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Segment Disclosures
 9 Months Ended
Sep. 30, 2022
Segment Reporting [Abstract]  
Segment Disclosures Segment Disclosures
Our homebuilding operations are aggregated geographically into four homebuilding reportable segments and our mortgage banking operations are presented as one reportable segment.  The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:
Mid Atlantic: Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East: New Jersey and Eastern Pennsylvania
Mid East: New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East: North Carolina, South Carolina, Tennessee, Florida and Georgia
Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses and a corporate capital allocation charge.  The corporate capital allocation charge is eliminated in consolidation and is based on the segment’s average net assets employed.  The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering our cost of capital.  
Assets not allocated to the operating segments are not included in either the operating segment’s corporate capital allocation charge or the CODM’s evaluation of the operating segment’s performance.  We record charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired.  For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit.  Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs.  Mortgage banking operations are not charged a corporate capital allocation charge.
In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense.  Our overhead functions such as accounting, treasury and human resources are centrally performed and these costs are not allocated to our operating segments.  Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly
maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments.  External corporate interest expense primarily consists of interest charges on our 3.95% Senior Notes due 2022 and 3.00% Senior Notes due 2030 (the “Senior Notes”), which are not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.
The following tables present segment revenues, profit and assets with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Revenues:
Homebuilding Mid Atlantic$1,282,504 $1,082,710 $3,632,524 $3,067,267 
Homebuilding North East250,067 213,087 663,012 568,524 
Homebuilding Mid East569,991 503,232 1,552,434 1,406,364 
Homebuilding South East636,883 537,586 1,810,764 1,482,731 
Mortgage Banking37,455 59,025 155,518 195,798 
Total consolidated revenues$2,776,900 $2,395,640 $7,814,252 $6,720,684 

Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Income before taxes:
Homebuilding Mid Atlantic$272,860 $222,504 $774,380 $526,052 
Homebuilding North East49,614 33,885 116,839 70,622 
Homebuilding Mid East92,364 81,021 246,059 189,849 
Homebuilding South East145,619 100,688 409,895 236,272 
Mortgage Banking18,993 40,249 97,899 140,183 
Total segment profit before taxes579,450 478,347 1,645,072 1,162,978 
Reconciling items:
Contract land deposit reserve adjustment (1)(8,736)4,126 (2,391)17,500 
Equity-based compensation expense (2)(26,686)(15,009)(58,441)(42,859)
Corporate capital allocation (3)81,020 64,055 228,276 188,638 
Unallocated corporate overhead(22,565)(27,801)(100,109)(101,605)
Consolidation adjustments and other (4)(57,165)(56,786)(2,561)(22,456)
Corporate interest expense(6,803)(12,805)(31,374)(38,598)
Reconciling items sub-total(40,935)(44,220)33,400 620 
Consolidated income before taxes$538,515 $434,127 $1,678,472 $1,163,598 
(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of lot deposit impairment charges in Note 2.
(2)The increase in equity-based compensation expense for the three and nine months ended September 30, 2022 was primarily attributable to a four year block grant of Options and RSUs in May 2022. See Note 7 for additional discussion of equity-based compensation.
(3)This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments.  The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Corporate capital allocation charge:
Homebuilding Mid Atlantic$37,305 $31,057 $108,514 $92,788 
Homebuilding North East7,994 6,719 23,238 19,214 
Homebuilding Mid East14,509 11,114 38,801 32,804 
Homebuilding South East21,212 15,165 57,723 43,832 
Total$81,020 $64,055 $228,276 $188,638 

(4)The consolidation adjustments and other for the three and nine month periods of 2022 and 2021 is primarily driven by changes in lumber prices in the respective periods. Our reportable segments' results include the intercompany profits of our production facilities for home packages delivered to our homebuilding divisions. Costs related to homes not yet settled are reversed through the consolidation adjustment and recorded in inventory. These costs are subsequently recorded through the consolidation adjustment when the respective homes are settled. Due to higher lumber prices in the first half of both 2022 and 2021, the previously reversed intercompany profits were recognized in the third quarter of the respective years through the consolidation adjustment as homes were settled, which negatively impacted margins in the respective periods.

 September 30, 2022December 31, 2021
Assets:
Homebuilding Mid Atlantic$1,289,036 $1,322,818 
Homebuilding North East268,794 235,048 
Homebuilding Mid East515,947 438,700 
Homebuilding South East791,054 629,198 
Mortgage Banking464,293 371,685 
Total segment assets3,329,124 2,997,449 
Reconciling items:
Cash and cash equivalents1,748,506 2,545,069 
Deferred taxes144,590 132,894 
Intangible assets and goodwill49,368 49,368 
Operating lease right-of-use assets69,933 59,010 
Finance lease right-of-use assets13,875 14,578 
Contract land deposit reserve(32,240)(30,041)
Consolidation adjustments and other66,378 66,148 
Reconciling items sub-total2,060,410 2,837,026 
Consolidated assets$5,389,534 $5,834,475