10-Q

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 June 30, 2017

OR

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

For the transition period from ____ to ____

Commission File Number: 1-12378

NVR, Inc.

(Exact name of registrant as specified in its charter)

Virginia	54-1394360
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

11700 Plaza America Drive, Suite 500

Reston, Virginia 20190

(703) 956-4000

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

(Not Applicable)

(Former name, former address, and former fiscal year if changed since last report)

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, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒		Accelerated filer	☐
Non-accelerated filer	☐	(Do not check if smaller reporting company)	Smaller reporting company	☐
			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for companying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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 July 24, 2017 there were 3,743,620 total shares of common stock outstanding.

NVR, Inc. Form 10-Q Table of Contents
		Page
PART I	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Income (unaudited)	2
	Condensed Consolidated Statements of Cash Flows (unaudited)	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	29
Item 4.	Controls and Procedures	29
PART II	OTHER INFORMATION	29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 6.	Exhibits	31
	SIGNATURE	32
	Exhibit Index	33

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

NVR, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	June 30, 2017			December 31, 2016
ASSETS
Homebuilding:
Cash and cash equivalents	$	518,482		$	375,748
Restricted cash		15,963			17,561
Receivables		22,110			18,937
Inventory:
Lots and housing units, covered under sales agreements with customers		1,155,047			883,868
Unsold lots and housing units		147,195			145,065
Land under development		46,685			46,999
Building materials and other		16,024			16,168
		1,364,951			1,092,100
Assets related to consolidated variable interest entity		1,243			1,251
Contract land deposits, net		358,405			379,844
Property, plant and equipment, net		43,995			45,915
Reorganization value in excess of amounts allocable to identifiable assets, net		41,580			41,580
Goodwill and finite-lived intangible assets, net		1,908			2,599
Other assets		265,539			257,811
		2,634,176			2,233,346
Mortgage Banking:
Cash and cash equivalents		9,632			19,657
Restricted cash		2,900			1,857
Mortgage loans held for sale, net		241,398			351,958
Property and equipment, net		5,530			4,903
Reorganization value in excess of amounts allocable to identifiable assets, net		7,347			7,347
Other assets		17,104			24,875
		283,911			410,597
Total assets	$	2,918,087		$	2,643,943
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable	$	271,899		$	251,212
Accrued expenses and other liabilities		317,168			336,318
Liabilities related to consolidated variable interest entity		874			882
Customer deposits		165,684			122,236
Senior notes		596,760			596,455
		1,352,385			1,307,103
Mortgage Banking:
Accounts payable and other liabilities		29,925			32,399
		29,925			32,399
Total liabilities		1,382,310			1,339,502
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both June 30, 2017 and December 31, 2016		206			206
Additional paid-in capital		1,607,958			1,515,828
Deferred compensation trust – 108,636 and 108,640 shares of NVR, Inc. common stock as of June 30, 2017 and December 31, 2016, respectively		(17,371	)		(17,375	)
Deferred compensation liability		17,371			17,375
Retained earnings		5,945,219			5,695,376
Less treasury stock at cost – 16,807,724 and 16,862,327 shares as of June 30, 2017 and December 31, 2016, respectively		(6,017,606	)		(5,906,969	)
Total shareholders' equity		1,535,777			1,304,441
Total liabilities and shareholders' equity	$	2,918,087		$	2,643,943

See notes to condensed consolidated financial statements.

1

NVR, Inc.

Condensed Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Homebuilding:
Revenues	$	1,512,714		$	1,361,741		$	2,760,301		$	2,483,245
Other income		1,447			753			2,549			1,520
Cost of sales		(1,218,083	)		(1,126,369	)		(2,244,100	)		(2,052,129	)
Selling, general and administrative		(99,100	)		(100,043	)		(199,004	)		(198,058	)
Operating income		196,978			136,082			319,746			234,578
Interest expense		(5,641	)		(4,554	)		(11,219	)		(9,396	)
Homebuilding income		191,337			131,528			308,527			225,182
Mortgage Banking:
Mortgage banking fees		31,778			26,442			61,283			48,964
Interest income		1,554			1,437			3,215			3,111
Other income		506			409			815			667
General and administrative		(15,934	)		(14,836	)		(32,180	)		(29,386	)
Interest expense		(273	)		(260	)		(531	)		(506	)
Mortgage banking income		17,631			13,192			32,602			22,850
Income before taxes		208,968			144,720			341,129			248,032
Income tax expense		(61,091	)		(53,044	)		(90,329	)		(91,053	)
Net income	$	147,877		$	91,676		$	250,800		$	156,979
Basic earnings per share	$	39.46		$	23.51		$	67.30		$	40.34
Diluted earnings per share	$	35.19		$	22.01		$	60.36		$	37.82
Basic weighted average shares outstanding		3,748			3,900			3,726			3,892
Diluted weighted average shares outstanding		4,202			4,165			4,155			4,151

See notes to condensed consolidated financial statements.

2

NVR, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	250,800		$	156,979
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,494			10,934
Equity-based compensation expense		21,467			21,378
Contract land deposit impairments (recoveries), net		3,567			(1,436	)
Gain on sale of loans, net		(47,474	)		(36,687	)
Mortgage loans closed		(1,772,432	)		(1,558,775	)
Mortgage loans sold and principal payments on mortgage loans held for sale		1,936,118			1,644,385
Distribution of earnings from unconsolidated joint ventures		3,611			6,135
Net change in assets and liabilities:
Increase in inventory		(272,851	)		(240,708	)
Decrease (increase) in contract land deposits		17,872			(30,340	)
Increase in receivables		(2,888	)		(7,406	)
(Decrease) increase in accounts payable and accrued expenses		(3,013	)		35,357
Increase in customer deposits		43,448			30,781
Other, net		(9,988	)		(18,025	)
Net cash provided by operating activities		179,731			12,572
Cash flows from investing activities:
Investments in and advances to unconsolidated joint ventures		(455	)		(321	)
Distribution of capital from unconsolidated joint ventures		4,270			7,003
Purchase of property, plant and equipment		(9,784	)		(11,773	)
Proceeds from the sale of property, plant and equipment		472			446
Net cash used in investing activities		(5,497	)		(4,645	)
Cash flows from financing activities:
Purchase of treasury stock		(159,506	)		(96,508	)
Distributions to partner in consolidated variable interest entity		—			(150	)
Proceeds from the exercise of stock options		117,966			27,909
Net cash used in financing activities		(41,540	)		(68,749	)
Net increase (decrease) in cash and cash equivalents		132,694			(60,822	)
Cash and cash equivalents, beginning of the period		396,619			425,316
Cash and cash equivalents, end of the period	$	529,313		$	364,494
Supplemental disclosures of cash flow information:
Interest paid during the period, net of interest capitalized	$	11,293		$	9,566
Income taxes paid during the period, net of refunds	$	99,370		$	90,078

See notes to condensed consolidated financial statements.

3

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements include the accounts of NVR, Inc. (“NVR” or the “Company”) and its subsidiaries and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 2 and 3 to the accompanying condensed consolidated financial statements).  Intercompany accounts and transactions have been eliminated in consolidation.  The statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.  In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation have been included.  Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

On January 1, 2017, the Company adopted Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation:  Improvements to Employee Share-Based Payment Accounting.  In connection with the adoption of ASU 2016-09, the Company:

• Recorded the excess tax benefit from stock option exercises as a reduction to income tax expense prospectively beginning January 1, 2017.  In the prior year, the excess tax benefit was recorded to additional paid-in capital within shareholders’ equity.  The excess tax benefit recognized during the three months ended June 30, 2017 and 2016 was $16,464 and $2,394, respectively.  The excess tax benefit recognized during the six months ended June 30, 2017 and 2016 was $36,364 and $8,678, respectively.

