurance Company, Inc., A Risk Retention Group (“Allegiant”); (3) StarAmerican Insurance Ltd. (“StarAmerican”); (4) American Home Insurance Agency, Inc.; and (5) American Home Title and Escrow Company. Due to its contributions to consolidated pretax income, we consider HomeAmerican to be a reportable segment (“mortgage operations”). The remaining operating segments have been aggregated into one reportable segment (“other”) because they do not individually exceed 10 percent of: (1) consolidated revenue; (2) the greater of (a) the combined reported profit of all operating segments that did not report a loss or (b) the positive value of the combined reported loss of all operating segments that reported losses; or (3) consolidated assets.

Corporate is a non-operating segment that develops and implements strategic initiatives and supports our operating divisions by centralizing key administrative functions such as finance, treasury, information technology, insurance, risk management, litigation, and human resources. Corporate also provides the necessary administrative functions to support MDC as a publicly traded company. A portion of the expenses incurred by Corporate are allocated to the homebuilding operating segments based on their respective percentages of assets, and to a lesser degree, a portion of Corporate expenses are allocated to the financial services segments. A majority of Corporate’s personnel and resources are primarily dedicated to activities relating to the homebuilding segments, and, therefore, the balance of any unallocated Corporate expenses is included in our homebuilding operations.

The following table summarizes home and land sale revenues for our homebuilding operations and revenues for our financial services operations.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Homebuilding
West	$	284,589	$	229,743	$	745,995	$	624,261
Mountain		192,876		147,166		521,034		428,080
East		100,547		78,737		279,238		242,932
Total home and land sale revenues	$	578,012	$	455,646	$	1,546,267	$	1,295,273
Financial Services
Mortgage operations	$	11,294	$	7,999	$	28,866	$	21,752
Other		6,114		4,842		15,382		13,100
Total financial services revenues	$	17,408	$	12,841	$	44,248	$	34,852

The

following table summarizes pretax income (loss) for our homebuilding and financial services operations:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding
West	$	18,392		$	16,708		$	43,830		$	40,808
Mountain		18,856			12,849			49,688			35,239
East		(2,267	)		(691	)		3,600			(1,093	)
Corporate		(7,306	)		(13,470	)		(29,381	)		(27,995	)
Total homebuilding pretax income	$	27,675		$	15,396		$	67,737		$	46,959
Financial Services
Mortgage operations	$	6,723		$	5,354		$	16,491		$	12,243
Other		3,654			2,908			8,555			9,664
Total financial services pretax income	$	10,377		$	8,262		$	25,046		$	21,907
Total pretax income	$	38,052		$	23,658		$	92,783		$	68,866

The following table summarizes total assets for our homebuilding and financial services operations. The assets in our West, Mountain and East segments consist primarily of inventory while the assets in our Corporate segment primarily include our cash and cash equivalents, marketable securities and deferred tax assets. The assets in our financial services segment consist mostly of cash and cash equivalents, marketable securities and mortgage loans held-for-sale.

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Homebuilding assets
West	$	1,083,419	$	991,393
Mountain		588,976		536,831
East		285,528		324,457
Corporate		332,483		393,712
Total homebuilding assets	$	2,290,406	$	2,246,393
Financial services assets
Mortgage operations	$	129,545	$	123,176
Other		54,319		46,330
Total financial services assets	$	183,864	$	169,506
Total assets	$	2,474,270	$	2,415,899

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Note 4 - Earnings Per Share

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Earnings Per Share [Text Block]

4

.             Earnings Per Share     

ASC Topic 260,

Earnings Per Share

(“ASC 260”), requires a

company that has participating security holders (for example, holders of unvested restricted stock that has nonforfeitable dividend rights) to utilize the two-class method for calculating earnings per share (“EPS”) unless the treasury stock method results in lower EPS. The two-class method is an allocation of earnings/(loss) between the holders of common stock and a company’s participating security holders. Under the two-class method, earnings/(loss) for the reporting period are allocated between common shareholders and other security holders based on their respective rights to receive distributed earnings (i.e., dividends) and undistributed earnings (i.e., net income/(loss)). Our common shares outstanding are comprised of shareholder owned common stock and participating security holders consisting of shareholders of unvested restricted stock. Basic EPS is calculated by dividing income or loss attributable to common stockholders by the weighted average number of shares of common stock outstanding, excluding participating shares in accordance with ASC 260

.

To calculate diluted EPS, basic EPS is further adjusted to include the effect of potential dilutive stock options outstanding.

The table below shows basic and diluted EPS calculations:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per share amounts)
Numerator
Net income	$	26,359		$	14,778		$	62,835		$	43,196
Less: distributed earnings allocated to participating securities		(45	)		(25	)		(124	)		(73	)
Less: undistributed earnings allocated to participating securities		(49	)		(6	)		(83	)		(15	)
Net income attributable to common stockholders (numerator for basic earnings per share)		26,265			14,747			62,628			43,108
Add back: undistributed earnings allocated to participating securities		49			6			83			15
Less: undistributed earnings reallocated to participating securities		(49	)		(6	)		(83	)		(15	)
Numerator for diluted earnings per share under two class method	$	26,265		$	14,747		$	62,628		$	43,108
Denominator
Weighted-average common shares outstanding		48,854,412			48,785,973			48,844,613			48,756,265
Add: dilutive effect of stock options		155,537			284,318			10,401			226,710
Denominator for diluted earnings per share under two class method		49,009,949			49,070,291			48,855,014			48,982,975
Basic Earnings Per Common Share	$	0.54		$	0.30		$	1.28		$	0.88
Diluted Earnings Per Common Share	$	0.54		$	0.30		$	1.28		$	0.88

Diluted EPS for the three and nine months ended September 30, 2016 excluded options to purchase approximately 5.3 million and 6.4 million shares, respectively, of common stock because the effect of their inclusion would be anti-dilutive. For the same periods in 2015, diluted EPS excluded options to purchase approximately 3.4 million and 3.9 million shares, respectively.

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Note 5 - Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

5

.     

        Accumulated

Other Comprehensive Income

The following table sets forth our changes in accumulated other comprehensive income (“AOCI”):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016		2015
	(Dollars in thousands)
Unrealized gains (losses) on available-for-sale marketable securities (1) :
Beginning balance	$	5,344		$	1,589		$	3,657	$	2,775
Other comprehensive income (loss) before reclassifications		1,156			(2,853	)		2,559		(3,753	)
Amounts reclassified from AOCI (2)		(201	)		1,714			83		1,428
Ending balance	$	6,299		$	450		$	6,299	$	450
Unrealized gains on available-for-sale metropolitan district bond securities (1) :
Beginning balance	$	13,214		$	9,814		$	12,058	$	7,680
Other comprehensive income before reclassifications		73			913			1,229		3,047
Ending balance	$	13,287		$	10,727		$	13,287	$	10,727
Total ending AOCI	$	19,586		$	11,177		$	19,586	$	11,177

(1) All amounts net-of-tax.

(2) See separate table below for details about these reclassifications

The following table sets forth the activity related to reclassifications out of accumulated other comprehensive income related to available for sale securities:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Affected Line Item in the Statements of Operations	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding: Interest and other income	$	555		$	(620	)	$	817		$	(495	)
Homebuilding: Other-than-temporary impairment of marketable securities		(215	)		(2,176	)		(934	)		(2,176	)
Financial services: Interest and other income		94			31			94			368
Financial services: Other than temporary impairment of marketable securities		(111	)		-			(111	)		-
Income before income taxes		323			(2,765	)		(134	)		(2,303	)
Provision for income taxes		(122	)		1,051			51			875
Net income	$	201		$	(1,714	)	$	(83	)	$	(1,428	)

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Note 6 - Fair Value Measurements

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Fair Value Disclosures [Text Block]

6

.             Fair Value Measurements

ASC Topic 820,

Fair Value Measurements

(“ASC 820”), defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs, other than quoted prices in active markets, that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The following table sets forth the fair values and methods used for measuring the fair values of financial instruments on a recurring basis:

		Fair Value
		September 30,		December 31,
Financial Instrument	Hierarchy	2016		2015
		(Dollars in thousands)
Marketable equity securities (available-for-sale)	Level 1	$	79,221	$	103,694
Mortgage loans held-for-sale, net	Level 2	$	117,989	$	115,670
Metropolitan district bond securities (related party) (available-for-sale)	Level 3	$	29,132	$	25,911

The following methods and assumptions were used to estimate the fair value of each class of financial instruments as of September 30, 2016 and December 31, 2015.

Cash and cash equivalents, restricted cash, trade and other receivables, prepaid and other assets, accounts payable, accrued liab

ilities and borrowings on our revolving credit facility

.

Fair value approximates carrying value.

Marketable s

ecurities

.  As of September 30, 2016 and December 31, 2015, we only held marketable equity securities. However, during 2015, we also held marketable debt securities. Our equity securities consist of holdings in corporate equities, preferred stock, exchange traded funds and holdings in mutual fund securities (which are primarily invested in debt securities). Our debt securities consisted primarily of fixed and floating rate interest earning debt securities, which included, among others, United States government and government agency debt and corporate debt. As of September 30, 2016 and December 31, 2015, all of our equity securities were treated as available-for-sale investments and as such, are recorded at fair value with all changes in fair value initially recorded through AOCI, subject to an assessment to determine if an unrealized loss, if applicable, is other-than-temporary.

Each quarter we assess all of our securities in an unrealized loss position for a potential other-than-temporary impairment (“OTTI”)

. If the unrealized loss is determined to be other-than-temporary, an OTTI is recorded to the

other-than-temporary impairment of marketable securities line in the homebuilding section of our

consolidated statements of operations and comprehensive income.

During the three months and nine months ended September 30, 2016, we recorded pretax OTTIs of $0.3 million and $1.0 million, respectively, for certain of our equity securities that were in an unrealized loss position as of the end of each respective period, compared to $2.2 million for both the three and nine months ended September 30, 2015.

The following tables set forth the cost and fair value of our marketable equity securities:

	September 30, 2016
	Amortized Cost		OTTI			Net Amortized Cost		Fair Value
	(Dollars in thousands)
Homebuilding equity securities	$	48,225	$	(958	)	$	47,267	$	57,116
Financial services equity securities		21,905		(112	)		21,793		22,105
Total marketable equity securities	$	70,130	$	(1,070	)	$	69,060	$	79,221

	December 31, 2015
	Amortized Cost		OTTI			Net Amortized Cost		Fair Value
	(Dollars in thousands)
Homebuilding equity securities	$	89,738	$	(3,969	)	$	85,769	$	92,387
Financial services equity securities		12,026		-			12,026		11,307
Total marketable equity securities	$	101,764	$	(3,969	)	$	97,795	$	103,694

As of September 30, 2016 and December 31, 2015, our marketable equity securities were in net unrealized gain positions totaling $10.2 million and $5.9 million, respectively. Our individual marketable equity securities that were in unrealized loss positions, excluding those that were impaired as part of any OTTI, aggregated to an unrealized loss of $0.5 million and $0.9 million as of September 30, 2016 and December 31, 2015, respectively.

The table below sets forth the aggregated unrealized losses for individual equity securities that were in unrealized loss positions but did not have OTTIs recognized.

We do not believe the decline in the value of these marketable securities as of September 30, 2016 is other-than-temporary.

	September 30, 2016							December 31, 2015
	Number of Securities in an Unrealized Loss Position		Aggregate Unrealized Loss Position			Aggregate Fair Value of Securities in an Unrealized Loss Position		Number of Securities in an Unrealized Loss Position		Aggregate Unrealized Loss Position			Aggregate Fair Value of Securities in an Unrealized Loss Position
	(Dollars in thousands)
Marketable equity securities		2	$	(450	)	$	2,548		4	$	(882	)	$	6,116

The table below sets forth gross realized gains and losses from the sale of available-for-sale marketable securities. We record the net amount of these gains and losses to either other expense or interest and other income, dependent upon whether there is a net realized loss or gain, respectively, in the homebuilding section or financial services section of our consolidated statements of operations and comprehensive income.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Gross realized gains on sales of available-for-sale securities
Equity securities	$	740		$	980		$	2,210		$	1,855
Debt securities		-			42			-			413
Total	$	740		$	1,022		$	2,210		$	2,268
Gross realized losses on sales of available-for-sale securities
Equity securities	$	(91	)	$	(1,604	)	$	(1,299	)	$	(2,161	)
Debt securities		-			(6	)		-			(233	)
Total	$	(91	)	$	(1,610	)	$	(1,299	)	$	(2,394	)
Net realized gain (loss) on sales of available-for-sale securities	$	649		$	(588	)	$	911		$	(126	)

Mortgage

l

oans

h

eld-for-

s

ale,

n

et.  

Our mortgage loans held-for-sale, which are measured at fair value on a recurring basis, include (1) mortgage loans held-for-sale that are under commitments to sell and (2) mortgage loans held-for-sale that are not under commitments to sell. At September 30, 2016 and December 31, 2015, we had $90.5 million and $92.6 million, respectively, of mortgage loans held-for-sale under commitments to sell. The fair value for those loans was based on quoted market prices for those mortgage loans, which are Level 2 fair value inputs. At September 30, 2016 and December 31, 2015, we had $27.4 million and $23.1 million, respectively, of mortgage loans held-for-sale that were not under commitments to sell. The fair value for those loans was primarily based upon the estimated market price received from an outside party, which is a Level 2 fair value input.    

Gains on sales of mortgage loans, net, are included as a component of revenues in the financial services section of our consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2016, we recorded net gains on the sales of mortgage loans of $10.0 million and $22.5 million, respectively, compared to $3.4 million and $12.2 million for the same periods in the prior year, respectively.

Metropolitan district bond securities (related party).

  The metropolitan district bond securities (the “Metro Bonds”) are included in the homebuilding section of our consolidated balance sheets. We acquired the Metro Bonds from a quasi-municipal corporation in the state of Colorado (the “Metro District”), which was formed to help fund and maintain the infrastructure associated with a master-planned community being developed by our Company. Cash flows received by the Company from these securities reflect principal and interest payments from the Metro District, which are generally received in the fourth quarter, and are supported by an annual levy on the taxable assessed value of real estate and personal property within the Metro District’s boundaries. The stated year of maturity for the Metro Bonds is 2037. However, if the unpaid principal and all accrued interest are not paid off by the year 2037, the Company will continue to receive principal and interest payments in perpetuity until the unpaid principal and accrued interest is paid in full.

In accordance with ASC Topic 310-30,

Loans and Debt Securities Acquired with Deteriorated Credit Quality

(“ASC 310-30”), we adjust the bond principal balance using an interest accretion model that utilizes future cash flows expected to be collected. Furthermore, as this investment is accounted for as an available-for-sale asset, we update its fair value on a quarterly basis, with the adjustment being recorded through AOCI. The fair value is based upon a discounted future cash flow model, which uses Level 3 inputs. The primary unobservable inputs used in our discounted cash flow model are (1) the forecasted number of homes to be closed, as they drive increases to the tax paying base for the Metro District, (2) the forecasted assessed value of those closed homes and (3) the discount rate. Cash receipts, which are scheduled to be received in the fourth quarter, reduce the carrying value of the Metro Bonds. The increases in the value of the Metro Bonds during the past two years are based on a larger percentage of future cash flows coming from homes that have closed, which utilize a lower discount rate as those cash flows have a reduced amount of risk. The table below provides quantitative data, as of September 30, 2016, regarding each unobservable input and the sensitivity of fair value to potential changes in those unobservable inputs.

	Quantitative Data				Sensitivity Analysis
Unobservable Input	Range			Weighted Average	Movement in Fair Value from Increase in Input	Movement in Fair Value from Decrease in Input
Number of homes closed per year	0	to	127	102	Increase	Decrease
Average sales price	$400,000	to	$1.3 million	$527,000	Increase	Decrease
Discount rate	5%	to	12%	9.0%	Decrease	Increase

The table set forth below summarizes the activity for our Metro Bonds:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Balance at beginning of period	$	28,604	$	22,259	$	25,911	$	18,203
Increase in fair value (recorded in other comprehensive income)		117		1,472		1,982		4,815
Change due to accretion of principal		411		343		1,239		1,056
Cash receipts		-		-		-		-
Balance at end of period	$	29,132	$	24,074	$	29,132	$	24,074

Mortgage Repurchase Facility.

The debt associated with our mortgage repurchase facility (see Note 18 for further discussion) is at floating rates that approximate current market rates and have relatively short-term maturities, generally within 30 days. The fair value approximates carrying value and is based on Level 2 inputs.

Senior Notes

. The estimated values of the senior notes in the following table are based on Level 2 inputs, which primarily reflect estimated prices for our senior notes and were obtained from multiple pricing sources.

	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
5⅝% Senior Notes due February 2020, net	$	246,689	$	268,688	$	246,032	$	257,813
5½% Senior Notes due January 2024		248,345		263,883		248,209		252,188
6% Senior Notes due January 2043		346,325		315,887		346,283		276,938
Total	$	841,359	$	848,458	$	840,524	$	786,939

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Note 7 - Inventories

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Inventory Disclosure [Text Block]

7

.             Inventories

The following table sets forth, by reportable segment, information relating to our homebuilding inventories:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Housing completed or under construction:
West	$	534,423	$	365,867
Mountain		306,681		253,578
East		135,268		127,591
Total housing completed or under construction		976,372		747,036
Land and land under development:
West		487,001		580,682
Mountain		252,838		259,484
East		130,894		176,760
Total land and land under development		870,733		1,016,926
Total inventories	$	1,847,105	$	1,763,962

Our inventories are primarily associated with communities where we intend to construct and sell homes, including models and unsold homes (defined as homes under construction without a sales contract). Costs capitalized to land and land under development primarily include: (1) land costs; (2) land development costs; (3) entitlement costs; (4) capitalized interest; (5) engineering fees; and (6) title insurance, real property taxes and closing costs directly related to the purchase of the land parcel. Components of housing completed or under construction primarily include: (1) land costs transferred from land and land under development; (2) direct construction costs associated with a house; (3) real property taxes, engineering fees, permits and other fees; (4) capitalized interest; and (5) indirect construction costs, which include field construction management salaries and benefits, utilities and other construction related costs. Land costs are transferred from land and land under development to housing completed or under construction at the point in time that construction of a home on an owned lot begins.

In accordance with ASC Topic 360,

Property, Plant, and Equipment

(“ASC 360”), homebuilding inventories, excluding those classified as held for sale, are carried at cost unless events and circumstances indicate that the carrying value of the underlying subdivision may not be recoverable.  We evaluate inventories for impairment at each quarter end on a subdivision level basis as each such subdivision represents the lowest level of identifiable cash flows. In making this determination, we review, among other things, the following for each subdivision:

• actual and trending “Operating Margin” (which is defined as home sale revenues less home cost of sales and all direct incremental costs associated with the home closing, including sales commissions) for homes closed;

• estimated future undiscounted cash flows and Operating Margin;

• forecasted Operating Margin for homes in backlog;

• actual and trending net and gross home orders;

• base sales price and home sales incentive information for homes closed, homes in backlog and homes available for sale;

• market information for each sub-market, including competition levels, home foreclosure levels, the size and style of homes currently being offered for sale and lot size; and

• known or probable events indicating that the carrying value may not be recoverable.

If events or circumstances indicate that the carrying value of our inventory may not be recoverable, assets are reviewed for impairment by comparing the undiscounted estimated future cash flows from an individual subdivision (including capitalized interest) to its carrying value. If the undiscounted future cash flows are less than the subdivision’s carrying value, the carrying value of the subdivision is written down to its then estimated fair value. We generally determine the estimated fair value of each subdivision by determining the present value of the estimated future cash flows at discount rates, which are Level 3 inputs, that are commensurate with the risk of the subdivision under evaluation. The evaluation for the recoverability of the carrying value of the assets for each individual subdivision can be impacted significantly by our estimates of future home sale revenues, home construction costs, and development costs per home, all of which are Level 3 inputs.

If land is classified as held for sale, in accordance with ASC 360, we measure it at the lower of the carrying value or fair value less estimated costs to sell. In determining fair value, we primarily rely upon the most recent negotiated price which is a Level 2 input. If a negotiated price is not available, we will consider several factors including, but not limited to, current market conditions, recent comparable sales transactions and market analysis studies. If the fair value less estimated costs to sell is lower than the current carrying value, the land is impaired down to its estimated fair value less costs to sell.

Impairments of homebuilding inventory by segment for the three and nine months ended September 30, 2016 and 2015 are shown in the table below. In addition to the impairments shown below, using Level 2 inputs, we recorded $1.1 million of impairments on our land held for sale during the three and nine months ended September 30, 2015. No such impairments were recorded during the same periods in 2016.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
West	$	-	$	-	$	1,400	$	-
Mountain		-		250		-		250
East		4,700		2,975		4,900		3,325
Total inventory impairments	$	4,700	$	3,225	$	6,300	$	3,575

The table below provides quantitative data, for the periods presented, used in determining the fair value of the impaired inventory.

	Impairment Data								Quantitative Data
Three Months Ended	Total Subdivisions Tested		Inventory Impairments		Fair Value of Inventory After Impairments		Number of Subdivisions Impaired		Discount Rate
	(Dollars in thousands)
March 31, 2016		14	$	-	$	-		-		N/A
June 30, 2016		17	$	1,600	$	6,415		2	12%	to	15%
September 30, 2016		25	$	4,700	$	12,295		2	15%	to	18%
March 31, 2015		22	$	350	$	3,701		1		8.7%
June 30, 2015		22	$	-	$	-		-		N/A
September 30, 2015		18	$	3,225	$	14,836		5	12%	to	15%

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Note 8 - Capitalization of Interest

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Capitalization Disclosure [Text Block]

8

.            Capitalization of Interest

We capitalize interest to inventories during the period of development in accordance with ASC Topic 835, Interest (“ASC 835”). Homebuilding interest capitalized as a cost of inventories is included in cost of sales during the period that related units or lots are delivered. To the extent our homebuilding debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred. For all periods presented, our qualified assets exceeded our homebuilding debt and as such, all interest incurred has been capitalized. Qualified homebuilding assets consist of all lots and homes, excluding finished unsold homes or finished models, within projects that are actively selling or under development. The table set forth below summarizes homebuilding interest activity.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding interest incurred	$	13,187		$	13,265		$	39,511		$	39,821
Less: Interest capitalized		(13,187	)		(13,265	)		(39,511	)		(39,821	)
Homebuilding interest expensed	$	-		$	-		$	-		$	-
Interest capitalized, beginning of period	$	77,150		$	78,857		$	77,541		$	79,231
Plus: Interest capitalized during period		13,187			13,265			39,511			39,821
Less: Previously capitalized interest included in home and land cost of sales		(15,922	)		(12,878	)		(42,637	)		(39,808	)
Interest capitalized, end of period	$	74,415		$	79,244		$	74,415		$	79,244

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Note 9 - Homebuilding Prepaid and Other Assets

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Other Assets Disclosure [Text Block]

9

.

Homebuilding

Prepaid and

Other Assets

The following table sets forth the components of homebuilding prepaid and other assets:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Land option deposits	$	7,360	$	11,997
Deferred marketing costs		35,335		31,152
Prepaid expenses		7,539		6,500
Goodwill		6,008		6,008
Deferred debt issuance costs, net		4,721		5,570
Other		5,232		4,167
Total	$	66,195	$	65,394

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Note 10 - Homebuilding Accrued Liabilities and Financial Services Accounts Payable and Accrued Liabilities

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

10

.          Homebuilding Accrued Liabilities and Financial Services Accounts Payable and Accrued Liabilities

The following table sets forth information relating to homebuilding accrued liabilities:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Customer and escrow deposits	$	30,875	$	20,717
Warranty accrual		18,709		15,328
Accrued compensation and related expenses		24,723		25,492
Accrued interest		11,031		23,234
Land development and home construction accruals		7,705		11,465
Other accrued liabilities		29,184		26,650
Total accrued liabilities	$	122,227	$	122,886

The following table sets forth information relating to financial services accounts payable and accrued liabilities:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Insurance reserves	$	48,153	$	45,811
Accounts payable and other accrued liabilities		8,781		6,303
Total accounts payable and accrued liabilities	$	56,934	$	52,114

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Note 11 - Warranty Accrual

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Product Warranty Disclosure [Text Block]

1

1

.     

Warranty Accrual

Our homes are sold with limited third-party warranties. We record accruals for general and structural warranty claims, as well as accruals for known, unusual warranty-related expenditures. Our warranty accruals are recorded based upon historical payment experience in an amount estimated to be adequate to cover expected costs of materials and outside labor during warranty periods. The determination of the warranty accrual rate for closed homes and the evaluation of our warranty accrual balance at period end are based on an internally developed analysis that includes known facts and interpretations of circumstances, including, among other things, our trends in historical warranty payment levels and warranty payments for claims not considered to be normal and recurring.

Our warranty accrual is included in accrued liabilities in the homebuilding section of our consolidated balance sheets and adjustments to our warranty accrual are recorded as an increase or reduction to home cost of sales in the homebuilding section of our consolidated statements of operations and comprehensive income.

The table set forth below summarizes accrual, adjustment and payment activity related to our warranty accrual for the three and nine months ended September 30, 2016 and 2015. For the three and nine months ended September 30, 2016 we recorded adjustments of $1.8 million and $5.1 million, respectively, to increase our warranty accrual primarily due to higher than expected recent warranty related expenditures. For the nine months ended September 30, 2015, we reduced our warranty reserve by $0.2 million, while for the three months ended September 30, 2015 there was no adjustment.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	17,217		$	17,253		$	15,328		$	18,346
Expense provisions		2,390			1,536			6,147			3,980
Cash payments		(2,723	)		(2,708	)		(7,828	)		(6,032	)
Adjustments		1,825			-			5,062			(213	)
Balance at end of period	$	18,709		$	16,081		$	18,709		$	16,081

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Note 12 - Insurance Reserves

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Liability for Future Policy Benefits and Unpaid Claims Disclosure [Text Block]

1

2

.          Insurance Reserves

The establishment of reserves for estimated losses associated with (1) insurance policies issued by Allegiant, (2) re-insurance agreements issued by StarAmerican, and (3) self-insured retentions for our homebuilding subsidiaries are based on actuarial studies that include known facts and interpretations of circumstances, including our experience with similar cases and historical trends involving claim payment patterns, pending levels of unpaid claims, product mix or concentration, claim severity, frequency patterns depending on the business conducted, and changing regulatory and legal environments. It is possible that future changes in the insurance payment experience used in estimating our ultimate insurance losses could have a material impact on our insurance reserves.

The table set forth below summarizes the insurance reserve activity for the three and nine months ended September 30, 2016 and 2015. The insurance reserve is included as a component of accrued liabilities in the financial services section of the consolidated balance sheets.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	46,900		$	47,389		$	45,811		$	50,470
Expense provisions		1,888			1,652			5,222			4,501
Cash payments, net of recoveries		(635	)		(2,356	)		(2,880	)		(6,786	)
Adjustments		-			-			-			(1,500	)
Balance at end of period	$	48,153		$	46,685		$	48,153		$	46,685

The adjustment to decrease our insurance reserve during the nine months ended September 30, 2015 primarily resulted from a decrease in insurance claim payment severity and frequency relative to prior period estimates.

In the ordinary course of business, we make payments from our insurance reserves to settle litigation claims arising primarily from our homebuilding activities. These payments are irregular in both their timing and their magnitude. As a result, the cash payments, net of recoveries shown for the three and nine months ended September 30, 2016 and 2015 are not necessarily indicative of what future cash payments will be for subsequent periods.

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Note 13 - Income Taxes

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Income Tax Disclosure [Text Block]

1

3

.          Income Taxes

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and use that rate to provide for income taxes for the current year-to-date reporting period. Our overall effective income tax rates were 30.7% and 32.3% for the three and nine months ended September 30, 2016, respectively, compared to 37.5% and 37.3% for the three and nine months ended September 30, 2015, respectively. The rates for the three and nine months ended September 30, 2016 resulted in income tax expense of $11.7 million and $29.9 million, respectively, compared to income tax expense of $8.9 million and $25.7 million for the three and nine months ended September 30, 2015. The year-over-year improvements in our effective tax rates are primarily the result of our estimated 2016 full year effective tax rate including (1) an estimate for energy credits versus no such estimate as of September 30, 2015 as the credit for both 2015 and 2016 was not approved by the U.S. Congress until December of 2015 and (2) a domestic manufacturing deduction whereas we were not eligible for this deduction in the prior year due to our net operating loss carryforwards.

At September 30, 2016 and December 31, 2015 we had deferred tax assets, net of valuation allowances and deferred tax liabilities, of $85.1 million and $99.1 million, respectively. The valuation allowances were related to: (1) various state net operating loss carryforwards where realization is more uncertain at this time due to the limited carryforward periods that exist in certain states; and (2) the portion of the amount by which the carrying value of our Metro Bonds for tax purposes exceeds our carrying value for book purposes, as we believe realization of that portion is more uncertain at this time.

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Note 14 - Senior Notes

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Long-term Debt [Text Block]

1

4

.          Senior Notes

The carrying value of our senior notes as of September 30, 2016 and December 31, 2015, net of any unamortized debt issuance costs or discount, were as follows:

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
5⅝% Senior notes due February 2020, net	$	246,689	$	246,032
5½% Senior notes due January 2024		248,345		248,209
6% Senior notes due January 2043		346,325		346,283
Total senior notes	$	841,359	$	840,524

Our senior notes are not secured and, while the senior note indentures contain some restrictions on secured debt and other transactions, they do not contain financial covenants. Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our homebuilding segment subsidiaries.

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Note 15 - Stock Based Compensation

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

15.          Stock Based Compensation

We account for share-based awards in accordance with ASC 718, which requires the fair value of stock-based compensation awards to be amortized as an expense over the vesting period. Stock-based compensation awards are valued at fair value on the date of grant. The following table sets forth share-based award expense activity for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Stock option grant expense	$	328	$	3,544	$	5,621	$	5,043
Restricted stock awards expense		145		454		1,015		1,546
Total stock based compensation	$	473	$	3,998	$	6,636	$	6,589

On May 18, 2015, the Company granted a non-qualified stock option to each of the Chief Executive Officer and the Chief Operating Officer for 1,000,000 shares of common stock under the Company’s 2011 Equity Incentive Plan. The terms of each option provide that, over a five year period, one third of the option shares will vest as of each of the third, fourth, and fifth anniversary dates of the grant of the option; provided that all unvested option shares will vest immediately in the event the closing price of the Company’s stock, as reported by the New York Stock Exchange, in any 20 out of 30 consecutive trading days closes at a price equal to or greater than 120% of the closing price on the date of grant (the “market-based condition”). The option exercise price is equal to the closing price of the Company’s common stock on the date of grant, which was $28.45 and the expiration date of each option is May 18, 2025. In accordance with ASC 718, the market-based awards were assigned a fair value of $5.62 per share (total value of $11.2 million) on the date of grant using a Monte Carlo simulation model and, as calculated under that model, all expense was recorded on a straight-line basis through the end of the 2016 second quarter. Included in the stock based compensation expense for the three and nine months ended September 30, 2016, shown in the table above, was $0 and $5.0 million, respectively, of stock option grant expense related to these market-based option grants. For the three and nine months ended September 30, 2015, $2.5 million and $3.7 million, respectively, of stock option grant expense was related to these market-based option grants.

On July 25, 2016, the Company granted long term performance stock unit awards (“PSUs”) to each of the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer under the Company’s 2011 Equity Incentive Plan. The PSUs will be earned based upon the Company’s performance, over a three year period commencing July 1, 2016 and ending June 30, 2019 (the “Performance Period”), measured by increasing home sale revenues over the Base Period. The “Base Period” for the awards is July 1, 2015 to June 30, 2016. The awards are conditioned upon the Company achieving an average gross margin from home sales percentage (excluding impairments) of at least fifteen percent (15%) over the Performance Period. Target goals of 100,000 shares for each of the Chief Executive Officer and the Chief Operating Officer and 25,000 shares for the Chief Financial Officer (the “Target Goals”) will be earned if the Company’s three year average home sale revenues over the Performance Period (“Performance Revenues”) exceed the home sale revenues over the Base Period (“Base Revenues”) by at least 10% but less than 20%. If Performance Revenues exceed the Base Revenues by at least 5% but less than 10%, 50% of the Target Goals will be earned. If Performance Revenues exceed the Base Revenues by at least 20%, 200% of the Target Goals will be earned.