• Presented the aforementioned excess tax benefit recognized as an operating activity on the statement of cash flows and retrospectively adjusted the prior year Statement of Cash Flows accordingly. In the prior year, the excess tax benefit was recognized as a cash inflow from financing activities and a corresponding cash outflow from operating activities. The retrospective adjustment resulted in an $8,678 increase to net cash provided by operating activities and an $8,678 increase to net cash used in financing activities in the Consolidated Statement of Cash Flows for the six months ended June 30, 2016.

• Made the election to recognize forfeitures of equity-based awards in the period in which they occur.  This election was applied using the modified retrospective transition method, which resulted in the Company recording a cumulative-effect adjustment, net of tax, to reduce beginning retained earnings by $957.  In the prior year, the Company estimated forfeitures based on its historical forfeiture rate.

No other adjustments were made as a result of the adoption of ASU 2016-09.

The Company also adopted ASU 2015-11, Inventory – Simplifying the Measurement of Inventory effective January 1, 2017.  The standard requires inventory to be measured at the lower of cost or net realizable value.  Under prior GAAP, impaired inventory was written down to net realizable value less a normal profit margin.  Under the new standard, impaired inventory will only be written down to the net realizable value. ASU 2015-11 was adopted prospectively and did not have a material effect on the Company’s consolidated financial statements.

For the three and six months ended June 30, 2017 and 2016, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements.

4

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

2. Variable Interest Entities

Fixed Price Finished Lot Purchase Agreements (“Lot Purchase Agreements”)

NVR generally does not engage in the land development business.  Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements.  The Lot Purchase Agreements require deposits that may be forfeited if NVR fails to perform under the Lot Purchase Agreements.  The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots.

NVR believes this lot acquisition strategy reduces the financial requirements and risks associated with direct land ownership and land development.  NVR may, at its option, choose for any reason and at any time not to perform under these Lot Purchase Agreements by delivering notice of its intent not to acquire the finished lots under contract.  NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained within the Lot Purchase Agreements.  In other words, if NVR does not perform under a Lot Purchase Agreement, NVR loses only its deposit.  None of the creditors of any of the development entities with which NVR enters Lot Purchase Agreements have recourse to the general credit of NVR.  NVR generally does not have any specific performance obligations to purchase a certain number or any of the lots, nor does NVR guarantee completion of the development by the developer or guarantee any of the developers’ financial or other liabilities.

NVR is not involved in the design or creation of the development entities from which the Company purchases lots under Lot Purchase Agreements.  The developer’s equity holders have the power to direct 100% of the operating activities of the development entity.  NVR has no voting rights in any of the development entities.  The sole purpose of the development entity’s activities is to generate positive cash flow returns for the equity holders.  Further, NVR does not share in any of the profit or loss generated by the project’s development.  The profits and losses are passed directly to the developer’s equity holders.

The deposit placed by NVR pursuant to the Lot Purchase Agreement is deemed to be a variable interest in the respective development entities.  Those development entities are deemed to be variable interest entities (“VIE”).  Therefore, the development entities with which NVR enters into Lot Purchase Agreements, including the joint venture limited liability corporations discussed below, are evaluated for possible consolidation by NVR.  An enterprise must consolidate a VIE when that enterprise has a controlling financial interest in the VIE.  An enterprise is deemed to have a controlling financial interest if it has (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE.

NVR believes the activities that most significantly impact a development entity’s economic performance are the operating activities of the entity.  The development entity’s equity investors bear the full risk during the development process. Unless and until a development entity completes finished building lots through the development process, the entity does not earn any revenues.  The operating development activities are managed solely by the development entity’s equity investors.

The development entities with which NVR contracts to buy finished lots typically select the respective projects, obtain the necessary zoning approvals, obtain the financing required with no support or guarantees from NVR, select who will purchase the finished lots and at what price, and manage the completion of the infrastructure improvements, all for the purpose of generating a cash flow return to the development entity’s equity holders and all independent of NVR.  The Company possesses no more than limited protective legal rights through the Lot Purchase Agreement in the specific finished lots that it is purchasing, and NVR possesses no participative rights in the development entities.  Accordingly, NVR does not have the power to direct the activities of a developer that most significantly impact the developer’s economic performance.  For this reason, NVR has concluded that it is not the primary beneficiary of the development entities with which the Company enters into Lot Purchase Agreements, and therefore, NVR does not consolidate any of these VIEs.

5

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

As of June 30, 2017, NVR controlled approximately 79,100 lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately $380,900 and $2,400, respectively.  As noted above, NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained in the Lot Purchase Agreements.

In addition, NVR has certain properties under contract with land owners that are expected to yield approximately 8,400 lots, which are not included in the number of total lots controlled.  Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with deposits in cash and letters of credit totaling approximately $11,600 and $200, respectively, as of June 30, 2017, of which approximately $5,500 is refundable if certain contractual conditions are not met.  NVR generally expects to assign the raw land contracts to a land developer and simultaneously enter into a Lot Purchase Agreement with the assignee if the project is determined to be feasible.

NVR’s total risk of loss related to contract land deposits as of June 30, 2017 and December 31, 2016 was as follows:

	June 30, 2017			December 31, 2016
Contract land deposits	$	392,503		$	411,150
Loss reserve on contract land deposits		(34,098	)		(31,306	)
Contract land deposits, net		358,405			379,844
Contingent obligations in the form of letters of credit		2,575			2,379
Specific performance obligations (1)		1,505			1,505
Total risk of loss	$	362,485		$	383,728

(1) As of both June 30, 2017 and December 31, 2016, the Company was committed to purchase 10 finished lots under specific performance obligations.

3. Joint Ventures

On a limited basis, NVR obtains finished lots using joint venture limited liability corporations (“JVs”). The JVs are typically structured such that NVR is a non-controlling member and is at risk only for the amount the Company has invested, or has committed to invest, in addition to any deposits placed under Lot Purchase Agreements with the joint venture. NVR is not a borrower, guarantor or obligor on any debt of the JVs, as applicable. The Company enters into Lot Purchase Agreements to purchase lots from these JVs, and as a result has a variable interest in these JVs.

At June 30, 2017, the Company had an aggregate investment totaling approximately $44,000 in six JVs that are expected to produce approximately 7,350 finished lots, of which approximately 4,050 lots were controlled by the Company and the remaining approximately 3,300 lots were either under contract with unrelated parties or not currently under contract. In addition, NVR had additional funding commitments totaling approximately $5,800 in the aggregate to three of the JVs at June 30, 2017. The Company has determined that it is not the primary beneficiary of five of the JVs because either NVR and the other JV partner share power or the other JV partner has the controlling financial interest. The aggregate investment in unconsolidated JVs was approximately $43,600 and $49,000 at June 30, 2017 and December 31, 2016, respectively, and is reported in the “Other assets” line item on the accompanying condensed consolidated balance sheets. For the remaining JV, NVR has concluded that it is the primary beneficiary because the Company has the controlling financial interest in the JV.

6

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

The condensed balance sheets as of June 30, 2017 and December 31, 2016 of the consolidated JV were as follows:

	June 30, 2017		December 31, 2016
Assets:
Cash	$	1,199	$	1,214
Other assets		44		37
Total assets	$	1,243	$	1,251
Liabilities and equity:
Accrued expenses	$	542	$	550
Equity		701		701
Total liabilities and equity	$	1,243	$	1,251

The Company recognizes income from the JVs as a reduction to the lot cost of the lots purchased from the respective JVs when the homes are settled and is based on the expected total profitability and the total number of lots expected to be produced by the respective JVs. Distributions received from the unconsolidated JVs are allocated between return of capital and distributions of earnings based on the ratio of capital contributed by NVR to the total expected returns for the respective JVs, and are classified within the accompanying condensed consolidated statements of cash flows as cash flows from investing activities and operating activities, respectively.

4. Land Under Development

On a limited basis, NVR directly acquires raw land parcels already zoned for its intended use to develop into finished lots.  Land under development includes the land acquisition costs, direct improvement costs, capitalized interest where applicable, and real estate taxes.