In accordance with ASC 718, the PSUs are valued at the fair value on the date of grant. The grant date fair value of these awards was $24.08 per share and the maximum potential expense that would be recognized by the Company if the maximum of the performance targets were met would be approximately $10.8 million. ASC 718 prohibits recognition of expense associated with performance based stock awards until achievement of the performance targets are probable of occurring. As of September 30, 2016, the Company concluded that achievement of the performance targets had not met the level of probability required to record compensation expense at that time and, as such, no compensation expense was recognized related to the grant of these awards during the 2016 third quarter.

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Note 16 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

16.          Commitments and Contingencies

Surety Bonds and Letters of Credit.

We are required to obtain surety bonds and letters of credit in support of our obligations for land development and subdivision improvements, homeowner association dues, warranty work, contractor license fees and earnest money deposits. At September 30, 2016, we had outstanding surety bonds and letters of credit totaling $179.3 million and $58.9 million, respectively, including $32.6 million in letters of credit issued by HomeAmerican. The estimated cost to complete obligations related to these bonds and letters of credit were approximately $53.8 million and $31.9 million, respectively. All letters of credit as of September 30, 2016, excluding those issued by HomeAmerican, were issued under

our unsecured revolving credit facility (see Note 18 for further discussion of the revolving credit facility)

. We expect that the obligations secured by these performance bonds and letters of credit generally will be performed in the ordinary course of business and in accordance with the applicable contractual terms. To the extent that the obligations are performed, the related performance bonds and letters of credit should be released and we should not have any continuing obligations. However, in the event any such performance bonds or letters of credit are called, our indemnity obligations could require us to reimburse the issuer of the performance bond or letter of credit.

We have made no material guarantees with respect to third-party obligations.

Mortgage Loan Loss Reserves.

In the normal course of business, we establish reserves for potential losses associated with HomeAmerican’s sale of mortgage loans to third-parties. These reserves are created to address repurchase and indemnity claims by third-party purchasers of the mortgage loans, which claims arise primarily out of, but are not limited to, allegations of homebuyer fraud at the time of origination of the loan, missing documentation, loan processing defects or defective appraisals. These reserves are based upon, among other things: (1) pending claims received from third-party purchasers associated with previously sold mortgage loans; (2) a current assessment of the potential exposure associated with future claims of loan processing defects or homebuyer fraud in mortgage loans originated in prior periods; and (3) historical loss experience. In addition to reserves established for mortgage loans previously sold to third-parties, we establish reserves for loans that we have been required to repurchase. Our mortgage loan reserves are reflected as a component of accrued liabilities in the financial services section of the consolidated balance sheets, and the associated expenses are included in expenses in the financial services section of the consolidated statements of operations and comprehensive income.

The following table summarizes the mortgage loan loss reserve activity for the three and nine months ended September 30, 2016 and 2015:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016		2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	160	$	1,058		$	201		$	810
Expense provisions		6		39			6			764
Cash payments		-		(325	)		-			(325	)
Adjustments		-		(568	)		(41	)		(1,045	)
Balance at end of period	$	166	$	204		$	166		$	204

Legal Reserves.

Because of the nature of the homebuilding business, we have been named as defendants in various claims, complaints and other legal actions arising in the ordinary course of business, including product liability claims and claims associated with the sale and financing of homes. In the opinion of management, the outcome of these ordinary course matters will not have a material adverse effect upon our financial condition, results of operations or cash flows.

Lot Option Contracts

. In the normal course of business, we enter into lot option purchase contracts (“Option Contracts”), generally through a deposit of cash or a letter of credit, for the right to purchase land or lots at a future point in time with predetermined terms. The use of such land option and other contracts generally allow us to reduce the risks associated with direct land ownership and development, reduces our capital and financial commitments, and minimizes the amount of land inventories on our consolidated balance sheets. Our obligation with respect to Option Contracts is generally limited to forfeiture of the related deposits. At September 30, 2016, we had cash deposits and letters of credit totaling $6.9 million and $2.4 million, respectively, at risk associated with the option to purchase 2,504 lots.

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Note 17 - Derivative Financial Instruments

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

17.          Derivative Financial Instruments

The derivative instruments we utilize in the normal course of business are interest rate lock commitments and forward sales of mortgage-backed securities, both of which typically are short-term in nature. Forward sales of mortgage-backed securities are utilized to hedge changes in fair value of our interest rate lock commitments as well as mortgage loans held-for-sale not under commitments to sell. For forward sales of mortgage-backed securities, as well as interest rate lock commitments that are still outstanding at the end of a reporting period, we record the changes in fair value of the derivatives in revenues in the financial services section of our consolidated statements of operations and comprehensive income with an offset to other assets or accounts payable and accrued liabilities in the financial services section of our consolidated balance sheets, depending on the nature of the change.

At September 30, 2016, we had interest rate lock commitments with an aggregate principal balance of

$105.8

million. Additionally, we had

$26.8 million of mortgage loans held-for-sale at September 30, 2016 that had not yet been committed to a mortgage purchaser.

In order to hedge the changes in fair value of our interest rate lock commitments and mortgage loans held-for-sale that had not yet been committed to a mortgage purchaser, we had forward sales of securities totaling

$88.5

million at September 30, 2016.

For the three and nine months ended September 30, 2016, we recorded net gains on our derivatives of $0.1 million and $1.1 million, respectively, compared to $0.9 and $1.5 million for the same periods in 2015.

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Note 18 - Lines of Credit

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

18.          Lines of Credit

Revolving Credit Facility.

We have an unsecured revolving credit agreement (“Revolving Credit Facility”) with a group of lenders, which may be used for general corporate purposes.

This agreement has an

aggregate commitment of $550 million (the “Commitment”)

and was amended on December 18, 2015 to extend the maturity to December 18, 2020.

Each lender may issue letters of credit in an amount up to 50% of its commitment. The facility permits an increase in the maximum Commitment amount to $1.0 billion upon our request, subject to receipt of additional commitments from existing or additional lenders and the consent of the designated agent and the co-administrative agent. As defined in the Revolving Credit Facility agreement, interest rates on outstanding borrowings are equal to the highest of: (1) 0.0% or (2) a specified eurocurrency rate, federal funds effective rate or prime rate, plus a margin that is determined based on our credit ratings and leverage ratio. At any time at which our leverage ratio, as of the last day of the most recent calendar quarter, exceeds 55%, the aggregate principal amount of all consolidated senior debt borrowings outstanding may not exceed the borrowing base. There is no borrowing base requirement if our leverage ratio, as of the last day of the most recent calendar quarter, is 55% or less.

The Revolving Credit Facility is fully and unconditionally guaranteed, jointly and severally, by most of our homebuilding segment subsidiaries. The facility contains various representations, warranties and covenants that we believe are customary for agreements of this type. The financial covenants include a consolidated tangible net worth test and a leverage test, along with a consolidated tangible net worth covenant, all as defined in the facility agreement. A failure to satisfy the foregoing tests does not constitute an event of default, but can trigger a “term-out” of the facility. A breach of the consolidated tangible net worth covenant (but not the consolidated tangible net worth test) or a violation of anti-corruption or sanctions laws would result in an event of default.

The Revolving Credit Facility is subject to acceleration upon certain specified events of default, including breach of the consolidated tangible net worth covenant, a violation of anti-corruption or sanctions laws, failure to make timely payments, breaches of certain representations or covenants, failure to pay other material indebtedness, or another person becoming beneficial owner of 50% or more of our outstanding common stock. We believe we were in compliance with the representations, warranties and covenants included in the Revolving Credit Facility as of

September 30, 2016.

We incur costs associated with unused commitment fees pursuant to the terms of the Revolving Credit Facility. At September 30, 2016 and December 31, 2015, there were $26.2 million and $22.5 million, respectively, in letters of credit outstanding, which reduced the amounts available to be borrowed under the Revolving Credit Facility. At both September 30, 2016 and December 31, 2015, we had $15.0 million in outstanding borrowings under the Revolving Credit Facility. As of September 30, 2016, availability under the Revolving Credit Facility was approximately $508.8 million.

Mortgage Repurchase Facility.

HomeAmerican

entered into an Amended and Restated Master Repurchase Agreement (the “Mortgage Repurchase Facility”) with U.S. Bank National Association

(“USBNA”), effective September 16, 2016

.

The Mortgage Repurchase Facility amends and restates the prior Master Repurchase Agreement with USBNA dated as of November 12, 2008, as amended, which contained similar terms. The Mortgage Repurchase Facility increases the facility amount from $50 million to $75 million, extends the expiration date to September 15, 2017, adjusts the facility’s sublimits, expands the types of eligible loans, and reduces the facility fee.

The Mortgage Repurchase Facility provides liquidity to HomeAmerican by providing for the sale of eligible mortgage loans to USBNA with an agreement by HomeAmerican to repurchase the mortgage loans at a future date. Until such mortgage loans are transferred back to HomeAmerican, the documents relating to such loans are held by USBNA, as custodian, pursuant to the Custody Agreement (“Custody Agreement”), dated as of November 12, 2008, by and between HomeAmerican and USBNA. In the event that an eligible mortgage loan becomes ineligible, as defined under the Mortgage Repurchase Facility, HomeAmerican may be required to repurchase the ineligible mortgage loan immediately. The maximum aggregate commitment of the Mortgage Repurchase Facility was temporarily increased on September 27, 2016 from $75 million to $110 million and was effective through October 26, 2016. The Mortgage Repurchase Facility also had a temporary increase in the maximum aggregate commitment from $50 million to $90 million from December 23, 2015 through January 31, 2016. At September 30, 2016 and December 31, 2015, there were $92.0 million and $88.6 million, respectively, of mortgage loans that HomeAmerican was obligated to repurchase under the Mortgage Repurchase Facility. Mortgage loans that HomeAmerican is obligated to repurchase under the Mortgage Repurchase Facility are accounted for as a debt financing arrangement and are reported as mortgage repurchase facility in the consolidated balance sheets. Advances under the Mortgage Repurchase Facility carry a price range that is LIBOR-based. The Mortgage Repurchase Facility contains various representations, warranties and affirmative and negative covenants that we believe are customary for agreements of this type. The negative covenants include, among others, (i) a minimum Adjusted Tangible Net Worth requirement, (ii) a maximum Adjusted Tangible Net Worth ratio, (iii) a minimum adjusted net income requirement, and (iv) a minimum Liquidity requirement. The foregoing capitalized terms are defined in the Mortgage Repurchase Facility. We believe HomeAmerican was in compliance with the representations, warranties and covenants included in the Mortgage Repurchase Facility as of September 30, 2016.

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Note 19 - Supplemental Guarantor Information

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

Supplemental Guarantor Information [Text Block]

19.          Supplemental Guarantor Information

Our senior notes are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by the following subsidiaries (collectively, the "Guarantor Subsidiaries"), which are 100%-owned subsidiaries of the Company.

● M.D.C. Land Corporation

● RAH of Florida, Inc.

● Richmond American Construction, Inc.

● Richmond American Homes of Arizona, Inc.

● Richmond American Homes of Colorado, Inc.

● Richmond American Homes of Delaware, Inc.

● Richmond American Homes of Florida, LP

● Richmond American Homes of Illinois, Inc.

● Richmond American Homes of Maryland, Inc.

● Richmond American Homes of Nevada, Inc.

● Richmond American Homes of New Jersey, Inc.

● Richmond American Homes of Pennsylvania, Inc.

● Richmond American Homes of Utah, Inc.

● Richmond American Homes of Virginia, Inc.

● Richmond American Homes of Washington, Inc.

The senior note indentures do not provide for a suspension of the guarantees, but do provide that any Guarantor may be released from its guarantee so long as (1) no default or event of default exists or would result from release of such guarantee, (2) the Guarantor being released has consolidated net worth of less than 5% of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (3) the Guarantors released from their guarantees in any year-end period comprise in the aggregate less than 10% (or 15% if and to the extent necessary to permit the cure of a default) of the Company’s consolidated net worth as of the end of the most recent fiscal quarter, (4) such release would not have a material adverse effect on the homebuilding business of the Company and its subsidiaries and (5) the Guarantor is released from its guarantee(s) under all Specified Indebtedness (other than by reason of payment under its guarantee of Specified Indebtedness). Upon delivery of an officers’ certificate and an opinion of counsel stating that all conditions precedent provided for in the indenture relating to such transactions have been complied with and the release is authorized, the guarantee will be automatically and unconditionally released. “Specified Indebtedness” means indebtedness under the senior notes, the Company’s Indenture dated as of December 3, 2002, the Revolving Credit Facility, and any refinancing, extension, renewal or replacement of any of the foregoing.

We have determined that separate, full financial statements of the Guarantor Subsidiaries would not be material to investors and, accordingly, supplemental financial information for the Guarantor and Non-Guarantor Subsidiaries is presented below.

Supplemental Condensed Combining Balance Sheet

	September 30, 2016
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	124,730	$	4,548	$	-	$	-		$	129,278
Marketable securities		57,116		-		-		-			57,116
Restricted cash		-		4,621		-		-			4,621
Trade and other receivables		6,517		38,979		-		(2,414	)		43,082
Inventories:
Housing completed or under construction		-		976,372		-		-			976,372
Land and land under development		-		870,733		-		-			870,733
Total inventories		-		1,847,105		-		-			1,847,105
Intercompany receivables		1,609,686		2,803		5,467		(1,617,956	)		-
Investment in subsidiaries		258,979		-		-		(258,979	)		-
Property and equipment, net		26,121		2,628		-		-			28,749
Deferred tax asset, net		83,839		-		-		1,289			85,128
Metropolitan district bond securities (related party)		29,132		-		-		-			29,132
Prepaid and other assets		6,153		60,042		-		-			66,195
Total homebuilding assets		2,202,273		1,960,726		5,467		(1,878,060	)		2,290,406
Financial Services:
Cash and cash equivalents		-		-		34,180		-			34,180
Marketable securities		-		-		22,105		-			22,105
Intercompany receivables		-		-		39,479		(39,479	)		-
Mortgage loans held-for-sale, net		-		-		117,989		-			117,989
Other assets		-		-		10,879		(1,289	)		9,590
Total financial services assets		-		-		224,632		(40,768	)		183,864
Total Assets	$	2,202,273	$	1,960,726	$	230,099	$	(1,918,828	)	$	2,474,270
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	54,117	$	-	$	-		$	54,117
Accrued liabilities		5,543		113,535		145		3,004			122,227
Advances and notes payable to parent and subsidiaries		47,749		1,579,856		26,267		(1,653,872	)		-
Revolving credit facility		15,000		-		-		-			15,000
Senior notes, net		841,359		-		-		-			841,359
Total homebuilding liabilities		909,651		1,747,508		26,412		(1,650,868	)		1,032,703
Financial Services:
Accounts payable and other liabilities		-		-		62,352		(5,418	)		56,934
Advances and notes payable to parent and subsidiaries		-		-		3,563		(3,563	)		-
Mortgage repurchase facility		-		-		92,011		-			92,011
Total financial services liabilities		-		-		157,926		(8,981	)		148,945
Total Liabilities		909,651		1,747,508		184,338		(1,659,849	)		1,181,648
Equity:
Total Stockholders' Equity		1,292,622		213,218		45,761		(258,979	)		1,292,622
Total Liabilities and Stockholders' Equity	$	2,202,273	$	1,960,726	$	230,099	$	(1,918,828	)	$	2,474,270