In January 2017, the Company purchased a raw land parcel for approximately $14,400.  The parcel is expected to produce approximately 90 lots.

As of June 30, 2017, NVR directly owned a total of four separate raw land parcels with a carrying value of $46,685 that are expected to produce approximately 550 finished lots. The Company also has additional funding commitments of approximately $10,000 under a joint development agreement related to one parcel, a portion of which the Company expects will be offset by development credits of approximately $5,400.

None of the raw parcels had any indicators of impairment as of June 30, 2017. Based on market conditions, NVR may on a limited basis continue to directly acquire additional raw parcels to develop into finished lots.

7

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

5. Capitalized Interest

The Company capitalizes interest costs to land under development during the active development of finished lots.  In addition, the Company capitalizes interest costs to its joint venture investments while the investments are considered qualified assets pursuant to Accounting Standards Codification 835-20, Interest. Capitalized interest is transferred to sold or unsold inventory as the development of finished lots is completed, then charged to cost of sales upon the Company’s settlement of homes and the respective lots.  Interest incurred in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred. NVR’s interest costs incurred, capitalized, expensed and charged to cost of sales during the three and six months ended June 30, 2017 and 2016 was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Interest capitalized, beginning of period	$	5,564		$	5,358		$	5,106		$	4,434
Interest incurred		6,580			6,397			13,139			12,785
Interest charged to interest expense		(5,914	)		(4,814	)		(11,750	)		(9,902	)
Interest charged to cost of sales		(278	)		(2,365	)		(543	)		(2,741	)
Interest capitalized, end of period	$	5,952		$	4,576		$	5,952		$	4,576

6. Earnings per Share

The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Weighted average number of shares outstanding used to calculate basic EPS		3,748		3,900		3,726		3,892
Dilutive securities:
Stock options and restricted share units		454		265		429		259
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS		4,202		4,165		4,155		4,151

The following stock options and restricted share units issued under equity incentive plans were outstanding during the three and six months ended June 30, 2017 and 2016, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Anti-dilutive securities		9		78		15		78

8

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

7. Shareholders’ Equity

A summary of changes in shareholders’ equity is presented below:

	Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Deferred Compensation Trust			Deferred Compensation Liability			Total
Balance, December 31, 2016	$	206	$	1,515,828		$	5,695,376		$	(5,906,969	)	$	(17,375	)	$	17,375		$	1,304,441
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax		—		1,566			(957	)		—			—			—			609
Net income		—		—			250,800			—			—			—			250,800
Deferred compensation activity		—		—			—			—			4			(4	)		—
Purchase of common stock for treasury		—		—			—			(159,506	)		—			—			(159,506	)
Equity-based compensation		—		21,467			—			—			—			—			21,467
Proceeds from stock options exercised		—		117,966			—			—			—			—			117,966
Treasury stock issued upon option exercise and restricted share vesting		—		(48,869	)		—			48,869			—			—			—
Balance, June 30, 2017	$	206	$	1,607,958		$	5,945,219		$	(6,017,606	)	$	(17,371	)	$	17,371		$	1,535,777

The Company repurchased 84 shares of its common stock during the six months ended June 30, 2017. The Company settles stock option exercises and vesting of restricted share units by issuing shares of treasury stock.  Approximately 138 shares were issued from the treasury account during the six months ended June 30, 2017 in settlement of stock option exercises and vesting of restricted share units.  Shares are relieved from the treasury account based on the weighted average cost basis of treasury shares acquired.

8. Product Warranties

The Company establishes warranty and product liability reserves (“Warranty Reserve”) to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to NVR’s homebuilding business.  Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases.  The following table reflects the changes in the Company’s Warranty Reserve during the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Warranty reserve, beginning of period	$	93,503		$	86,692		$	93,895		$	87,407
Provision		13,206			12,867			22,167			21,709
Payments		(11,315	)		(11,606	)		(20,668	)		(21,163	)
Warranty reserve, end of period	$	95,394		$	87,953		$	95,394		$	87,953

9. Segment Disclosures

The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as a single 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

9

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

Mid East:	New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East:	North Carolina, South Carolina, Florida and Tennessee

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 the Company’s cost of capital.  In addition, certain assets, including goodwill and intangible assets and consolidation adjustments as discussed further below, are not allocated to the operating segments as those assets are neither included in the operating segment’s corporate capital allocation charge, nor in the CODM’s evaluation of the operating segment’s performance.  The Company records 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 charged to the operating segment upon the determination to terminate a Lot Purchase Agreement with the developer, or to restructure a Lot Purchase Agreement 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.  NVR’s overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to the Company’s 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 the Company’s operating segments.  External corporate interest expense primarily consists of interest charges on the Company’s 3.95% Senior Notes due 2022 (the “Senior Notes”) and is 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues:
Homebuilding Mid Atlantic	$	872,148	$	772,147	$	1,594,416	$	1,405,718
Homebuilding North East		127,541		108,766		233,771		205,919
Homebuilding Mid East		313,237		306,257		556,268		550,534
Homebuilding South East		199,788		174,571		375,846		321,074
Mortgage Banking		31,778		26,442		61,283		48,964
Total consolidated revenues	$	1,544,492	$	1,388,183	$	2,821,584	$	2,532,209

10

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Profit before taxes:
Homebuilding Mid Atlantic	$	100,621		$	63,730		$	165,109		$	110,339
Homebuilding North East		14,112			5,578			23,218			9,643
Homebuilding Mid East		35,986			30,056			58,145			52,789
Homebuilding South East		22,911			15,825			37,481			28,611
Mortgage Banking		18,004			13,973			33,957			24,348
Total segment profit before taxes		191,634			129,162			317,910			225,730
Reconciling items:
Contract land deposit reserve adjustment (1)		(2,064	)		1,307			(2,792	)		2,636
Equity-based compensation expense		(10,878	)		(10,829	)		(21,467	)		(21,378	)
Corporate capital allocation (2)		49,646			46,259			95,833			90,574
Unallocated corporate overhead		(23,360	)		(26,517	)		(50,594	)		(56,026	)
Consolidation adjustments and other		9,614			9,877			13,427			15,862
Corporate interest expense		(5,624	)		(4,539	)		(11,188	)		(9,366	)
Reconciling items sub-total		17,334			15,558			23,219			22,302
Consolidated profit before taxes	$	208,968		$	144,720		$	341,129		$	248,032

	June 30, 2017			December 31, 2016
Assets:
Homebuilding Mid Atlantic	$	1,177,147		$	1,054,779
Homebuilding North East		148,272			126,720
Homebuilding Mid East		274,846			222,736
Homebuilding South East		263,780			214,225
Mortgage Banking		276,564			403,250
Total segment assets		2,140,609			2,021,710
Reconciling items:
Consolidated variable interest entity		1,243			1,251
Cash and cash equivalents		518,482			375,748
Deferred taxes		176,401			170,652
Intangible assets and goodwill		50,835			51,526
Contract land deposit reserve		(34,098	)		(31,306	)
Consolidation adjustments and other		64,615			54,362
Reconciling items sub-total		777,478			622,233
Consolidated assets	$	2,918,087		$	2,643,943

(1) This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.

(2) 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Corporate capital allocation charge:
Homebuilding Mid Atlantic	$	31,005	$	28,766	$	60,130	$	55,951
Homebuilding North East		4,133		4,447		7,947		9,400
Homebuilding Mid East		7,535		7,458		14,277		14,157
Homebuilding South East		6,973		5,588		13,479		11,066
Total	$	49,646	$	46,259	$	95,833	$	90,574

11

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

10. Fair Value

GAAP assigns a fair value hierarchy to the inputs used to measure fair value.  Level 1 inputs are quoted prices in active markets for identical assets and liabilities.  Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly.  Level 3 inputs are unobservable inputs.