Supplemental Co

ndensed Combining Balance Sheet

	December 31, 2015
					Non-
			Guarantor		Guarantor			Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries			Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	141,245	$	3,097	$	-		$	-		$	144,342
Marketable securities		92,387		-		-			-			92,387
Restricted cash		-		3,750		-			-			3,750
Trade and other receivables		5,304		20,297		-			(2,287	)		23,314
Inventories:
Housing completed or under construction		-		747,036		-			-			747,036
Land and land under development		-		1,016,926		-			-			1,016,926
Total inventories		-		1,763,962		-			-			1,763,962
Intercompany receivables		1,509,551		2,850		5,291			(1,517,692	)		-
Investment in subsidiaries		267,191		-		-			(267,191	)		-
Property and equipment, net		26,073		2,153		-			-			28,226
Deferred tax asset, net		97,083		-		-			2,024			99,107
Metropolitan district bond securities (related party)		25,911		-		-			-			25,911
Prepaid and other assets		5,973		59,421		-			-			65,394
Total homebuilding assets		2,170,718		1,855,530		5,291			(1,785,146	)		2,246,393
Financial Services:
Cash and cash equivalents		-		-		36,646			-			36,646
Marketable securities		-		-		11,307			-			11,307
Intercompany receivables		-		-		39,234			(39,234	)		-
Mortgage loans held-for-sale, net		-		-		115,670			-			115,670
Other assets		-		-		7,907			(2,024	)		5,883
Total financial services assets		-		-		210,764			(41,258	)		169,506
Total Assets	$	2,170,718	$	1,855,530	$	216,055		$	(1,826,404	)	$	2,415,899
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	40,472	$	-		$	-		$	40,472
Accrued liabilities		11,527		108,445		(33	)		2,947			122,886
Advances and notes payable to parent and subsidiaries		47,375		1,480,589		25,536			(1,553,500	)		-
Revolving credit facility		15,000		-		-			-			15,000
Senior notes, net		840,524		-		-			-			840,524
Total homebuilding liabilities		914,426		1,629,506		25,503			(1,550,553	)		1,018,882
Financial Services:
Accounts payable and accrued liabilities		-		-		57,348			(5,234	)		52,114
Advances and notes payable to parent and subsidiaries		-		-		3,426			(3,426	)		-
Mortgage repurchase facility		-		-		88,611			-			88,611
Total financial services liabilities		-		-		149,385			(8,660	)		140,725
Total Liabilities		914,426		1,629,506		174,888			(1,559,213	)		1,159,607
Equity:
Total Stockholders' Equity		1,256,292		226,024		41,167			(267,191	)		1,256,292
Total Liabilities and Stockholders' Equity	$	2,170,718	$	1,855,530	$	216,055		$	(1,826,404	)	$	2,415,899

Supplementa

l Condensed Combining Statement

of Operations

	Three Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	578,012		$	-		$	-		$	578,012
Home and land cost of sales		-			(483,829	)		-			-			(483,829	)
Inventory impairments		-			(4,700	)		-			-			(4,700	)
Total cost of sales		-			(488,529	)		-			-			(488,529	)
Gross margin		-			89,483			-			-			89,483
Selling, general, and administrative expenses		(8,268	)		(53,452	)		-			(184	)		(61,904	)
Equity income of subsidiaries		30,711			-			-			(30,711	)		-
Interest and other income		1,478			500			1			(110	)		1,869
Other expense		1			(1,559	)		-			-			(1,558	)
Other-than-temporary impairment of marketable securities		(215	)		-			-			-			(215	)
Homebuilding pretax income (loss)		23,707			34,972			1			(31,005	)		27,675
Financial Services:
Financial services pretax income		-			-			10,083			294			10,377
Income before income taxes		23,707			34,972			10,084			(30,711	)		38,052
(Provision) benefit for income taxes		2,652			(10,616	)		(3,729	)		-			(11,693	)
Net income	$	26,359		$	24,356		$	6,355		$	(30,711	)	$	26,359
Other comprehensive income related to available for sale securities, net of tax		1,028			-			310			(310	)		1,028
Comprehensive income	$	27,387		$	24,356		$	6,665		$	(31,021	)	$	27,387

	Three Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	455,646		$	-		$	-		$	455,646
Home and land cost of sales		-			(376,667	)		(100	)		-			(376,767	)
Inventory impairments		-			(4,351	)		-			-			(4,351	)
Total cost of sales		-			(381,018	)		(100	)		-			(381,118	)
Gross margin		-			74,628			(100	)		-			74,528
Selling, general, and administrative expenses		(11,651	)		(45,620	)		-			(173	)		(57,444	)
Equity income of subsidiaries		23,070			-			-			(23,070	)		-
Interest and other income		539			298			2			(1	)		838
Interest expense		155			-			-			(155	)		-
Other expense		(2	)		(348	)		-			-			(350	)
Other-than-temporary impairment of marketable securities		(2,176	)		-			-			-			(2,176	)
Homebuilding pretax income (loss)		9,935			28,958			(98	)		(23,399	)		15,396
Financial Services:
Financial services pretax income		-			-			7,933			329			8,262
Income before income taxes		9,935			28,958			7,835			(23,070	)		23,658
(Provision) benefit for income taxes		4,843			(10,874	)		(2,849	)		-			(8,880	)
Net income	$	14,778		$	18,084		$	4,986		$	(23,070	)	$	14,778
Other comprehensive income related to available for sale securities, net of tax		(226	)		-			1,198			(1,198	)		(226	)
Comprehensive income	$	14,552		$	18,084		$	6,184		$	(24,268	)	$	14,552

Supplementa

l Condensed Combining Statement

of Operations

	Nine Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,546,267		$	-		$	-		$	1,546,267
Home and land cost of sales		-			(1,291,270	)		(300	)		-			(1,291,570	)
Inventory impairments		-			(6,300	)		-			-			(6,300	)
Total cost of sales		-			(1,297,570	)		(300	)		-			(1,297,870	)
Gross margin		-			248,697			(300	)		-			248,397
Selling, general, and administrative expenses		(31,598	)		(150,492	)		-			(531	)		(182,621	)
Equity income of subsidiaries		80,990			-			-			(80,990	)		-
Interest and other income		3,970			1,652			4			(268	)		5,358
Other expense		(2	)		(2,461	)		-			-			(2,463	)
Other-than-temporary impairment of marketable securities		(934	)		-			-			-			(934	)
Homebuilding pretax income (loss)		52,426			97,396			(296	)		(81,789	)		67,737
Financial Services:
Financial services pretax income		-			-			24,247			799			25,046
Income before income taxes		52,426			97,396			23,951			(80,990	)		92,783
(Provision) benefit for income taxes		10,409			(31,438	)		(8,919	)		-			(29,948	)
Net income	$	62,835		$	65,958		$	15,032		$	(80,990	)	$	62,835
Other comprehensive income related to available for sale securities, net of tax		3,871			-			680			(680	)		3,871
Comprehensive income	$	66,706		$	65,958		$	15,712		$	(81,670	)	$	66,706

	Nine Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,295,273		$	-		$	-		$	1,295,273
Home and land cost of sales		-			(1,081,453	)		(100	)		-			(1,081,553	)
Inventory impairments		-			(4,701	)		-			-			(4,701	)
Total cost of sales		-			(1,086,154	)		(100	)		-			(1,086,254	)
Gross margin		-			209,119			(100	)		-			209,019
Selling, general, and administrative expenses		(29,211	)		(133,125	)		-			(421	)		(162,757	)
Equity income of subsidiaries		60,310			-			-			(60,310	)		-
Interest and other income		3,830			1,573			7			2			5,412
Interest expense		433			-			-			(433	)		-
Other expense		(5	)		(2,534	)		-			-			(2,539	)
Other-than-temporary impairment of marketable securities		(2,176	)		-			-			-			(2,176	)
Homebuilding pretax income (loss)		33,181			75,033			(93	)		(61,162	)		46,959
Financial Services:
Financial services pretax income		-			-			21,055			852			21,907
Income before income taxes		33,181			75,033			20,962			(60,310	)		68,866
(Provision) benefit for income taxes		10,015			(27,986	)		(7,699	)		-			(25,670	)
Net income	$	43,196		$	47,047		$	13,263		$	(60,310	)	$	43,196
Other comprehensive income related to available for sale securities, net of tax		722			-			918			(918	)		722
Comprehensive income	$	43,918		$	47,047		$	14,181		$	(61,228	)	$	43,918

Supplementa

l Condensed Combining Statement

of Cash Flows

	Nine Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	(5,918	)	$	(17,581	)	$	14,596		$	-		$	(8,903	)
Net cash provided by (used in) investing activities		26,166			(1,252	)		(9,797	)		9,619			24,736
Financing activities:
Payments from (advances to) subsidiaries		-			20,284			(10,665	)		(9,619	)		-
Mortgage repurchase facility		-			-			3,400			-			3,400
Dividend payments		(36,763	)		-			-			-			(36,763	)
Net cash provided by (used in) financing activities		(36,763	)		20,284			(7,265	)		(9,619	)		(33,363	)
Net increase in cash and cash equivalents		(16,515	)		1,451			(2,466	)		-			(17,530	)
Cash and cash equivalents:
Beginning of period		141,245			3,097			36,646			-			180,988
End of period	$	124,730		$	4,548		$	34,180		$	-		$	163,458

	Nine Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	19,057		$	(73,657	)	$	28,114		$	-		$	(26,486	)
Net cash provided by (used in) investing activities		(21,669	)		(402	)		3,260			67,515			48,704
Financing activities:
Payments from (advances to) subsidiaries		-			75,084			(7,569	)		(67,515	)		-
Mortgage repurchase facility		-			-			(17,067	)		-			(17,067	)
Dividend payments		(36,646	)		-			-			-			(36,646	)
Proceeds from the exercise of stock options		665			-			-			-			665
Net cash provided by (used in) financing activities		(35,981	)		75,084			(24,636	)		(67,515	)		(53,048	)
Net increase in cash and cash equivalents		(38,593	)		1,025			6,738			-			(30,830	)
Cash and cash equivalents:
Beginning of period		119,951			2,691			31,183			-			153,825
End of period	$	81,358		$	3,716		$	37,921		$	-		$	122,995

XML

Note 3 - Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Reconciliation of Revenue from Segments to Consolidated [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Homebuilding
West	$	284,589	$	229,743	$	745,995	$	624,261
Mountain		192,876		147,166		521,034		428,080
East		100,547		78,737		279,238		242,932
Total home and land sale revenues	$	578,012	$	455,646	$	1,546,267	$	1,295,273
Financial Services
Mortgage operations	$	11,294	$	7,999	$	28,866	$	21,752
Other		6,114		4,842		15,382		13,100
Total financial services revenues	$	17,408	$	12,841	$	44,248	$	34,852

Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding
West	$	18,392		$	16,708		$	43,830		$	40,808
Mountain		18,856			12,849			49,688			35,239
East		(2,267	)		(691	)		3,600			(1,093	)
Corporate		(7,306	)		(13,470	)		(29,381	)		(27,995	)
Total homebuilding pretax income	$	27,675		$	15,396		$	67,737		$	46,959
Financial Services
Mortgage operations	$	6,723		$	5,354		$	16,491		$	12,243
Other		3,654			2,908			8,555			9,664
Total financial services pretax income	$	10,377		$	8,262		$	25,046		$	21,907
Total pretax income	$	38,052		$	23,658		$	92,783		$	68,866

Reconciliation of Assets from Segment to Consolidated [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Homebuilding assets
West	$	1,083,419	$	991,393
Mountain		588,976		536,831
East		285,528		324,457
Corporate		332,483		393,712
Total homebuilding assets	$	2,290,406	$	2,246,393
Financial services assets
Mortgage operations	$	129,545	$	123,176
Other		54,319		46,330
Total financial services assets	$	183,864	$	169,506
Total assets	$	2,474,270	$	2,415,899

XML

Note 4 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands, except per share amounts)
Numerator
Net income	$	26,359		$	14,778		$	62,835		$	43,196
Less: distributed earnings allocated to participating securities		(45	)		(25	)		(124	)		(73	)
Less: undistributed earnings allocated to participating securities		(49	)		(6	)		(83	)		(15	)
Net income attributable to common stockholders (numerator for basic earnings per share)		26,265			14,747			62,628			43,108
Add back: undistributed earnings allocated to participating securities		49			6			83			15
Less: undistributed earnings reallocated to participating securities		(49	)		(6	)		(83	)		(15	)
Numerator for diluted earnings per share under two class method	$	26,265		$	14,747		$	62,628		$	43,108
Denominator
Weighted-average common shares outstanding		48,854,412			48,785,973			48,844,613			48,756,265
Add: dilutive effect of stock options		155,537			284,318			10,401			226,710
Denominator for diluted earnings per share under two class method		49,009,949			49,070,291			48,855,014			48,982,975
Basic Earnings Per Common Share	$	0.54		$	0.30		$	1.28		$	0.88
Diluted Earnings Per Common Share	$	0.54		$	0.30		$	1.28		$	0.88

XML

Note 5 - Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016		2015
	(Dollars in thousands)
Unrealized gains (losses) on available-for-sale marketable securities (1) :
Beginning balance	$	5,344		$	1,589		$	3,657	$	2,775
Other comprehensive income (loss) before reclassifications		1,156			(2,853	)		2,559		(3,753	)
Amounts reclassified from AOCI (2)		(201	)		1,714			83		1,428
Ending balance	$	6,299		$	450		$	6,299	$	450
Unrealized gains on available-for-sale metropolitan district bond securities (1) :
Beginning balance	$	13,214		$	9,814		$	12,058	$	7,680
Other comprehensive income before reclassifications		73			913			1,229		3,047
Ending balance	$	13,287		$	10,727		$	13,287	$	10,727
Total ending AOCI	$	19,586		$	11,177		$	19,586	$	11,177

Reclassification out of Accumulated Other Comprehensive Income [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Affected Line Item in the Statements of Operations	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding: Interest and other income	$	555		$	(620	)	$	817		$	(495	)
Homebuilding: Other-than-temporary impairment of marketable securities		(215	)		(2,176	)		(934	)		(2,176	)
Financial services: Interest and other income		94			31			94			368
Financial services: Other than temporary impairment of marketable securities		(111	)		-			(111	)		-
Income before income taxes		323			(2,765	)		(134	)		(2,303	)
Provision for income taxes		(122	)		1,051			51			875
Net income	$	201		$	(1,714	)	$	(83	)	$	(1,428	)

XML

Note 6 - Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

		Fair Value
		September 30,		December 31,
Financial Instrument	Hierarchy	2016		2015
		(Dollars in thousands)
Marketable equity securities (available-for-sale)	Level 1	$	79,221	$	103,694
Mortgage loans held-for-sale, net	Level 2	$	117,989	$	115,670
Metropolitan district bond securities (related party) (available-for-sale)	Level 3	$	29,132	$	25,911

Available-for-sale Securities [Table Text Block]

	September 30, 2016
	Amortized Cost		OTTI			Net Amortized Cost		Fair Value
	(Dollars in thousands)
Homebuilding equity securities	$	48,225	$	(958	)	$	47,267	$	57,116
Financial services equity securities		21,905		(112	)		21,793		22,105
Total marketable equity securities	$	70,130	$	(1,070	)	$	69,060	$	79,221

	December 31, 2015
	Amortized Cost		OTTI			Net Amortized Cost		Fair Value
	(Dollars in thousands)
Homebuilding equity securities	$	89,738	$	(3,969	)	$	85,769	$	92,387
Financial services equity securities		12,026		-			12,026		11,307
Total marketable equity securities	$	101,764	$	(3,969	)	$	97,795	$	103,694

Schedule of Unrealized Loss on Investments [Table Text Block]

	September 30, 2016							December 31, 2015
	Number of Securities in an Unrealized Loss Position		Aggregate Unrealized Loss Position			Aggregate Fair Value of Securities in an Unrealized Loss Position		Number of Securities in an Unrealized Loss Position		Aggregate Unrealized Loss Position			Aggregate Fair Value of Securities in an Unrealized Loss Position
	(Dollars in thousands)
Marketable equity securities		2	$	(450	)	$	2,548		4	$	(882	)	$	6,116

Realized Gain (Loss) on Investments [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Gross realized gains on sales of available-for-sale securities
Equity securities	$	740		$	980		$	2,210		$	1,855
Debt securities		-			42			-			413
Total	$	740		$	1,022		$	2,210		$	2,268
Gross realized losses on sales of available-for-sale securities
Equity securities	$	(91	)	$	(1,604	)	$	(1,299	)	$	(2,161	)
Debt securities		-			(6	)		-			(233	)
Total	$	(91	)	$	(1,610	)	$	(1,299	)	$	(2,394	)
Net realized gain (loss) on sales of available-for-sale securities	$	649		$	(588	)	$	911		$	(126	)

Fair Value Inputs, Assets, Quantitative Information [Table Text Block]