Financial Instruments

The estimated fair value of NVR’s Senior Notes as of June 30, 2017 was $630,000.  The estimated fair value is based on recent market prices of similar transactions, which is classified as Level 2 within the fair value hierarchy.  The carrying value of the Senior Notes was $596,760 at June 30, 2017.  Except as otherwise noted below, NVR believes that insignificant differences exist between the carrying value and the fair value of its financial instruments, which consist of cash equivalents, due to their short term nature.

Derivative Instruments and Mortgage Loans Held for Sale

In the normal course of business, NVR’s wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”), enters into contractual commitments to extend credit to NVR’s homebuyers with fixed expiration dates.  The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by NVRM.  All mortgagors are evaluated for credit worthiness prior to the extension of the commitment.  Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to a broker/dealer.  To mitigate the effect of the interest rate risk inherentin providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers.  The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments.  NVRM does not engage in speculative or trading derivative activities.  Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers are undesignated derivatives and, accordingly, are marked to fair value through earnings.  At June 30, 2017, there were contractual commitments to extend credit to borrowers aggregating $655,409 and open forward delivery contracts aggregating $777,148, which hedge both the rate lock loan commitments and closed loans held for sale.

The fair value of NVRM’s rate lock commitments to borrowers and the related input levels include, as applicable:

i) the assumed gain/loss of the expected resultant loan sale (Level 2);

ii) the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and

iii) the value of the servicing rights associated with the loan (Level 2).

The assumed gain/loss considers the excess servicing to be received or buydown fees to be paid upon securitization of the loan.  The excess servicing and buydown fees are calculated pursuant to contractual terms with investors.  To calculate the effects of interest rate movements, NVRM utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount.  NVRM sells all of its loans on a servicing released basis, and receives a servicing released premium upon sale.  Thus, the value of the servicing rights, which averaged 111 basis points of the loan amount as of June 30, 2017, is included in the fair value measurement and is based upon contractual terms with investors and varies depending on the loan type.  NVRM assumes an approximate 15% fallout rate when measuring the fair value of rate lock commitments.  Fallout is defined as locked loan commitments for which NVRM does not close a mortgage loan and is based on historical experience.

The fair value of NVRM’s forward sales contracts to broker/dealers solely considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2).  The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold.  Fair value is measured using Level 2 inputs.  The fair value of

12

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

loans held for sale of $241,398 included on the accompanying condensed consolidated balance sheet has been increased by $1,057 from the aggregate principal balance of $240,341.

The undesignated derivative instruments are included on the accompanying condensed consolidated balance sheet, as of June 30, 2017, as follows:

	Fair Value		Balance Sheet Location
Rate lock commitments:
Gross assets	$	6,559
Gross liabilities		5,048
Net rate lock commitments	$	1,511	NVRM - Other assets
Forward sales contracts:
Gross assets	$	3,003
Gross liabilities		26
Net forward sales contracts	$	2,977	NVRM - Other assets

The fair value measurement as of June 30, 2017 was as follows:

	Notional or Principal Amount		Assumed Gain/(Loss) From Loan Sale			Interest Rate Movement Effect			Servicing Rights Value		Security Price Change		Total Fair Value Measurement Gain/(Loss)
Rate lock commitments	$	655,409	$	(2,645	)	$	(2,111	)	$	6,267	$	—	$	1,511
Forward sales contracts	$	777,148		—			—			—		2,977		2,977
Mortgages held for sale	$	240,341		(997	)		(549	)		2,603		—		1,057
Total fair value measurement			$	(3,642	)	$	(2,660	)	$	8,870	$	2,977	$	5,545

For the three and six months ended June 30, 2017, NVRM recorded a fair value adjustment to income of $3,376 and $1,359, respectively.  For the three and six months ended June 30, 2016, NVRM recorded a fair value adjustment to income of $589 and a fair value adjustment to expense of $67, respectively.  Unrealized gains/losses from the change in the fair value measurements are included in earnings as a component of mortgage banking fees in the accompanying condensed consolidated statements of income.  The fair value measurement will be impacted in the future by the change in the value of the servicing rights, interest rate movements, security price fluctuations, and the volume and product mix of NVRM’s closed loans and locked loan commitments.

11. Debt

Senior Notes

As of June 30, 2017, the Company had Senior Notes outstanding with a principal balance of $600,000. The Senior Notes mature on September 15, 2022 and bear interest at 3.95%, payable semi-annually in arrears on March 15 and September 15. The Senior Notes were issued at a discount to yield 3.97% and have been reflected net of the unamortized discount and unamortized debt issuance costs in the accompanying condensed consolidated balance sheet.

Credit Agreement

NVR has an unsecured Credit Agreement (the “Credit Agreement”), which provides for aggregate revolving loan commitments of $200,000 (the “Facility”). Under the Credit Agreement, the Company may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments.  The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit, of which approximately $8,600 was outstanding at June 30, 2017, and a $25,000 sublimit for a swing line commitment. The Credit Agreement termination date is July 15, 2021. There was no debt outstanding under the Facility at June 30, 2017.

13

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

Repurchase Agreement

NVRM provides for its mortgage origination and other operating activities using cash generated from its operations, borrowings from its parent company, NVR, as well as a revolving mortgage repurchase agreement (the “Repurchase Agreement”), which is non-recourse to NVR.  The Repurchase Agreement provides for loan purchases up to $150,000, subject to certain sub-limits, and provides for an incremental commitment pursuant to which NVRM may from time to time request increases in the total commitment available under the Repurchase Agreement by up to $50,000 in the aggregate. Amounts outstanding under the Repurchase Agreement are collateralized by the Company’s mortgage loans held for sale. The Repurchase Agreement was renewed in July 2017 with materially consistent terms and conditions and expires onJuly 25, 2018. At June 30, 2017, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. There was no debt outstanding under the Repurchase Agreement at June 30, 2017.

12. Commitments and Contingencies

In June 2010, the Company received a Request for Information from the United States Environmental Protection Agency (“EPA”) pursuant to Section 308 of the Clean Water Act. The request sought information about storm water discharge practices in connection with homebuilding projects completed or underway by the Company in New York and New Jersey. The Company cooperated with this request, and provided information to the EPA. The Company was subsequently informed by the United States Department of Justice (“DOJ”) that the EPA forwarded the information on the matter to the DOJ. The Company has entered a consent decree with the EPA and DOJ to settle this matter. The consent decree includes injunctive relief and payment of a civil penalty, which was accrued as of June 30, 2017. The consent decree has been submitted for approval in the U.S. District Court for the District of New Jersey. The Company believes the disposition of this matter will not have a material adverse effect on its results of operations and liquidity or on its financial condition.

The Company and its subsidiaries are also involved in various other litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. Legal costs incurred in connection with outstanding litigation are expensed as incurred.

13. Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2017 was 29.2% and 26.5%, respectively.  For both the three and six months ended June 30, 2016, the Company’s effective tax rate was 36.7%.  The 2017 effective tax rate was reduced as a result of the Company’s adoption of ASU 2016-09, which requires the excess tax benefit from stock option exercises to be recorded as a reduction to income tax expense in the period stock options are exercised.  During the three and six months ended June 30, 2017, the Company recognized $16,464 and $36,364, respectively, in excess tax benefits. During the three and six months ended June 30, 2016, excess tax benefits of $2,394 and $8,678, respectively, were recorded to additional paid-in capital within shareholders’ equity.

14. Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  The standard will replace most existing revenue recognition guidance in GAAP when it becomes effective. The standard is effective for the Company as of January 1, 2018. The Company plans to adopt the standard using the cumulative effect transition method. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures.

In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on-balance sheet with a liability equal to the present value of lease payments over the lease term and a right-of-use asset for the right to use the underlying asset over the lease term. Lessees will recognize expenses on their income statements in

14

NVR, Inc.