	Quantitative Data				Sensitivity Analysis
Unobservable Input	Range			Weighted Average	Movement in Fair Value from Increase in Input	Movement in Fair Value from Decrease in Input
Number of homes closed per year	0	to	127	102	Increase	Decrease
Average sales price	$400,000	to	$1.3 million	$527,000	Increase	Decrease
Discount rate	5%	to	12%	9.0%	Decrease	Increase

Schedule of Principal Amounts and Fair Values of Debt Instruments [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Balance at beginning of period	$	28,604	$	22,259	$	25,911	$	18,203
Increase in fair value (recorded in other comprehensive income)		117		1,472		1,982		4,815
Change due to accretion of principal		411		343		1,239		1,056
Cash receipts		-		-		-		-
Balance at end of period	$	29,132	$	24,074	$	29,132	$	24,074

Fair Value of Senior Notes [Table Text Block]

	September 30, 2016				December 31, 2015
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
5⅝% Senior Notes due February 2020, net	$	246,689	$	268,688	$	246,032	$	257,813
5½% Senior Notes due January 2024		248,345		263,883		248,209		252,188
6% Senior Notes due January 2043		346,325		315,887		346,283		276,938
Total	$	841,359	$	848,458	$	840,524	$	786,939

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Note 7 - Inventories (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Inventory [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Housing completed or under construction:
West	$	534,423	$	365,867
Mountain		306,681		253,578
East		135,268		127,591
Total housing completed or under construction		976,372		747,036
Land and land under development:
West		487,001		580,682
Mountain		252,838		259,484
East		130,894		176,760
Total land and land under development		870,733		1,016,926
Total inventories	$	1,847,105	$	1,763,962

Schedule of Inventory Impairments [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
West	$	-	$	-	$	1,400	$	-
Mountain		-		250		-		250
East		4,700		2,975		4,900		3,325
Total inventory impairments	$	4,700	$	3,225	$	6,300	$	3,575

Quantitative Data for Fair Value of the Impaired Inventory [Table Text Block]

	Impairment Data								Quantitative Data
Three Months Ended	Total Subdivisions Tested		Inventory Impairments		Fair Value of Inventory After Impairments		Number of Subdivisions Impaired		Discount Rate
	(Dollars in thousands)
March 31, 2016		14	$	-	$	-		-		N/A
June 30, 2016		17	$	1,600	$	6,415		2	12%	to	15%
September 30, 2016		25	$	4,700	$	12,295		2	15%	to	18%
March 31, 2015		22	$	350	$	3,701		1		8.7%
June 30, 2015		22	$	-	$	-		-		N/A
September 30, 2015		18	$	3,225	$	14,836		5	12%	to	15%

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Note 8 - Capitalization of Interest (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Capitalization of Interest [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Homebuilding interest incurred	$	13,187		$	13,265		$	39,511		$	39,821
Less: Interest capitalized		(13,187	)		(13,265	)		(39,511	)		(39,821	)
Homebuilding interest expensed	$	-		$	-		$	-		$	-
Interest capitalized, beginning of period	$	77,150		$	78,857		$	77,541		$	79,231
Plus: Interest capitalized during period		13,187			13,265			39,511			39,821
Less: Previously capitalized interest included in home and land cost of sales		(15,922	)		(12,878	)		(42,637	)		(39,808	)
Interest capitalized, end of period	$	74,415		$	79,244		$	74,415		$	79,244

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Note 9 - Homebuilding Prepaid and Other Assets (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Other Assets [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Land option deposits	$	7,360	$	11,997
Deferred marketing costs		35,335		31,152
Prepaid expenses		7,539		6,500
Goodwill		6,008		6,008
Deferred debt issuance costs, net		4,721		5,570
Other		5,232		4,167
Total	$	66,195	$	65,394

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Note 10 - Homebuilding Accrued Liabilities and Financial Services Accounts Payable and Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Accrued Liabilities [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Customer and escrow deposits	$	30,875	$	20,717
Warranty accrual		18,709		15,328
Accrued compensation and related expenses		24,723		25,492
Accrued interest		11,031		23,234
Land development and home construction accruals		7,705		11,465
Other accrued liabilities		29,184		26,650
Total accrued liabilities	$	122,227	$	122,886

Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
Insurance reserves	$	48,153	$	45,811
Accounts payable and other accrued liabilities		8,781		6,303
Total accounts payable and accrued liabilities	$	56,934	$	52,114

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Note 11 - Warranty Accrual (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Product Warranty Liability [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	17,217		$	17,253		$	15,328		$	18,346
Expense provisions		2,390			1,536			6,147			3,980
Cash payments		(2,723	)		(2,708	)		(7,828	)		(6,032	)
Adjustments		1,825			-			5,062			(213	)
Balance at end of period	$	18,709		$	16,081		$	18,709		$	16,081

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Note 12 - Insurance Reserves (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Liability for Unpaid Claims and Claims Adjustment Expense [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2016			2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	46,900		$	47,389		$	45,811		$	50,470
Expense provisions		1,888			1,652			5,222			4,501
Cash payments, net of recoveries		(635	)		(2,356	)		(2,880	)		(6,786	)
Adjustments		-			-			-			(1,500	)
Balance at end of period	$	48,153		$	46,685		$	48,153		$	46,685

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Note 14 - Senior Notes (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Debt [Table Text Block]

	September 30,		December 31,
	2016		2015
	(Dollars in thousands)
5⅝% Senior notes due February 2020, net	$	246,689	$	246,032
5½% Senior notes due January 2024		248,345		248,209
6% Senior notes due January 2043		346,325		346,283
Total senior notes	$	841,359	$	840,524

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Note 15 - Stock Based Compensation (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Share-based Compensation, Activity [Table Text Block]

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
	(Dollars in thousands)
Stock option grant expense	$	328	$	3,544	$	5,621	$	5,043
Restricted stock awards expense		145		454		1,015		1,546
Total stock based compensation	$	473	$	3,998	$	6,636	$	6,589

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Note 16 - Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Schedule of Mortgage Loan Loss Reserve Activity [TableText Block]

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2016		2015			2016			2015
	(Dollars in thousands)
Balance at beginning of period	$	160	$	1,058		$	201		$	810
Expense provisions		6		39			6			764
Cash payments		-		(325	)		-			(325	)
Adjustments		-		(568	)		(41	)		(1,045	)
Balance at end of period	$	166	$	204		$	166		$	204

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Note 19 - Supplemental Guarantor Information (Tables)

9 Months Ended

Sep. 30, 2016

Notes Tables

Condensed Balance Sheet [Table Text Block]

	September 30, 2016
					Non-
			Guarantor		Guarantor		Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries		Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	124,730	$	4,548	$	-	$	-		$	129,278
Marketable securities		57,116		-		-		-			57,116
Restricted cash		-		4,621		-		-			4,621
Trade and other receivables		6,517		38,979		-		(2,414	)		43,082
Inventories:
Housing completed or under construction		-		976,372		-		-			976,372
Land and land under development		-		870,733		-		-			870,733
Total inventories		-		1,847,105		-		-			1,847,105
Intercompany receivables		1,609,686		2,803		5,467		(1,617,956	)		-
Investment in subsidiaries		258,979		-		-		(258,979	)		-
Property and equipment, net		26,121		2,628		-		-			28,749
Deferred tax asset, net		83,839		-		-		1,289			85,128
Metropolitan district bond securities (related party)		29,132		-		-		-			29,132
Prepaid and other assets		6,153		60,042		-		-			66,195
Total homebuilding assets		2,202,273		1,960,726		5,467		(1,878,060	)		2,290,406
Financial Services:
Cash and cash equivalents		-		-		34,180		-			34,180
Marketable securities		-		-		22,105		-			22,105
Intercompany receivables		-		-		39,479		(39,479	)		-
Mortgage loans held-for-sale, net		-		-		117,989		-			117,989
Other assets		-		-		10,879		(1,289	)		9,590
Total financial services assets		-		-		224,632		(40,768	)		183,864
Total Assets	$	2,202,273	$	1,960,726	$	230,099	$	(1,918,828	)	$	2,474,270
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	54,117	$	-	$	-		$	54,117
Accrued liabilities		5,543		113,535		145		3,004			122,227
Advances and notes payable to parent and subsidiaries		47,749		1,579,856		26,267		(1,653,872	)		-
Revolving credit facility		15,000		-		-		-			15,000
Senior notes, net		841,359		-		-		-			841,359
Total homebuilding liabilities		909,651		1,747,508		26,412		(1,650,868	)		1,032,703
Financial Services:
Accounts payable and other liabilities		-		-		62,352		(5,418	)		56,934
Advances and notes payable to parent and subsidiaries		-		-		3,563		(3,563	)		-
Mortgage repurchase facility		-		-		92,011		-			92,011
Total financial services liabilities		-		-		157,926		(8,981	)		148,945
Total Liabilities		909,651		1,747,508		184,338		(1,659,849	)		1,181,648
Equity:
Total Stockholders' Equity		1,292,622		213,218		45,761		(258,979	)		1,292,622
Total Liabilities and Stockholders' Equity	$	2,202,273	$	1,960,726	$	230,099	$	(1,918,828	)	$	2,474,270

	December 31, 2015
					Non-
			Guarantor		Guarantor			Eliminating			Consolidated
	MDC		Subsidiaries		Subsidiaries			Entries			MDC
	(Dollars in thousands)
ASSETS
Homebuilding:
Cash and cash equivalents	$	141,245	$	3,097	$	-		$	-		$	144,342
Marketable securities		92,387		-		-			-			92,387
Restricted cash		-		3,750		-			-			3,750
Trade and other receivables		5,304		20,297		-			(2,287	)		23,314
Inventories:
Housing completed or under construction		-		747,036		-			-			747,036
Land and land under development		-		1,016,926		-			-			1,016,926
Total inventories		-		1,763,962		-			-			1,763,962
Intercompany receivables		1,509,551		2,850		5,291			(1,517,692	)		-
Investment in subsidiaries		267,191		-		-			(267,191	)		-
Property and equipment, net		26,073		2,153		-			-			28,226
Deferred tax asset, net		97,083		-		-			2,024			99,107
Metropolitan district bond securities (related party)		25,911		-		-			-			25,911
Prepaid and other assets		5,973		59,421		-			-			65,394
Total homebuilding assets		2,170,718		1,855,530		5,291			(1,785,146	)		2,246,393
Financial Services:
Cash and cash equivalents		-		-		36,646			-			36,646
Marketable securities		-		-		11,307			-			11,307
Intercompany receivables		-		-		39,234			(39,234	)		-
Mortgage loans held-for-sale, net		-		-		115,670			-			115,670
Other assets		-		-		7,907			(2,024	)		5,883
Total financial services assets		-		-		210,764			(41,258	)		169,506
Total Assets	$	2,170,718	$	1,855,530	$	216,055		$	(1,826,404	)	$	2,415,899
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	-	$	40,472	$	-		$	-		$	40,472
Accrued liabilities		11,527		108,445		(33	)		2,947			122,886
Advances and notes payable to parent and subsidiaries		47,375		1,480,589		25,536			(1,553,500	)		-
Revolving credit facility		15,000		-		-			-			15,000
Senior notes, net		840,524		-		-			-			840,524
Total homebuilding liabilities		914,426		1,629,506		25,503			(1,550,553	)		1,018,882
Financial Services:
Accounts payable and accrued liabilities		-		-		57,348			(5,234	)		52,114
Advances and notes payable to parent and subsidiaries		-		-		3,426			(3,426	)		-
Mortgage repurchase facility		-		-		88,611			-			88,611
Total financial services liabilities		-		-		149,385			(8,660	)		140,725
Total Liabilities		914,426		1,629,506		174,888			(1,559,213	)		1,159,607
Equity:
Total Stockholders' Equity		1,256,292		226,024		41,167			(267,191	)		1,256,292
Total Liabilities and Stockholders' Equity	$	2,170,718	$	1,855,530	$	216,055		$	(1,826,404	)	$	2,415,899

Condensed Income Statement [Table Text Block]

	Three Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	578,012		$	-		$	-		$	578,012
Home and land cost of sales		-			(483,829	)		-			-			(483,829	)
Inventory impairments		-			(4,700	)		-			-			(4,700	)
Total cost of sales		-			(488,529	)		-			-			(488,529	)
Gross margin		-			89,483			-			-			89,483
Selling, general, and administrative expenses		(8,268	)		(53,452	)		-			(184	)		(61,904	)
Equity income of subsidiaries		30,711			-			-			(30,711	)		-
Interest and other income		1,478			500			1			(110	)		1,869
Other expense		1			(1,559	)		-			-			(1,558	)
Other-than-temporary impairment of marketable securities		(215	)		-			-			-			(215	)
Homebuilding pretax income (loss)		23,707			34,972			1			(31,005	)		27,675
Financial Services:
Financial services pretax income		-			-			10,083			294			10,377
Income before income taxes		23,707			34,972			10,084			(30,711	)		38,052
(Provision) benefit for income taxes		2,652			(10,616	)		(3,729	)		-			(11,693	)
Net income	$	26,359		$	24,356		$	6,355		$	(30,711	)	$	26,359
Other comprehensive income related to available for sale securities, net of tax		1,028			-			310			(310	)		1,028
Comprehensive income	$	27,387		$	24,356		$	6,665		$	(31,021	)	$	27,387

	Three Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	455,646		$	-		$	-		$	455,646
Home and land cost of sales		-			(376,667	)		(100	)		-			(376,767	)
Inventory impairments		-			(4,351	)		-			-			(4,351	)
Total cost of sales		-			(381,018	)		(100	)		-			(381,118	)
Gross margin		-			74,628			(100	)		-			74,528
Selling, general, and administrative expenses		(11,651	)		(45,620	)		-			(173	)		(57,444	)
Equity income of subsidiaries		23,070			-			-			(23,070	)		-
Interest and other income		539			298			2			(1	)		838
Interest expense		155			-			-			(155	)		-
Other expense		(2	)		(348	)		-			-			(350	)
Other-than-temporary impairment of marketable securities		(2,176	)		-			-			-			(2,176	)
Homebuilding pretax income (loss)		9,935			28,958			(98	)		(23,399	)		15,396
Financial Services:
Financial services pretax income		-			-			7,933			329			8,262
Income before income taxes		9,935			28,958			7,835			(23,070	)		23,658
(Provision) benefit for income taxes		4,843			(10,874	)		(2,849	)		-			(8,880	)
Net income	$	14,778		$	18,084		$	4,986		$	(23,070	)	$	14,778
Other comprehensive income related to available for sale securities, net of tax		(226	)		-			1,198			(1,198	)		(226	)
Comprehensive income	$	14,552		$	18,084		$	6,184		$	(24,268	)	$	14,552

	Nine Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,546,267		$	-		$	-		$	1,546,267
Home and land cost of sales		-			(1,291,270	)		(300	)		-			(1,291,570	)
Inventory impairments		-			(6,300	)		-			-			(6,300	)
Total cost of sales		-			(1,297,570	)		(300	)		-			(1,297,870	)
Gross margin		-			248,697			(300	)		-			248,397
Selling, general, and administrative expenses		(31,598	)		(150,492	)		-			(531	)		(182,621	)
Equity income of subsidiaries		80,990			-			-			(80,990	)		-
Interest and other income		3,970			1,652			4			(268	)		5,358
Other expense		(2	)		(2,461	)		-			-			(2,463	)
Other-than-temporary impairment of marketable securities		(934	)		-			-			-			(934	)
Homebuilding pretax income (loss)		52,426			97,396			(296	)		(81,789	)		67,737
Financial Services:
Financial services pretax income		-			-			24,247			799			25,046
Income before income taxes		52,426			97,396			23,951			(80,990	)		92,783
(Provision) benefit for income taxes		10,409			(31,438	)		(8,919	)		-			(29,948	)
Net income	$	62,835		$	65,958		$	15,032		$	(80,990	)	$	62,835
Other comprehensive income related to available for sale securities, net of tax		3,871			-			680			(680	)		3,871
Comprehensive income	$	66,706		$	65,958		$	15,712		$	(81,670	)	$	66,706

	Nine Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Homebuilding:
Revenues	$	-		$	1,295,273		$	-		$	-		$	1,295,273
Home and land cost of sales		-			(1,081,453	)		(100	)		-			(1,081,553	)
Inventory impairments		-			(4,701	)		-			-			(4,701	)
Total cost of sales		-			(1,086,154	)		(100	)		-			(1,086,254	)
Gross margin		-			209,119			(100	)		-			209,019
Selling, general, and administrative expenses		(29,211	)		(133,125	)		-			(421	)		(162,757	)
Equity income of subsidiaries		60,310			-			-			(60,310	)		-
Interest and other income		3,830			1,573			7			2			5,412
Interest expense		433			-			-			(433	)		-
Other expense		(5	)		(2,534	)		-			-			(2,539	)
Other-than-temporary impairment of marketable securities		(2,176	)		-			-			-			(2,176	)
Homebuilding pretax income (loss)		33,181			75,033			(93	)		(61,162	)		46,959
Financial Services:
Financial services pretax income		-			-			21,055			852			21,907
Income before income taxes		33,181			75,033			20,962			(60,310	)		68,866
(Provision) benefit for income taxes		10,015			(27,986	)		(7,699	)		-			(25,670	)
Net income	$	43,196		$	47,047		$	13,263		$	(60,310	)	$	43,196
Other comprehensive income related to available for sale securities, net of tax		722			-			918			(918	)		722
Comprehensive income	$	43,918		$	47,047		$	14,181		$	(61,228	)	$	43,918

Condensed Cash Flow Statement [Table Text Block]

	Nine Months Ended September 30, 2016
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	(5,918	)	$	(17,581	)	$	14,596		$	-		$	(8,903	)
Net cash provided by (used in) investing activities		26,166			(1,252	)		(9,797	)		9,619			24,736
Financing activities:
Payments from (advances to) subsidiaries		-			20,284			(10,665	)		(9,619	)		-
Mortgage repurchase facility		-			-			3,400			-			3,400
Dividend payments		(36,763	)		-			-			-			(36,763	)
Net cash provided by (used in) financing activities		(36,763	)		20,284			(7,265	)		(9,619	)		(33,363	)
Net increase in cash and cash equivalents		(16,515	)		1,451			(2,466	)		-			(17,530	)
Cash and cash equivalents:
Beginning of period		141,245			3,097			36,646			-			180,988
End of period	$	124,730		$	4,548		$	34,180		$	-		$	163,458

	Nine Months Ended September 30, 2015
							Non-
				Guarantor			Guarantor			Eliminating			Consolidated
	MDC			Subsidiaries			Subsidiaries			Entries			MDC
	(Dollars in thousands)
Net cash provided by (used in) operating activities	$	19,057		$	(73,657	)	$	28,114		$	-		$	(26,486	)
Net cash provided by (used in) investing activities		(21,669	)		(402	)		3,260			67,515			48,704
Financing activities:
Payments from (advances to) subsidiaries		-			75,084			(7,569	)		(67,515	)		-
Mortgage repurchase facility		-			-			(17,067	)		-			(17,067	)
Dividend payments		(36,646	)		-			-			-			(36,646	)
Proceeds from the exercise of stock options		665			-			-			-			665
Net cash provided by (used in) financing activities		(35,981	)		75,084			(24,636	)		(67,515	)		(53,048	)
Net increase in cash and cash equivalents		(38,593	)		1,025			6,738			-			(30,830	)
Cash and cash equivalents:
Beginning of period		119,951			2,691			31,183			-			153,825
End of period	$	81,358		$	3,716		$	37,921		$	-		$	122,995

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Note 3 - Segment Reporting (Details Textual)	9 Months Ended
	Sep. 30, 2016
Other Segments [Member]
Number of Reportable Segments	1

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Note 3 - Segment Reporting - Reconciliation of Revenue from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Homebuilding Segment [Member] | Reportable Segment, West [Member]
Home and land sale revenues	$ 284,589	$ 229,743	$ 745,995	$ 624,261
Homebuilding Segment [Member] | Reportable Segment, Mountain [Member]
Home and land sale revenues	192,876	147,166	521,034	428,080
Homebuilding Segment [Member] | Reportable Segment, East [Member]
Home and land sale revenues	100,547	78,737	279,238	242,932
Homebuilding Segment [Member]
Home and land sale revenues	578,012	455,646	1,546,267	1,295,273
Financial Services Segment [Member] | Mortgage Operations [Member]
Financial services revenues	11,294	7,999	28,866	21,752
Financial Services Segment [Member] | Other Financial Services [Member]
Financial services revenues	6,114	4,842	15,382	13,100
Financial Services Segment [Member]
Financial services revenues	$ 17,408	$ 12,841	$ 44,248	$ 34,852

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Note 3 - Segment Reporting - Reconciliation of Pretax Operating Income from Segments to Consolidated (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Homebuilding Segment [Member] | Reportable Segment, West [Member] | Operating Segments [Member]
Income before income taxes	$ 18,392	$ 16,708	$ 43,830	$ 40,808
Homebuilding Segment [Member] | Reportable Segment, Mountain [Member] | Operating Segments [Member]
Income before income taxes	18,856	12,849	49,688	35,239
Homebuilding Segment [Member] | Reportable Segment, East [Member] | Operating Segments [Member]
Income before income taxes	(2,267)	(691)	3,600	(1,093)
Homebuilding Segment [Member] | Corporate, Non-Segment [Member]
Income before income taxes	(7,306)	(13,470)	(29,381)	(27,995)
Homebuilding Segment [Member]
Income before income taxes	27,675	15,396	67,737	46,959
Financial Services Segment [Member] | Mortgage Operations [Member] | Operating Segments [Member]
Income before income taxes	6,723	5,354	16,491	12,243
Financial Services Segment [Member] | Other Financial Services [Member] | Operating Segments [Member]
Income before income taxes	3,654	2,908	8,555	9,664
Financial Services Segment [Member]
Income before income taxes	10,377	8,262	25,046	21,907
Income before income taxes	$ 38,052	$ 23,658	$ 92,783	$ 68,866

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Note 3 - Segment Reporting - Total Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Homebuilding Segment [Member] | Reportable Segment, West [Member] | Operating Segments [Member]
Assets	$ 1,083,419	$ 991,393
Homebuilding Segment [Member] | Reportable Segment, Mountain [Member] | Operating Segments [Member]
Assets	588,976	536,831
Homebuilding Segment [Member] | Reportable Segment, East [Member] | Operating Segments [Member]
Assets	285,528	324,457
Homebuilding Segment [Member] | Corporate, Non-Segment [Member]
Assets	332,483	393,712
Homebuilding Segment [Member]
Assets	2,290,406	2,246,393
Financial Services Segment [Member] | Mortgage Operations [Member] | Operating Segments [Member]
Assets	129,545	123,176
Financial Services Segment [Member] | Other Financial Services [Member] | Operating Segments [Member]
Assets	54,319	46,330
Financial Services Segment [Member]
Assets	183,864	169,506
Assets	$ 2,474,270	$ 2,415,899

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Note 4 - Earnings Per Share (Details Textual) - shares shares in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	5.3	3.4	6.4	3.9

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Note 4 - Earnings Per Share - Basic and Diluted Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Option [Member]
Add: dilutive effect of stock options (in shares)	155,537	284,318	10,401	226,710
Net income	$ 26,359	$ 14,778	$ 62,835	$ 43,196
Less: distributed earnings allocated to participating securities	(45)	(25)	(124)	(73)
Less: undistributed earnings allocated to participating securities	(49)	(6)	(83)	(15)
Net income attributable to common stockholders (numerator for basic earnings per share)	26,265	14,747	62,628	43,108
Add back: undistributed earnings allocated to participating securities	49	6	83	15
Less: undistributed earnings reallocated to participating securities	(49)	(6)	(83)	(15)
Numerator for diluted earnings per share under two class method	$ 26,265	$ 14,747	$ 62,628	$ 43,108
Weighted-average common shares outstanding (in shares)	48,854,412	48,785,973	48,844,613	48,756,265
Denominator for diluted earnings per share under two class method (in shares)	49,009,949	49,070,291	48,855,014	48,982,975
Basic Earnings Per Common Share (in dollars per share)	$ 0.54	$ 0.30	$ 1.28	$ 0.88
Diluted Earnings Per Common Share (in dollars per share)	$ 0.54	$ 0.30	$ 1.28	$ 0.88

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Note 5 - Accumulated Other Comprehensive Income - Changes in AOCI (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member] | Marketable Securities [Member]
Beginning balance	[1]	$ 5,344	$ 1,589	$ 3,657	$ 2,775
Other comprehensive income (loss) before reclassifications	[1]	1,156	(2,853)	2,559	(3,753)
Amounts reclassified from AOCI	[1],[2]	(201)	1,714	83	1,428
Ending balance	[1]	6,299	450	6,299	450
Ending balance	[1]	5,344	1,589	3,657	2,775
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member] | Metropolitan District Bond Securities [Member]
Beginning balance	[1]	13,214	9,814	12,058	7,680
Other comprehensive income (loss) before reclassifications	[1]	73	913	1,229	3,047
Ending balance	[1]	13,287	10,727	13,287	10,727
Ending balance	[1]	13,214	9,814	12,058	7,680
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Ending balance	[1]	19,586	11,177	19,586	11,177
Ending balance	[1]	19,586	$ 11,177	19,586	$ 11,177
Beginning balance				15,715
Ending balance		19,586		19,586
Ending balance		$ 19,586		$ 19,586

[1] All amounts net-of-tax.

[2] See separate table below for details about these reclassifications

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Note 5 - Accumulated Other Comprehensive Income - Reclassifications out of AOCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Reclassification out of Accumulated Other Comprehensive Income [Member] | Homebuilding Segment [Member] | Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Interest and other income	$ 555	$ (620)	$ 817	$ (495)
Other-than-temporary impairment of marketable securities	(215)	(2,176)	(934)	(2,176)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Financial Services Segment [Member] | Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Interest and other income	94	31	94	368
Other-than-temporary impairment of marketable securities	(111)		(111)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]
Income before income taxes	323	(2,765)	(134)	(2,303)
Provision for income taxes	(122)	1,051	51	875
Net income	201	(1,714)	(83)	(1,428)
Homebuilding Segment [Member]
Interest and other income	1,869	838	5,358	5,412
Other-than-temporary impairment of marketable securities	(215)	(2,176)	(934)	(2,176)
Income before income taxes	27,675	15,396	67,737	46,959
Financial Services Segment [Member]
Other-than-temporary impairment of marketable securities	(111)		(111)
Income before income taxes	10,377	8,262	25,046	21,907
Other-than-temporary impairment of marketable securities	(300)	(2,200)	(1,045)	(2,176)
Income before income taxes	38,052	23,658	92,783	68,866
Provision for income taxes	(11,693)	(8,880)	(29,948)	(25,670)
Net income	$ 26,359	$ 14,778	$ 62,835	$ 43,196

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Note 6 - Fair Value Measurements (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Inputs, Level 2 [Member] | Under Commitment to Sell [Member]
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	$ 90,500		$ 90,500			$ 92,600
Fair Value, Inputs, Level 2 [Member] | Not Under Commitment to Sell [Member]
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	27,400		27,400			23,100
Fair Value, Inputs, Level 2 [Member]
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	117,989		117,989			115,670
Financial Services Segment [Member]
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	111		111
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	117,989		117,989			115,670
Gain (Loss) on Sale of Mortgage Loans	10,000	3,400	$ 22,500	12,200
Minimum [Member]
Short Term Borrowings Maturity Period			30 days
Other than Temporary Impairment Losses, Investments, Portion Recognized in Earnings, Net	300	$ 2,200	$ 1,045	$ 2,176
Available-for-sale Securities, Accumulated Gross Unrealized Gain (Loss), before Tax	10,200		10,200			5,900
Available-for-sale Securities, Continuous Unrealized Loss Position, Accumulated Loss	$ 450		$ 450		$ 900	$ 882

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Note 6 - Fair Value Measurements - Fair Value Methods Used for Measuring Fair Values of Financial Instruments on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Inputs, Level 1 [Member]
Marketable equity securities (available-for-sale)	$ 79,221		$ 103,694
Fair Value, Inputs, Level 2 [Member]
Mortgage loans held-for-sale, net	117,989		115,670
Fair Value, Inputs, Level 3 [Member] | Metropolitan District Bond Securities [Member]
Metropolitan district bond securities (related party) (available-for-sale)	29,132		25,911
Metropolitan District Bond Securities [Member]
Metropolitan district bond securities (related party) (available-for-sale)	$ 29,132	$ 28,604	$ 25,911	$ 24,074	$ 22,259	$ 18,203

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Note 6 - Fair Value Measurements - Amortized Cost and Estimated Fair Value of Available-for-Sale Marketable Securities (Details) - Equity Securities [Member] - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Homebuilding Segment [Member]
Amortized Cost	$ 48,225	$ 89,738
OTTI	(958)	(3,969)
Net Amortized Cost	47,267	85,769
Fair Value	57,116	92,387
Financial Services Segment [Member]
Amortized Cost	21,905	12,026
OTTI	(112)
Net Amortized Cost	21,793	12,026
Fair Value	22,105	11,307
Amortized Cost	70,130	101,764
OTTI	(1,070)	(3,969)
Net Amortized Cost	69,060	97,795
Fair Value	$ 79,221	$ 103,694

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Note 6 - Fair Value Measurements - Aggregate Fair Value of Securities in Unrealized Loss Positions (Details) $ in Thousands	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)
Marketable equity securities		2	4
Marketable equity securities	$ (900)	$ (450)	$ (882)
Marketable equity securities		$ 2,548	$ 6,116

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Note 6 - Fair Value Measurements - Gross Realized Gains and Gross Realized Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Equity Securities [Member]
Gross realized gains on sales of available-for-sale securities	$ 740	$ 980	$ 2,210	$ 1,855
Gross realized losses on sales of available-for-sale securities	(91)	(1,604)	(1,299)	(2,161)
Debt Securities [Member]
Gross realized gains on sales of available-for-sale securities		42		413
Gross realized losses on sales of available-for-sale securities		(6)		(233)
Gross realized gains on sales of available-for-sale securities	740	1,022	2,210	2,268
Gross realized losses on sales of available-for-sale securities	(91)	(1,610)	(1,299)	(2,394)
Net realized gain (loss) on sales of available-for-sale securities	$ 649	$ (588)	$ 911	$ (126)

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Note 6 - Fair Value Measurements - Quantitative Data Regarding Unobservable Inputs and Sensitivity Analysis (Details)	3 Months Ended				9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Mar. 31, 2015	Sep. 30, 2016
Minimum [Member]
Number of homes closed per year					0
Average sales price					400,000
Discount rate	15.00%	12.00%	12.00%		5.00%
Maximum [Member]
Number of homes closed per year					127
Average sales price					1.3
Discount rate	18.00%	15.00%	15.00%		12.00%
Weighted Average [Member]
Number of homes closed per year					102
Average sales price					527,000
Discount rate					9.00%
Number of homes closed per year					Increase
Number of homes closed per year					Decrease
Discount rate				8.70%
Discount rate					Decrease
Discount rate					Increase

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Note 6 - Fair Value Measurements - Summary of Activity for Metro Bonds (Details) - Metropolitan District Bond Securities [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Balance at beginning of period	$ 28,604	$ 22,259	$ 25,911	$ 18,203
Increase in fair value (recorded in other comprehensive income)	117	1,472	1,982	4,815
Change due to accretion of principal	411	343	1,239	1,056
Cash receipts
Balance at end of period	$ 29,132	$ 24,074	$ 29,132	$ 24,074

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Note 6 - Fair Value Measurements - Estimated Fair Value of Senior Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Senior Notes 5.625 Due 2020 [Member]
Carrying Amount	$ 246,689	$ 246,032
Fair Value	268,688	257,813
Senior Notes 5.5 Due 2024 [Member]
Carrying Amount	248,345	248,209
Fair Value	263,883	252,188
Senior Notes 6.00 Due January 2043 [Member]
Carrying Amount	346,325	346,283
Fair Value	315,887	276,938
Carrying Amount	841,359	840,524
Fair Value	$ 848,458	$ 786,939