Notes to Condensed Consolidated Financial Statements

(dollars and shares in thousands)

(unaudited)

a manner similar to current GAAP. The standard also requires additional disclosures of key information about leasing arrangements. The standard is effective for the Company as of January 1, 2019. The Company believes that the adoption of this standard will have a material effect on both assets and liabilities presented on the balance sheet, and is further evaluating the impact of its adoption.

In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes the way impairment of financial assets is recognized. The standard will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The standard’s provisions will be applied as a cumulative-effect adjustment to beginning retained earnings as of the effective date. The standard is effective for the Company as of January 1, 2020. Early adoption is permitted for annual and interim periods beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures.

In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The objective of the standard is to address the diversity in practice of how certain cash receipts and payments are presented on the statement of cash flows. The standard requires that the guidance be applied retrospectively in the first interim and annual periods in which an entity adopts the guidance. The standard is effective for the Company as of January 1, 2018. The Company expects the standard to affect the presentation of the distributions from joint ventures in the consolidated statement of cash flows.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. As a result, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The standard is effective for the Company as of January 1, 2018. The Company does not believe that the adoption of this standard will have a material effect on its consolidated statements of cash flows and related disclosures.

In January 2017, FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard’s objective is to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. Under the amendments in the standard, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would then be recognized, not to exceed the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on January 1, 2020, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures.

In May 2017, FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting.  The amendments in the standard clarify when changes in a share-based payment award must be accounted for as a modification, and will allow entities to make certain changes to share-based payment awards without accounting for them as modifications.  Under the new guidance, entities will only apply modification accounting if there are substantive changes made to share-based payment awards.  If a change made to a share-based payment award does not affect the fair value, vesting conditions and classification as either an equity or liability instrument, modification accounting will not need to be applied.  The standard is effective for the Company on January 1, 2018, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures.

15

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

(dollars in thousands)

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press releases or other public communications, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates” or the negative thereof or other comparable terminology.  All statements other than of historical facts are forward-looking statements.  Forward-looking statements contained in this document may include those regarding market trends, NVR’s financial position, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements.  Such risk factors include, but are not limited to the following: general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by NVR and NVR’s customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by NVR in its homebuilding operations; shortages of labor; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which NVR has little or no control.  NVR undertakes no obligation to update such forward-looking statements except as required by law.  For additional information regarding risk factors, see Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of NVR’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

Unless the context otherwise requires, references to “NVR,” “we,” “us,” or “our” include NVR and its consolidated subsidiaries.

Results of Operations for the Three and Six Months Ended June 30, 2017 and 2016

Overview

Business

Our primary business is the construction and sale of single-family detached homes, townhomes and condominiums, all of which are primarily constructed on a pre-sold basis.  To fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business.  We primarily conduct our operations in mature markets. Additionally, we generally grow our business through market share gains in our existing markets and by expanding into markets contiguous to our current active markets.  Our four homebuilding reportable segments consist of the following regions:

Mid Atlantic:	Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East:	New Jersey and Eastern Pennsylvania
Mid East:	New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East:	North Carolina, South Carolina, Florida and Tennessee

Our lot acquisition strategy is predicated upon avoiding the financial requirements and risks associated with direct land ownership and development.  We generally do not engage in land development (see discussion below of our land development activities). Instead, we typically acquire finished lots at market prices from various third party land developers pursuant to fixed price finished lot purchase agreements (“Lot Purchase Agreements”).  These Lot Purchase Agreements require deposits, typically ranging up to 10% of the aggregate purchase price of the finished lots, in the form of cash or letters of credit that may be forfeited if we fail to perform under the Lot Purchase Agreement.  This strategy has allowed us to maximize inventory turnover, which we believe enables us to minimize market risk and to operate with less capital, thereby enhancing rates of return on equity and total capital.

16

In addition to constructing homes primarily on a pre-sold basis and utilizing what we believe is a conservative lot acquisition strategy, we focus on obtaining and maintaining a leading market position in each market we serve.  This strategy allows us to gain valuable efficiencies and competitive advantages in our markets, which we believe contributes to minimizing the adverse effects of regional economic cycles and provides growth opportunities within these markets.  Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build.

In certain specific strategic circumstances, we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development.  Once we acquire control of raw ground, we determine whether to sell the raw parcel to a developer and enter into a Lot Purchase Agreement with the developer to purchase the finished lots or to hire a developer to develop the land on our behalf.  While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so.  We expect, however, to continue to acquire substantially all our finished lot inventory using Lot Purchase Agreements with forfeitable deposits.

As of June 30, 2017, we controlled lots as described below.

Lot Purchase Agreements

We controlled approximately 79,100 lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately $380,900 and $2,400, respectively. Included in the number of controlled lots are approximately 3,900 lots for which we have recorded a contract land deposit impairment reserve of approximately $34,100 as of June 30, 2017.

Joint Venture Limited Liability Corporations (“JVs”)

We had an aggregate investment totaling approximately $44,000 in six JVs, expected to produce approximately 7,350 lots. Of the lots to be produced by the JVs, approximately 4,050 lots were controlled by us and approximately 3,300 were either under contract with unrelated parties or currently not under contract.

Land Under Development

We directly owned four separate raw land parcels, zoned for their intended use, with a current cost basis, including development costs, of approximately $46,700 that we intend to develop into approximately 550 finished lots.  We had additional funding commitments of approximately $10,000 under a joint development agreement related to one parcel, a portion of which we expect will be offset by development credits of approximately $5,400. During January 2017, we purchased one land parcel under development for approximately $14,400. The parcel is expected to produce approximately 90 lots.

See Notes 2, 3 and 4 to the condensed consolidated financial statements included herein for additional information regarding Lot Purchase Agreements, JVs and land under development, respectively.

Raw Land Purchase Agreements

In addition to the lots we currently control as discussed above, we have certain properties under contract with land owners that are expected to yield approximately 8,400 lots.  Some of these properties may require rezoning or other approvals to achieve the expected yield.  These properties are controlled with deposits in cash and letters of credit totaling approximately $11,600 and $200, respectively, as of June 30, 2017, of which approximately $5,500 is refundable if certain contractual conditions are not met.  We generally expect to assign the raw land contracts to a land developer and simultaneously enter into a Lot Purchase Agreement with the assignee if the project is determined to be feasible.

Current Business Environment and Key Financial Results

During the first six months of 2017 we continued to experience steady new home demand, consistent with that seen during 2016.  However, new home prices continued to be constrained due to the competitive market environment.

Our consolidated revenues for the second quarter of 2017 totaled $1,544,492, an 11% increase from the second quarter of 2016.  Net income for the second quarter ended June 30, 2017 was $147,877, or $35.19 per diluted share, increases of 61% and 60% when compared to net income and diluted earnings per share in the second quarter of 2016, respectively.  Our homebuilding gross profit margin percentage increased to 19.5% in the second quarter of 2017 from 17.3% in the second quarter of 2016. New orders, net of cancellations (“New Orders”) increased 8% in the second quarter

17

of 2017 compared to the second quarter of 2016.The average sales price for New Orders in the second quarter of 2017 of $377.0decreased 2% compared to the second quarter of 2016.

Net income and diluted earnings per share were favorably impacted by the reduction in our effective tax rate in the second quarter of 2017 to 29.2% from 36.7% in the second quarter of 2016.  The reduction in the effective tax rate was primarily due to our January 1, 2017 adoption of Accounting Standard Update (“ASU”) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting.  See additional discussion regarding the income tax impact of the adoption of ASU 2016-09 in the “Effective Tax Rate” section below.

We believe that a continuation of the housing market recovery is dependent upon a sustained overall economic recovery, driven by continued improvements in job and wage growth and household formation.  We expect to continue to face gross margin pressure currently impacted by modest pricing power and our ability to manage higher land and construction costs. We also expect to face pressure on mortgage banking profit due to the competitive pricing pressures in the mortgage market. We believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet.

Homebuilding Operations

The following table summarizes the results of operations and other data for the consolidated homebuilding operations:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Financial Data:
Revenues	$	1,512,714		$	1,361,741		$	2,760,301		$	2,483,245
Cost of sales	$	1,218,083		$	1,126,369		$	2,244,100		$	2,052,129
Gross profit margin percentage		19.5	%		17.3	%		18.7	%		17.4	%
Selling, general and administrative expenses	$	99,100		$	100,043		$	199,004		$	198,058
Operating Data:
Settlements (units)		3,917			3,581			7,173			6,587
Average settlement price	$	386.1		$	378.5		$	384.8		$	374.4
New orders (units)		4,678			4,324			9,102			8,461
Average new order price	$	377.0		$	383.9		$	384.6		$	379.9
Backlog (units)								8,813			8,103
Average backlog price							$	390.9		$	385.4
New order cancellation rate		12.9	%		12.7	%		14.2	%		14.0	%

Consolidated Homebuilding - Three Months Ended June 30, 2017 and 2016

Homebuilding revenues increased 11% for the second quarter of 2017 from the same period in 2016, as a result of a 9% increase in the number of units settled and a 2% increase in the average settlement price quarter over quarter. The increases in the number of units settled and the average settlement price were primarily attributable to a 9% higher backlog unit balance and a 4% higher average sales price of units in backlog, respectively, entering the second quarter of 2017 compared to the same period in 2016.

Gross profit margin percentage in the second quarter of 2017 increased 220 basis points to 19.5% compared to the second quarter of 2016, due to the modest improvement in pricing, moderating construction costs, and the increase in the number of units settled, which allowed us to better leverage certain operating costs.

The number of New Orders increased 8% while the average sales price of New Orders decreased 2% in the second quarter of 2017 compared to the second quarter of 2016.  The number of New Orders increased in each of our market segments due to more favorable market conditions in the second quarter of 2017 compared to the same period in 2016.  Additionally, the increase in New Orders was favorably impacted by a 2% increase in the average number of active communities quarter over quarter.  The decrease in the average sales price of New Orders was primarily attributable to a shift in New Orders to lower priced markets.  

Selling, general and administrative (“SG&A”) expenses in the second quarter of 2017 were relatively flat compared to the same period in 2016, but as a percentage of revenue decreased to 6.6% in the second quarter of 2017 from 7.3% in

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the second quarter of 2016.  SG&A as a percentage of revenue were favorably impacted by the 11% increase in homebuilding revenues coupled with relatively flat headcount quarter over quarter.

Consolidated Homebuilding - Six Months Ended June 30, 2017 and 2016

Homebuilding revenues increased 11% for the six months ended June 30, 2017 from the same period in 2016, as a result of a 9% increase in the number of units settled and a 3% increase in the average settlement price year over year.  The increases in the number of units settled and the average settlement price were primarily attributable to an 11% higher backlog unit balance and a 3% higher average sales price of units in backlog, respectively, entering 2017 compared to backlog entering 2016.

Gross profit margin percentage in the first six months of 2017 increased 134 basis points to 18.7% compared to 17.4% in 2016, due primarily to the modest improvement in pricing and the increase in the number of units settled, which allowed us to better leverage certain operating costs.  These favorable impacts on gross profit margin and segment profit were partially offset by slightly higher construction costs year over year.

The number of New Orders and the average sales price of New Orders increased 8% and 1%, respectively, in the first six months of 2017 when compared to the first six months of 2016.  New Orders increased in each of our market segments due to more favorable market conditions in the first six months of 2017 compared to the first six months of 2016.  Additionally, the increase in New Orders was favorably impacted by a 2% increase in the average number of active communities year over year.

SG&A expenses in the first six months of 2017 were relatively flat compared to the first six months of 2016, but as a percentage of revenue decreased to 7.2% in the first half of 2017 from 8.0% in the first half of 2016.  SG&A expenses as a percentage of revenue were favorably impacted by the 11% increase in revenues coupled with relatively flat headcount year over year.

Backlog units and dollars were 8,813 units and $3,444,964, respectively, as of June 30, 2017 compared to 8,103 units and $3,122,534, respectively, as of June 30, 2016.  The 9% increase in backlog units was primarily attributable to the aforementioned 8% increase in New Orders. Backlog dollars were favorably impacted by the increase in backlog units.

Backlog, which represents homes sold but not yet settled with the customer, may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons.  In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period.  Expressed as the total of all cancellations during the period as a percentage of gross sales during the period, our cancellation rate was approximately 14.2% and 14.0% in the first six months of 2017 and 2016, respectively.  During the most recent four quarters, approximately 6% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2017 or future years.

The backlog turnover rate is impacted by various factors, including, but not limited to, changes in New Order activity, internal production capacity, external subcontractor capacity and other external factors over which we do not exercise control.

Reportable Segments

Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, SG&A expenses, and a corporate capital allocation charge determined at the corporate headquarters.  The corporate capital allocation charge eliminates in consolidation and is based on the segment’s average net assets employed.  The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment’s results are providing the desired rate of return after covering our cost of capital.

We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired.  For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the determination to terminate a Lot Purchase Agreement with the developer or to restructure a Lot

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Purchase Agreement resulting in the forfeiture of the deposit.  We evaluate our entire net contract land deposit portfolio for impairment each quarter.  For presentation purposes below, the contract land deposit reserve at June 30, 2017 and December 31, 2016 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis.  The net contract land deposit balances below also include approximately $2,600 and $2,400 at June 30, 2017 and December 31, 2016, respectively, of letters of credit issued as deposits in lieu of cash.

The following tables summarize certain homebuilding operating activity by reportable segment for the three and six months ended June 30, 2017 and 2016.

Selected Segment Financial Data:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues:
Mid Atlantic	$	872,148	$	772,147	$	1,594,416	$	1,405,718
North East		127,541		108,766		233,771		205,919
Mid East		313,237		306,257		556,268		550,534
South East		199,788		174,571		375,846		321,074

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Gross profit margin:
Mid Atlantic	$	166,422	$	128,005	$	294,328	$	234,814
North East		25,187		17,031		45,234		32,877
Mid East		59,879		54,408		104,265		99,061
South East		41,364		32,151		73,381		59,843

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Segment profit:
Mid Atlantic	$	100,621	$	63,730	$	165,109	$	110,339
North East		14,112		5,578		23,218		9,643
Mid East		35,986		30,056		58,145		52,789
South East		22,911		15,825		37,481		28,611

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Gross profit margin percentage:
Mid Atlantic		19.1	%		16.6	%		18.5	%		16.7	%
North East		19.7	%		15.7	%		19.3	%		16.0	%
Mid East		19.1	%		17.8	%		18.7	%		18.0	%
South East		20.7	%		18.4	%		19.5	%		18.6	%

Operating Activity:

	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
	Units		Average Price		Units		Average Price		Units		Average Price		Units		Average Price
Settlements:
Mid Atlantic		1,976	$	441.3		1,762	$	434.6		3,634	$	438.7		3,217	$	431.7
North East		329	$	387.7		289	$	376.4		597	$	391.6		566	$	363.8
Mid East		947	$	330.7		934	$	327.9		1,672	$	332.6		1,695	$	324.8
South East		665	$	300.4		596	$	292.9		1,270	$	295.9		1,109	$	289.5
Total		3,917	$	386.1		3,581	$	378.5		7,173	$	384.8		6,587	$	374.4

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	Three Months Ended June 30,								Six Months Ended June 30,
	2017				2016				2017				2016
	Units		Average Price		Units		Average Price		Units		Average Price		Units		Average Price
New orders, net of cancellations:
Mid Atlantic		2,263	$	433.1		2,242	$	443.9		4,388	$	444.1		4,271	$	439.4
North East		361	$	396.4		314	$	380.6		720	$	410.3		655	$	372.8
Mid East		1,145	$	326.7		1,003	$	321.5		2,279	$	327.9		2,060	$	320.3
South East		909	$	293.1		765	$	290.8		1,715	$	296.9		1,475	$	293.8
Total		4,678	$	377.0		4,324	$	383.9		9,102	$	384.6		8,461	$	379.9