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Note 6 - Fair Value Measurements - Estimated Fair Value of Senior Notes (Details) (Parentheticals)	Sep. 30, 2016	Dec. 31, 2015
Senior Notes 5.625 Due 2020 [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.625%	5.625%
Senior Notes 5.5 Due 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.50%	5.50%
Senior Notes 6.00 Due January 2043 [Member]
Debt Instrument, Interest Rate, Stated Percentage	6.00%	6.00%

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Note 7 - Inventories (Details Textual) - USD ($)	3 Months Ended					9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
Fair Value, Inputs, Level 2 [Member] | Land Held for Sale [Member]
Inventory Write-down	$ 0		$ 1,100,000			$ 0	$ 1,100,000
Inventory Write-down	$ 4,700,000	$ 1,600,000	$ 3,225,000		$ 350,000

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Note 7 - Inventories - Summary of Inventory (Details) - Homebuilding Segment [Member] - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Reportable Segment, West [Member]
Housing completed or under construction:
Housing Completed or Under Construction	$ 534,423	$ 365,867
Land and land under development:
Land and Land Under Development	487,001	580,682
Reportable Segment, Mountain [Member]
Housing completed or under construction:
Housing Completed or Under Construction	306,681	253,578
Land and land under development:
Land and Land Under Development	252,838	259,484
Reportable Segment, East [Member]
Housing completed or under construction:
Housing Completed or Under Construction	135,268	127,591
Land and land under development:
Land and Land Under Development	130,894	176,760
Housing Completed or Under Construction	976,372	747,036
Land and Land Under Development	870,733	1,016,926
Land and Land Under Development	$ 1,847,105	$ 1,763,962

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Note 7 - Inventories - Inventory Impairments (Details) - USD ($) $ in Thousands	3 Months Ended					9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
Homebuilding Segment [Member] | Reportable Segment, West [Member]
Impairment Data; Inventory Impairments						$ 1,400
Homebuilding Segment [Member] | Reportable Segment, Mountain [Member]
Impairment Data; Inventory Impairments			250				250
Homebuilding Segment [Member] | Reportable Segment, East [Member]
Impairment Data; Inventory Impairments	4,700		2,975			4,900	3,325
Homebuilding Segment [Member]
Impairment Data; Inventory Impairments	4,700		3,225			$ 6,300	$ 3,575
Impairment Data; Inventory Impairments	$ 4,700	$ 1,600	$ 3,225		$ 350

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Note 7 - Inventories - Fair Value of Impaired Inventory (Details) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Sep. 30, 2016
Minimum [Member]
Quantitative Data; Discount Rate	15.00%	12.00%		12.00%			5.00%
Maximum [Member]
Quantitative Data; Discount Rate	18.00%	15.00%		15.00%			12.00%
Impairment Data; Total Subdivisions Tested	25	17	14	18	22	22
Impairment Data; Inventory Impairments	$ 4,700	$ 1,600		$ 3,225		$ 350
Impairment Data; Fair Value of Inventory After Impairments	$ 12,295	$ 6,415		$ 14,836		$ 3,701
Impairment Data; Number of Subdivisions Impaired	2	2		5		1
Quantitative Data; Discount Rate						8.70%

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Note 8 - Capitalization of Interest - Interest Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Homebuilding interest incurred	$ 13,187	$ 13,265	$ 39,511	$ 39,821
Less: Interest capitalized	(13,187)	(13,265)	(39,511)	(39,821)
Homebuilding interest expensed
Interest capitalized, beginning of period	77,150	78,857	77,541	79,231
Plus: Interest capitalized during period	13,187	13,265	39,511	39,821
Less: Previously capitalized interest included in home and land cost of sales	(15,922)	(12,878)	(42,637)	(39,808)
Interest capitalized, end of period	$ 74,415	$ 79,244	$ 74,415	$ 79,244

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Note 9 - Homebuilding Prepaid Expenses and Other Assets - Summary of Homebuilding Prepaid Expenses and Other Assets (Details) - Homebuilding Segment [Member] - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Land option deposits	$ 7,360	$ 11,997
Deferred marketing costs	35,335	31,152
Prepaid expenses	7,539	6,500
Goodwill	6,008	6,008
Deferred debt issuance costs, net	4,721	5,570
Other	5,232	4,167
Total	$ 66,195	$ 65,394

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Note 10 - Homebuilding Accrued Liabilities and Financial Services Accounts Payable and Accrued Liabilities - Homebuilding Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Homebuilding Segment [Member] | Land Development and Home Construction Accruals [Member]
Land development and home construction accruals	$ 7,705		$ 11,465
Homebuilding Segment [Member]
Customer and escrow deposits	30,875		20,717
Warranty accrual	18,709		15,328
Accrued compensation and related expenses	24,723		25,492
Accrued interest	11,031		23,234
Land development and home construction accruals	122,227		122,886
Other accrued liabilities	29,184		26,650
Warranty accrual	$ 18,709	$ 17,217	$ 15,328	$ 16,081	$ 17,253	$ 18,346

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Note 10 - Homebuilding Accrued Liabilities and Financial Services Accounts Payable and Accrued Liabilities - Financial Services Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Dec. 31, 2014
Financial Services Segment [Member]
Insurance reserves	$ 48,153		$ 45,811
Accounts payable and other accrued liabilities	8,781		6,303
Total accounts payable and accrued liabilities	56,934		52,114
Insurance reserves	$ 48,153	$ 46,900	$ 45,811	$ 46,685	$ 47,389	$ 50,470

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Note 11 - Warranty Accrual (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Standard and Extended Product Warranty Accrual, Increase (Decrease) for Preexisting Warranties	$ 1,825,000	$ 0	$ 5,062,000	$ (213,000)

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Note 11 - Warranty Accrual - Warranty Accrual and Payment Activity (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Balance at beginning of period	$ 17,217,000	$ 17,253,000	$ 15,328,000	$ 18,346,000
Expense provisions	2,390,000	1,536,000	6,147,000	3,980,000
Cash payments	(2,723,000)	(2,708,000)	(7,828,000)	(6,032,000)
Standard and Extended Product Warranty Accrual, Increase (Decrease) for Preexisting Warranties	1,825,000	0	5,062,000	(213,000)
Balance at end of period	$ 18,709,000	$ 16,081,000	$ 18,709,000	$ 16,081,000

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Note 12 - Insurance Reserves - Summary of Insurance Reserve Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Balance at beginning of period	$ 46,900	$ 47,389	$ 45,811	$ 50,470
Expense provisions	1,888	1,652	5,222	4,501
Cash payments, net of recoveries	(635)	(2,356)	(2,880)	(6,786)
Adjustments				(1,500)
Balance at end of period	$ 48,153	$ 46,685	$ 48,153	$ 46,685

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Note 13 - Income Taxes (Details Textual) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Effective Income Tax Rate Reconciliation, Percent	30.70%	37.50%	32.30%	37.30%
Income Tax Expense (Benefit)	$ 11,693	$ 8,880	$ 29,948	$ 25,670
Deferred Tax Assets, Net	$ 85,100		$ 85,100		$ 99,100

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Note 14 - Senior Notes - Carrying Amount of Senior Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Senior Notes 5.625 Due 2020 [Member]
Carrying Amount	$ 246,689	$ 246,032
Senior Notes 5.5 Due 2024 [Member]
Carrying Amount	248,345	248,209
Senior Notes 6.00 Due January 2043 [Member]
Carrying Amount	346,325	346,283
Carrying Amount	$ 841,359	$ 840,524

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Note 14 - Senior Notes - Carrying Amount of Senior Notes (Details) (Parentheticals)	Sep. 30, 2016	Dec. 31, 2015
Senior Notes 5.625 Due 2020 [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.625%	5.625%
Senior Notes 5.5 Due 2024 [Member]
Debt Instrument, Interest Rate, Stated Percentage	5.50%	5.50%
Senior Notes 6.00 Due January 2043 [Member]
Debt Instrument, Interest Rate, Stated Percentage	6.00%	6.00%

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Note 15 - Stock Based Compensation (Details Textual) - USD ($)		3 Months Ended		9 Months Ended
	May 18, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Nonqualified Stock Option [Member] | Equity Incentive Plan 2011 [Member] | CEO and COO [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	1,000,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Sharebased Compensation Arrangement by Sharebased Payment Award Expected to Vest Immediately Threshold Trading Days	20 days
Sharebased Compensation Arrangement by Sharebased Payment Award Expected to Vest Immediately threshold Consecutive Trading Days	30 days
Sharebased Compensation Arrangement by Sharebased Payment Award Expected to Vest Immediately Threshold Percentage of Stock Price Trigger	120.00%
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 5.62
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized		$ 11,200,000		$ 11,200,000
Allocated Share-based Compensation Expense		$ 0	$ 2,500,000	$ 5,000,000	$ 3,700,000
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Target Goal Number of Shares		100,000		100,000
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Chief Operating Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Target Goal Number of Shares		100,000		100,000
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Chief Financial Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Target Goal Number of Shares		25,000		25,000
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Minimum [Member] | 5% to 10% Vesting Threshold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Performance Revenues that Exceed Base Revenues				5.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Minimum [Member] | 20% Vesting Threshold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Performance Revenues that Exceed Base Revenues				20.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Performance Revenues that Exceed Base Revenues				10.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Maximum [Member] | 5% to 10% Vesting Threshold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Performance Revenues that Exceed Base Revenues				10.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Performance Revenues that Exceed Base Revenues				20.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | 5% to 10% Vesting Threshold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Target Goal Number of Shares				50.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | 20% Vesting Threshold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Percentage of Target Goal Number of Shares				200.00%
Performance Shares [Member] | Equity Incentive Plan 2011 [Member] | Pro Forma [Member]
Allocated Share-based Compensation Expense		$ 10,800,000
Performance Shares [Member] | Equity Incentive Plan 2011 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period		3 years
Allocated Share-based Compensation Expense		$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Average Gross Margin of Home Sales, Percentage, Minimum		15.00%
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value		$ 24.08		$ 24.08
Share Price	$ 28.45
Allocated Share-based Compensation Expense		$ 473,000	$ 3,998,000	$ 6,636,000	$ 6,589,000

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Note 15 - Stock Based Compensation - Share-based Award Expense Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Stock Option [Member]
Allocated Share-based Compensation Expense	$ 328	$ 3,544	$ 5,621	$ 5,043
Restricted Stock [Member]
Allocated Share-based Compensation Expense	145	454	1,015	1,546
Allocated Share-based Compensation Expense	$ 473	$ 3,998	$ 6,636	$ 6,589

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Note 16 - Commitments and Contingencies (Details Textual) $ in Millions	9 Months Ended
	Sep. 30, 2016 USD ($)
HomeAmerican [Member]
Letters of Credit Outstanding, Amount	$ 32.6
Option Contracts [Member]
Letters of Credit Outstanding, Amount	2.4
Earnest Money Deposits	$ 6.9
Right to Acquire Lots Under Options Contract	2,504
Surety Bonds, Outstanding, Amount	$ 179.3
Letters of Credit Outstanding, Amount	58.9
Estimated Cost Related to Bonds	53.8
Estimated Cost Related to Letters of Credit	$ 31.9

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Note 16 - Commitments and Contingencies - Mortgage Loan Loss Reserve Activity (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Balance at beginning of period	$ 160	$ 1,058	$ 201	$ 810
Expense provisions	6	39	6	764
Adjustments		(568)	(41)	(1,045)
Balance at end of period	$ 166	$ 204	$ 166	$ 204

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Note 17 - Derivative Financial Instruments (Details Textual) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Commitment to Originate Mortgage Loans [Member]
Notional Amount of Forward Rate Commitments and Futures Contracts to Hedge against Mortgage Servicing Rights	$ 105.8		$ 105.8
No Commitment to Originate Mortgage Loans [Member]
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	26.8		26.8
Forward Sales of Mortgage Backed Securities [Member]
Notional Amount of Forward Rate Commitments and Futures Contracts to Hedge against Mortgage Servicing Rights	88.5		88.5
Derivative, Gain (Loss) on Derivative, Net	$ 0.1	$ 0.9	$ 1.1	$ 1.5

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Note 18 - Lines of Credit (Details Textual) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Sep. 30, 2016	Sep. 27, 2016	Sep. 26, 2016	Dec. 31, 2015	Dec. 23, 2015	Dec. 22, 2015	Dec. 18, 2015	Nov. 12, 2008
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 1,000.0						$ 550.0
Debt Instrument, Interest Rate, Stated Percentage		0.00%
Debt Instrument, Covenant, Minimum Common Stock Outstanding Ownership, Percentage		5000.00%
Long-term Line of Credit		$ 15.0			$ 15.0
Line of Credit Facility, Remaining Borrowing Capacity		508.8
Standby Letters of Credit [Member]
Line of Credit Facility Maximum Borrowing Capacity Percentage	50.00%
Letters of Credit Outstanding, Amount		26.2			22.5
Mortgage Repurchase Facility [Member] | Warehouse Agreement Borrowings [Member]
Line of Credit Facility, Maximum Borrowing Capacity		75.0	$ 110.0	$ 75.0		$ 90.0	$ 50.0		$ 50.0
Long-term Line of Credit		$ 92.0			$ 88.6
Debt Instrument, Covenant, Maximum Leverage Ratio		5500.00%
Letters of Credit Outstanding, Amount		$ 58.9

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Note 19 - Supplemental Guarantor Information (Details Textual)	9 Months Ended
	Sep. 30, 2016
Guarantor Subsidiaries [Member]
Equity Method Investment, Ownership Percentage	100.00%
Maximum Percentage of Consolidated Net Worth of Guarantor for Suspension of Guarantee	5.00%
Maximum Aggregate Percentage of Consolidated Net Worth of All Guarantors for Suspension of Guarantee	10.00%
Maximum Aggregate Percentage of Consolidated Net Worth of All Guarantors for Suspension of Guarantee to Permit Cure of Default	15.00%