	As of June 30,
	2017				2016
	Units		Average Price		Units		Average Price
Backlog:
Mid Atlantic		4,295	$	448.1		4,191	$	442.1
North East		731	$	424.3		629	$	382.5
Mid East		2,106	$	332.8		1,863	$	325.3
South East		1,681	$	303.0		1,420	$	297.8
Total		8,813	$	390.9		8,103	$	385.4

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
New order cancellation rate:
Mid Atlantic		14.3	%		12.7	%		15.5	%		14.2	%
North East		12.6	%		16.7	%		13.0	%		16.1	%
Mid East		11.1	%		12.2	%		11.8	%		13.3	%
South East		11.9	%		11.9	%		14.5	%		13.4	%

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Average active communities:
Mid Atlantic		244		238		241		234
North East		45		43		44		41
Mid East		118		128		119		131
South East		84		74		84		75
Total		491		483		488		481

Homebuilding Inventory:

	June 30, 2017		December 31, 2016
Sold inventory:
Mid Atlantic	$	693,332	$	544,840
North East		105,550		79,751
Mid East		191,056		141,033
South East		146,008		107,967
Total (1)	$	1,135,946	$	873,591

	June 30, 2017		December 31, 2016
Unsold lots and housing units inventory:
Mid Atlantic	$	119,762	$	117,920
North East		4,744		6,370
Mid East		6,115		7,218
South East		12,757		10,872
Total (1)	$	143,378	$	142,380

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(1) The reconciling items between segment inventory and consolidated inventory include certain consolidation adjustments necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes and are not allocated to our operating segments.

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Sold and unsold inventory impairments:
Mid Atlantic	$	99	$	53	$	108	$	106
North East		7		—		7		—
Mid East		—		—		—		—
South East		—		153		—		153
Total	$	106	$	206	$	115	$	259

Lots Controlled and Land Deposits:

	June 30, 2017		December 31, 2016
Total lots controlled:
Mid Atlantic		36,800		35,350
North East		6,550		6,200
Mid East		19,750		19,050
South East		20,600		17,400
Total		83,700		78,000

	June 30, 2017		December 31, 2016
Lots included in impairment reserve:
Mid Atlantic		1,950		1,950
North East		500		550
Mid East		950		1,100
South East		500		400
Total		3,900		4,000

	June 30, 2017		December 31, 2016
Contract land deposits, net:
Mid Atlantic	$	213,501	$	239,588
North East		25,636		27,648
Mid East		45,442		44,394
South East		76,401		70,593
Total	$	360,980	$	382,223

	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017		2016
Contract land deposit impairments (recoveries), net:
Mid Atlantic	$	(16	)	$	975	$	970	$	960
North East		—			—		—		—
Mid East		2			5		5		51
South East		—			194		—		189
Total	$	(14	)	$	1,174	$	975	$	1,200

Mid Atlantic

Three Months Ended June 30, 2017 and 2016

The Mid Atlantic segment had an approximate $36,900, or 58%, increase in segment profit in the second quarter of 2017 compared to the second quarter of 2016.  The increase in segment profit was driven by an increase of approximately $100,000, or 13%, in revenues and improved gross profit margins quarter over quarter. Segment revenues increased primarily due to a 12% increase in the number of units settled.  The increase in the number of units settled was favorably

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impacted by an8% higher backlog unit balance entering the second quarter of 2017 compared to the same period in 2016, coupled with a higher backlog turnover rate quarter over quarter. The Mid Atlantic segment’s gross profit margin percentage increased to 19.1% in the second quarter of 2017 from 16.6% in the second quarter of 2016, due primarily to the modest improvement in pricing, moderating construction costs, andthe increase in the number of units settled, which allowed us to better leverage certain operating costs.

Segment New Orders increased 1% while the average sales price of New Orders decreased 2% in the second quarter of 2017 compared to the second quarter of 2016. The decrease in the average sales price of New Orders was primarily attributable to a shift in New Orders in the current year quarter to lower priced markets, as well as a shift from our NVHomes product, which typically sells at higher price points within the segment.

Six Months Ended June 30, 2017 and 2016

The Mid Atlantic segment had an approximate $54,800, or 50%, increase in segment profit in the first six months of 2017 compared to the first six months of 2016.  The increase in segment profit was driven by an increase of segment revenues of approximately $188,700, or 13%, and improved gross profit margins year over year.  Segment revenues increased due primarily to a 13% increase in the number of units settled.  The increase in the number of units settled was favorably impacted by a 13% higher backlog unit balance entering 2017 compared to the backlog entering 2016.  The Mid Atlantic segment’s gross profit margin percentage increased to 18.5% in 2017 from 16.7% in 2016, due primarily to the modest improvement in pricing, moderating construction costs, and the increase in the number of units settled, which allowed us to better leverage certain operating costs.

Segment New Orders and the average sales price of New Order increased 3% and 1%, respectively, in the first six months of 2017 compared to the same period in 2016. The increase in New Orders was attributable to a 3% increase in the average number of active communities year over year.

North East

Three Months Ended June 30, 2017 and 2016

The North East segment had an approximate $8,500, or 153%, increase in segment profit in the second quarter of 2017 compared to the second quarter of 2016 due to an increase in segment revenues of approximately $18,800, or 17%, and improved gross profit margins, quarter over quarter. The increase in segment revenues was due primarily to a 14% increase in the number of units settled and a 3% increase in the average price of units settled quarter over quarter. The increase in the number of units settled was primarily attributable to a 16% higher backlog unit balance entering the second quarter of 2017 compared to the same period in 2016. The increase in the average settlement price was attributable to an 11% higher average sales price of units in backlog entering the second quarter of 2017 compared to the same period in 2016, partially offset by a shift in units settled to lower priced markets quarter over quarter. The North East segment’s gross profit margin percentage increased to 19.7% in the second quarter of 2017 from 15.7% in the second quarter of 2016. Gross profit margin and segment profit were favorably impacted by the modest improvement in pricing, flat construction costs, and the increase in the number of units settled, which allowed us to better leverage certain operating costs.  These favorable impacts on gross profit margin and segment profit were partially offset by higher lot costs quarter over quarter.

Segment New Orders and the average sales price of New Orders increased 15% and 4%, respectively, in the second quarter of 2017 compared to the second quarter of 2016. The increase in New Orders was attributable to a 5% increase in the average number of active communities quarter over quarter and more favorable market conditions in the second quarter of 2017 compared to the same period in 2016, which led to higher absorption rates. The increase in the average sales price of New Orders quarter over quarter, was attributable to a shift in New Orders to higher priced markets within the segment and a shift to higher priced communities within certain markets.

Six Months Ended June 30, 2017 and 2016

The North East segment had an approximate $13,600, or 141%, increase in segment profit in the first six months of 2017 compared to the first six months of 2016 due to an increase in segment revenues of approximately $27,900, or 14%, and improved gross profit margins, year over year. The increase in segment revenues was due to a 5% increase in the number of units settled and an 8% increase in the average settlement price year over year. The increase in the number of units settled was primarily attributable to a 13% higher backlog unit balance entering 2017 compared to the backlog unit

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balance entering 2016, partially offset by a lower backlog turnover rate year over year. The increase in the average settlement price was attributable to a 9% higher average sales price of units in backlog entering 2017 compared to the same period in 2016, driven by a shift to higher priced markets within the segment and a shift to higher priced communities within certain markets. The North East segment’s gross profit margin percentage increased to 19.3% in the first six months of 2017 from 16.0% in the first six months of 2016. Gross profit margin and segment profit were favorably impacted by the improvement in pricingand the increase in the number of units settled, which allowed us to better leverage certain operating costs.  These favorable impacts on gross profit margin and segment profit were partially offset by higher construction and lot costs year over year.