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Note 19 - Supplemental Guarantor Information - Supplemental Condensed Combining Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015	Sep. 30, 2015	Dec. 31, 2014
MDC Holdings [Member] | Homebuilding Segment [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents	$ 124,730	$ 141,245
Marketable securities	57,116	92,387
Restricted cash
Trade and other receivables	6,517	5,304
Housing completed or under construction
Land and land under development
Total inventories
Intercompany receivables	1,609,686	1,509,551
Investment in subsidiaries	258,979	267,191
Property and equipment, net	26,121	26,073
Deferred Tax Assets, Net	83,839	97,083
Metropolitan district bond securities (related party)	29,132	25,911
Prepaid and other assets	6,153	5,973
Assets	2,202,273	2,170,718
Accounts payable
Accrued liabilities	5,543	11,527
Advances and notes payable to parent and subsidiaries	47,749	47,375
Revolving credit facility	15,000	15,000
Senior notes, net	841,359	840,524
Total homebuilding liabilities	909,651	914,426
Total financial services liabilities	909,651	914,426
Land and Land Under Development
Long-term Line of Credit	15,000	15,000
MDC Holdings [Member] | Financial Services Segment [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents
Marketable securities
Intercompany receivables
Assets
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage
Other assets
Advances and notes payable to parent and subsidiaries
Total homebuilding liabilities
Accounts payable and other liabilities
Mortgage repurchase facility
Total financial services liabilities
MDC Holdings [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents	124,730	141,245	$ 81,358	$ 119,951
Assets	2,202,273	2,170,718
Total homebuilding liabilities	909,651	914,426
Total financial services liabilities	909,651	914,426
Total Stockholders' Equity	1,292,622	1,256,292
Total Liabilities and Stockholders' Equity	2,202,273	2,170,718
Guarantor Subsidiaries [Member] | Homebuilding Segment [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents	4,548	3,097
Marketable securities
Restricted cash	4,621	3,750
Trade and other receivables	38,979	20,297
Housing completed or under construction	976,372	747,036
Land and land under development	870,733	1,016,926
Total inventories	1,847,105	1,763,962
Intercompany receivables	2,803	2,850
Investment in subsidiaries
Property and equipment, net	2,628	2,153
Deferred Tax Assets, Net
Metropolitan district bond securities (related party)
Prepaid and other assets	60,042	59,421
Assets	1,960,726	1,855,530
Accounts payable	54,117	40,472
Accrued liabilities	113,535	108,445
Advances and notes payable to parent and subsidiaries	1,579,856	1,480,589
Revolving credit facility
Senior notes, net
Total homebuilding liabilities	1,747,508	1,629,506
Total financial services liabilities	1,747,508	1,629,506
Land and Land Under Development	1,847,105	1,763,962
Long-term Line of Credit
Guarantor Subsidiaries [Member] | Financial Services Segment [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents
Marketable securities
Intercompany receivables
Assets
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage
Other assets
Advances and notes payable to parent and subsidiaries
Total homebuilding liabilities
Accounts payable and other liabilities
Mortgage repurchase facility
Total financial services liabilities
Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents	4,548	3,097	3,716	2,691
Assets	1,960,726	1,855,530
Total homebuilding liabilities	1,747,508	1,629,506
Total financial services liabilities	1,747,508	1,629,506
Total Stockholders' Equity	213,218	226,024
Total Liabilities and Stockholders' Equity	1,960,726	1,855,530
Non-Guarantor Subsidiaries [Member] | Homebuilding Segment [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents
Marketable securities
Restricted cash
Trade and other receivables
Housing completed or under construction
Land and land under development
Total inventories
Intercompany receivables	5,467	5,291
Investment in subsidiaries
Property and equipment, net
Deferred Tax Assets, Net
Metropolitan district bond securities (related party)
Prepaid and other assets
Assets	5,467	5,291
Accounts payable
Accrued liabilities	145	(33)
Advances and notes payable to parent and subsidiaries	26,267	25,536
Revolving credit facility
Senior notes, net
Total homebuilding liabilities	26,412	25,503
Total financial services liabilities	26,412	25,503
Land and Land Under Development
Long-term Line of Credit
Non-Guarantor Subsidiaries [Member] | Financial Services Segment [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents	34,180	36,646
Marketable securities	22,105	11,307
Intercompany receivables	39,479	39,234
Assets	224,632	210,764
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	117,989	115,670
Other assets	10,879	7,907
Advances and notes payable to parent and subsidiaries	3,563	3,426
Total homebuilding liabilities	157,926	149,385
Accounts payable and other liabilities	62,352	57,348
Mortgage repurchase facility	92,011	88,611
Total financial services liabilities	157,926	149,385
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Cash and cash equivalents	34,180	36,646	37,921	31,183
Assets	230,099	216,055
Total homebuilding liabilities	184,338	174,888
Total financial services liabilities	184,338	174,888
Total Stockholders' Equity	45,761	41,167
Total Liabilities and Stockholders' Equity	230,099	216,055
Homebuilding Segment [Member] | Consolidation, Eliminations [Member]
Cash and cash equivalents
Marketable securities
Restricted cash
Trade and other receivables	(2,414)	(2,287)
Housing completed or under construction
Land and land under development
Total inventories
Intercompany receivables	(1,617,956)	(1,517,692)
Investment in subsidiaries	(258,979)	(267,191)
Property and equipment, net
Deferred Tax Assets, Net	1,289	2,024
Metropolitan district bond securities (related party)
Prepaid and other assets
Assets	(1,878,060)	(1,785,146)
Accounts payable
Accrued liabilities	3,004	2,947
Advances and notes payable to parent and subsidiaries	(1,653,872)	(1,553,500)
Revolving credit facility
Senior notes, net
Total homebuilding liabilities	(1,650,868)	(1,550,553)
Total financial services liabilities	(1,650,868)	(1,550,553)
Land and Land Under Development
Long-term Line of Credit
Homebuilding Segment [Member]
Cash and cash equivalents	129,278	144,342
Marketable securities	57,116	92,387
Restricted cash	4,621	3,750
Trade and other receivables	43,082	23,314
Housing completed or under construction	976,372	747,036
Land and land under development	870,733	1,016,926
Total inventories	1,847,105	1,763,962
Intercompany receivables
Investment in subsidiaries
Property and equipment, net	28,749	28,226
Deferred Tax Assets, Net	85,128	99,107
Metropolitan district bond securities (related party)	29,132	25,911
Prepaid and other assets	66,195	65,394
Assets	2,290,406	2,246,393
Accounts payable	54,117	40,472
Accrued liabilities	122,227	122,886
Advances and notes payable to parent and subsidiaries
Revolving credit facility	15,000	15,000
Senior notes, net	841,359	840,524
Total homebuilding liabilities	1,032,703	1,018,882
Total financial services liabilities	1,032,703	1,018,882
Land and Land Under Development	1,847,105	1,763,962
Long-term Line of Credit	15,000	15,000
Financial Services Segment [Member] | Consolidation, Eliminations [Member]
Cash and cash equivalents
Marketable securities
Intercompany receivables	(39,479)	(39,234)
Assets	(40,768)	(41,258)
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage
Other assets	(1,289)	(2,024)
Advances and notes payable to parent and subsidiaries	(3,563)	(3,426)
Total homebuilding liabilities	(8,981)	(8,660)
Accounts payable and other liabilities	(5,418)	(5,234)
Mortgage repurchase facility
Total financial services liabilities	(8,981)	(8,660)
Financial Services Segment [Member]
Cash and cash equivalents	34,180	36,646
Marketable securities	22,105	11,307
Intercompany receivables
Assets	183,864	169,506
Loans Receivable Held-for-sale, Net, Not Part of Disposal Group, Mortgage	117,989	115,670
Other assets	9,590	5,883
Advances and notes payable to parent and subsidiaries
Total homebuilding liabilities	148,945	140,725
Accounts payable and other liabilities	56,934	52,114
Mortgage repurchase facility	92,011	88,611
Total financial services liabilities	148,945	140,725
Consolidation, Eliminations [Member]
Cash and cash equivalents
Assets	(1,918,828)	(1,826,404)
Total homebuilding liabilities	(1,659,849)	(1,559,213)
Total financial services liabilities	(1,659,849)	(1,559,213)
Total Stockholders' Equity	(258,979)	(267,191)
Total Liabilities and Stockholders' Equity	(1,918,828)	(1,826,404)
Cash and cash equivalents	163,458	180,988	$ 122,995	$ 153,825
Deferred Tax Assets, Net	85,100	99,100
Assets	2,474,270	2,415,899
Total homebuilding liabilities	1,181,648	1,159,607
Total financial services liabilities	1,181,648	1,159,607
Total Stockholders' Equity	1,292,622	1,256,292
Total Liabilities and Stockholders' Equity	$ 2,474,270	$ 2,415,899

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Note 19 - Supplemental Guarantor Information - Supplemental Condensed Combining Statements of Operations and Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended					9 Months Ended
	Sep. 30, 2016	Jun. 30, 2016	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Sep. 30, 2016	Sep. 30, 2015
MDC Holdings [Member] | Homebuilding Segment [Member] | Reportable Legal Entities [Member]
Revenues
Home and land cost of sales
Inventory impairments
Total cost of sales
Gross margin
Selling, general, and administrative expenses	(8,268)		(11,651)			(31,598)	(29,211)
Equity income of subsidiaries	30,711		23,070			80,990	60,310
Interest and other income	1,478		539			3,970	3,830
Other expense	1		(2)			(2)	(5)
Other-than-temporary impairment of marketable securities	(215)		(2,176)			(934)	(2,176)
Homebuilding pretax income (loss)	23,707		9,935			52,426	33,181
Financial services pretax income	23,707		9,935			52,426	33,181
Interest expense			155				433
MDC Holdings [Member] | Financial Services Segment [Member] | Reportable Legal Entities [Member]
Homebuilding pretax income (loss)
Financial services pretax income
MDC Holdings [Member] | Reportable Legal Entities [Member]
Homebuilding pretax income (loss)	23,707		9,935			52,426	33,181
Financial services pretax income	23,707		9,935			52,426	33,181
(Provision) benefit for income taxes	2,652		4,843			10,409	10,015
Net income	26,359		14,778			62,835	43,196
Other comprehensive income related to available for sale securities, net of tax	1,028		(226)			3,871	722
Comprehensive income	27,387		14,552			66,706	43,918
Guarantor Subsidiaries [Member] | Homebuilding Segment [Member] | Reportable Legal Entities [Member]
Revenues	578,012		455,646			1,546,267	1,295,273
Home and land cost of sales	(483,829)		(376,667)			(1,291,270)	(1,081,453)
Inventory impairments	(4,700)		(4,351)			(6,300)	(4,701)
Total cost of sales	(488,529)		(381,018)			(1,297,570)	(1,086,154)
Gross margin	89,483		74,628			248,697	209,119
Selling, general, and administrative expenses	(53,452)		(45,620)			(150,492)	(133,125)
Equity income of subsidiaries
Interest and other income	500		298			1,652	1,573
Other expense	(1,559)		(348)			(2,461)	(2,534)
Other-than-temporary impairment of marketable securities
Homebuilding pretax income (loss)	34,972		28,958			97,396	75,033
Financial services pretax income	34,972		28,958			97,396	75,033
Interest expense
Guarantor Subsidiaries [Member] | Financial Services Segment [Member] | Reportable Legal Entities [Member]
Homebuilding pretax income (loss)
Financial services pretax income
Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Homebuilding pretax income (loss)	34,972		28,958			97,396	75,033
Financial services pretax income	34,972		28,958			97,396	75,033
(Provision) benefit for income taxes	(10,616)		(10,874)			(31,438)	(27,986)
Net income	24,356		18,084			65,958	47,047
Other comprehensive income related to available for sale securities, net of tax
Comprehensive income	24,356		18,084			65,958	47,047
Non-Guarantor Subsidiaries [Member] | Homebuilding Segment [Member] | Reportable Legal Entities [Member]
Revenues
Home and land cost of sales			(100)			(300)	(100)
Inventory impairments
Total cost of sales			(100)			(300)	(100)
Gross margin			(100)			(300)	(100)
Selling, general, and administrative expenses
Equity income of subsidiaries
Interest and other income	1		2			4	7
Other expense
Other-than-temporary impairment of marketable securities
Homebuilding pretax income (loss)	1		(98)			(296)	(93)
Financial services pretax income	1		(98)			(296)	(93)
Interest expense
Non-Guarantor Subsidiaries [Member] | Financial Services Segment [Member] | Reportable Legal Entities [Member]
Homebuilding pretax income (loss)	10,083		7,933			24,247	21,055
Financial services pretax income	10,083		7,933			24,247	21,055
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Homebuilding pretax income (loss)	10,084		7,835			23,951	20,962
Financial services pretax income	10,084		7,835			23,951	20,962
(Provision) benefit for income taxes	(3,729)		(2,849)			(8,919)	(7,699)
Net income	6,355		4,986			15,032	13,263
Other comprehensive income related to available for sale securities, net of tax	310		1,198			680	918
Comprehensive income	6,665		6,184			15,712	14,181
Homebuilding Segment [Member] | Consolidation, Eliminations [Member]
Revenues
Home and land cost of sales
Inventory impairments
Total cost of sales
Gross margin
Selling, general, and administrative expenses	(184)		(173)			(531)	(421)
Equity income of subsidiaries	(30,711)		(23,070)			(80,990)	(60,310)
Interest and other income	(110)		(1)			(268)	2
Other expense
Other-than-temporary impairment of marketable securities
Homebuilding pretax income (loss)	(31,005)		(23,399)			(81,789)	(61,162)
Financial services pretax income	(31,005)		(23,399)			(81,789)	(61,162)
Interest expense			(155)				(433)
Homebuilding Segment [Member]
Revenues	578,012		455,646			1,546,267	1,295,273
Home and land cost of sales	(483,829)		(376,767)			(1,291,570)	(1,081,553)
Inventory impairments	(4,700)		(3,225)			(6,300)	(3,575)
Total cost of sales	(488,529)		(381,118)			(1,297,870)	(1,086,254)
Gross margin	89,483		74,528			248,397	209,019
Selling, general, and administrative expenses	(61,904)		(57,444)			(182,621)	(162,757)
Equity income of subsidiaries
Interest and other income	1,869		838			5,358	5,412
Other expense	(1,558)		(350)			(2,463)	(2,539)
Other-than-temporary impairment of marketable securities	(215)		(2,176)			(934)	(2,176)
Homebuilding pretax income (loss)	27,675		15,396			67,737	46,959
Financial services pretax income	27,675		15,396			67,737	46,959
Interest expense
Financial Services Segment [Member] | Consolidation, Eliminations [Member]
Homebuilding pretax income (loss)	294		329			799	852
Financial services pretax income	294		329			799	852
Financial Services Segment [Member]
Other-than-temporary impairment of marketable securities	(111)					(111)
Homebuilding pretax income (loss)	10,377		8,262			25,046	21,907
Financial services pretax income	10,377		8,262			25,046	21,907
Consolidation, Eliminations [Member]
Homebuilding pretax income (loss)	(30,711)		(23,070)			(80,990)	(60,310)
Financial services pretax income	(30,711)		(23,070)			(80,990)	(60,310)
(Provision) benefit for income taxes
Net income	(30,711)		(23,070)			(80,990)	(60,310)
Other comprehensive income related to available for sale securities, net of tax	(310)		(1,198)			(680)	(918)
Comprehensive income	(31,021)		(24,268)			(81,670)	(61,228)
Inventory impairments	(4,700)	$ (1,600)	(3,225)		$ (350)
Other-than-temporary impairment of marketable securities	(300)		(2,200)			(1,045)	(2,176)
Homebuilding pretax income (loss)	38,052		23,658			92,783	68,866
Financial services pretax income	38,052		23,658			92,783	68,866
(Provision) benefit for income taxes	(11,693)		(8,880)			(29,948)	(25,670)
Net income	26,359		14,778			62,835	43,196
Other comprehensive income related to available for sale securities, net of tax	1,028		(226)			3,871	722
Comprehensive income	27,387		14,552			66,706	43,918
Interest expense

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Note 19 - Supplemental Guarantor Information - Supplemental Condensed Combining Statements of Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
MDC Holdings [Member] | Reportable Legal Entities [Member]
Net cash provided by (used in) operating activities	$ (5,918)	$ 19,057
Net cash provided by (used in) investing activities	26,166	(21,669)
Payments from (advances to) subsidiaries
Mortgage repurchase facility
Dividend payments	(36,763)	(36,646)
Net cash provided by (used in) financing activities	(36,763)	(35,981)
Net increase in cash and cash equivalents	(16,515)	(38,593)
Beginning of period	141,245	119,951
End of period	124,730	81,358
Proceeds from the exercise of stock options		665
Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Net cash provided by (used in) operating activities	(17,581)	(73,657)
Net cash provided by (used in) investing activities	(1,252)	(402)
Payments from (advances to) subsidiaries	20,284	75,084
Mortgage repurchase facility
Dividend payments
Net cash provided by (used in) financing activities	20,284	75,084
Net increase in cash and cash equivalents	1,451	1,025
Beginning of period	3,097	2,691
End of period	4,548	3,716
Proceeds from the exercise of stock options
Non-Guarantor Subsidiaries [Member] | Reportable Legal Entities [Member]
Net cash provided by (used in) operating activities	14,596	28,114
Net cash provided by (used in) investing activities	(9,797)	3,260
Payments from (advances to) subsidiaries	(10,665)	(7,569)
Mortgage repurchase facility	3,400	(17,067)
Dividend payments
Net cash provided by (used in) financing activities	(7,265)	(24,636)
Net increase in cash and cash equivalents	(2,466)	6,738
Beginning of period	36,646	31,183
End of period	34,180	37,921
Proceeds from the exercise of stock options
Consolidation, Eliminations [Member]
Net cash provided by (used in) operating activities
Net cash provided by (used in) investing activities	9,619	67,515
Payments from (advances to) subsidiaries	(9,619)	(67,515)
Mortgage repurchase facility
Dividend payments
Net cash provided by (used in) financing activities	(9,619)	(67,515)
Net increase in cash and cash equivalents
Beginning of period
End of period
Proceeds from the exercise of stock options
Net cash provided by (used in) operating activities	(8,903)	(26,486)
Net cash provided by (used in) investing activities	24,736	48,704
Payments from (advances to) subsidiaries
Mortgage repurchase facility	3,400	(17,067)
Dividend payments	(36,763)	(36,646)
Net cash provided by (used in) financing activities	(33,363)	(53,048)
Net increase in cash and cash equivalents	(17,530)	(30,830)
Beginning of period	180,988	153,825
End of period	163,458	122,995
Proceeds from the exercise of stock options		$ 665