Segment New Orders and the average sales price of New Orders each increased 10% in the first six months of 2017 compared to the same period in 2016. New Orders were favorably impacted by an 8% increase in the average number of active communities year over year. The increase in the average New Order sales year over year, was attributable to a shift in New Orders to higher priced markets within the segment and a shift to higher priced communities within certain markets.

Mid East

Three Months Ended June 30, 2017 and 2016

The Mid East segment had an approximate $5,900, or 20%, increase in segment profit in the second quarter of 2017 compared to the second quarter of 2016. The increase in segment profit was driven by an increase of approximately $7,000, or 2%, in revenues and improved gross profit margins quarter over quarter. The increase in revenues was due to 1% increases in both the number of units settled and the average price of units settled quarter over quarter. The segment’s gross profit margin percentage increased to 19.1% in the second quarter of 2017 from 17.8% in the second quarter of 2016.  Gross profit margins were favorably impacted by the modest improvements in pricing and construction costs quarter over quarter.

Segment New Orders and the average sales price of New Orders increased 14% and 2%, respectively, in the second quarter of 2017 compared to the same period in 2016.  New Orders increased despite an 8% decrease in the average number of active communities quarter over quarter as more favorable market conditions in the second quarter of 2017 led to higher absorption rates within the segment.

Six Months Ended June 30, 2017 and 2016

The Mid East segment had an approximate $5,400, or 10%, increase in segment profit in the first six months of 2017 compared to the first six months of 2016.  The increase in segment profit was driven by an increase of approximately $5,700, or 1%, in revenues and improved gross profit margins year over year.  The increase in revenues was due to a 2% increase in the average price of units settled, which was attributable to a 3% higher average sales price of homes in backlog entering 2017 compared to the same period in 2016. The segment’s gross profit margin percentage increased to 18.7% in the first six months of 2017 from 18.0% in the same period of 2016, primarily attributable to the modest improvement in pricing, partially offset by higher construction costs year over year.

Segment New Orders and the average sales price of New Orders increased 11% and 2%, respectively, in the first six months of 2017 compared to the same period in 2016.  New Orders increased despite a 9% decrease in the average number of active communities year over year as more favorable market conditions in 2017 led to higher absorption rates within the segment.

South East

Three Months Ended June 30, 2017 and 2016

The South East segment had an approximate $7,100, or 45%, increase in segment profit in the second quarter of 2017 compared to the second quarter of 2016. The increase in segment profit was primarily driven by an increase of approximately $25,200, or 14%, in revenues and improved gross profit margins quarter over quarter.  The increase in revenues was due to a 12% increase in the number of units settled and a 3% increase in the average settlement price quarter over quarter. The increases in the number of units settled and the average settlement price were primarily attributable to a 15% higher backlog unit balance and a 3% higher average sales price of units in backlog, respectively, entering the second quarter of 2017 compared to the same period in 2016. The South East segment’s gross profit margin

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percentage increased to 20.7% in the second quarter of 2017 from 18.4% in the second quarterof 2016,primarily due tothe modest improvement in pricing, partially offset by higher construction costs.

Segment New Orders and the average sales price of New Orders increased 19% and 1%, respectively, in the second quarter of 2017 compared to the same period in 2016.  New Orders were favorably impacted by a 14% increase in the average number of active communities in the second quarter of 2017 compared to the same period in 2016 and more favorable market conditions quarter over quarter.

Six Months Ended June 30, 2017 and 2016

The South East segment had an approximate $8,900, or 31%, increase in segment profit in the first six months of 2017 compared to the first six months of 2016.  The increase in segment profit was primarily driven by an increase of approximately $54,800, or 17%, in revenues and improved gross profit margins.  The increase in revenues was attributable to a 15% increase in the number of units settled and a 2% increase in the average settlement price.  The increase in settlements was attributable to a 17% higher backlog unit balance entering 2017 compared to backlog entering 2016. The South East segment’s gross profit margin percentage increased to 19.5% in the first six months of 2017 from 18.6% in the first six months of 2016 primarily due to the modest improvement in pricing, partially offset by higher construction costs year over year.

Segment New Orders and the average sales price of New Orders increased 16% and 1%, respectively, in the first six months of 2017 compared to 2016.  New Orders were favorably impacted by a 13% increase in the average number of active communities in the first six months of 2017 compared to the same period in 2016 and more favorable market conditions year over year.

Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations

In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between homebuilding segment profit and homebuilding consolidated profit before tax include unallocated corporate overhead (which includes all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. Our overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to our operating segments. Consolidation adjustments consist of such items to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments. External corporate interest expense primarily consists of interest charges on our 3.95% Senior Notes due 2022, and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017			2016
Homebuilding consolidated gross profit:
Mid Atlantic	$	166,422	$	128,005	$	294,328		$	234,814
North East		25,187		17,031		45,234			32,877
Mid East		59,879		54,408		104,265			99,061
South East		41,364		32,151		73,381			59,843
Consolidation adjustments and other		1,779		3,777		(1,007	)		4,521
Homebuilding consolidated gross profit	$	294,631	$	235,372	$	516,201		$	431,116

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	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Homebuilding consolidated profit before taxes:
Mid Atlantic	$	100,621		$	63,730		$	165,109		$	110,339
North East		14,112			5,578			23,218			9,643
Mid East		35,986			30,056			58,145			52,789
South East		22,911			15,825			37,481			28,611
Reconciling items:
Contract land deposit impairment reserve (1)		(2,064	)		1,307			(2,792	)		2,636
Equity-based compensation expense		(10,505	)		(10,048	)		(20,112	)		(19,880	)
Corporate capital allocation (2)		49,646			46,259			95,833			90,574
Unallocated corporate overhead		(23,360	)		(26,517	)		(50,594	)		(56,026	)
Consolidation adjustments and other		9,614			9,877			13,427			15,862
Corporate interest expense		(5,624	)		(4,539	)		(11,188	)		(9,366	)
Reconciling items sub-total		17,707			16,339			24,574			23,800
Homebuilding consolidated profit before taxes	$	191,337		$	131,528		$	308,527		$	225,182

(1) This item represents changes to the contract land deposit impairment reserve which are not allocated to the reportable segments.

(2) This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments.  The corporate capital allocation charge is based on the segment’s monthly average asset balance, and is as follows for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Corporate capital allocation charge:
Mid Atlantic	$	31,005	$	28,766	$	60,130	$	55,951
North East		4,133		4,447		7,947		9,400
Mid East		7,535		7,458		14,277		14,157
South East		6,973		5,588		13,479		11,066
Total	$	49,646	$	46,259	$	95,833	$	90,574

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Mortgage Banking Segment

Three and Six Months Ended June 30, 2017 and 2016

We conduct our mortgage banking activity through NVR Mortgage Finance, Inc. (“NVRM”), a wholly owned subsidiary. NVRM focuses exclusively on serving the homebuilding segment customer base. NVRM sells all of the mortgage loans it closes to investors in the secondary markets on a servicing-released basis, typically within 30 days from the loan closing. The following table summarizes the results of our mortgage banking operations and certain statistical data for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Loan closing volume:
Total principal	$	1,041,613		$	942,407		$	1,884,954		$	1,696,247
Loan volume mix:
Adjustable rate mortgages		9	%		7	%		8	%		7	%
Fixed-rate mortgages		91	%		93	%		92	%		93	%
Operating profit:
Segment profit	$	18,004		$	13,973		$	33,957		$	24,348
Equity-based compensation expense		(373	)		(781	)		(1,355	)		(1,498	)
Mortgage banking income before tax	$	17,631		$	13,192		$	32,602		$	22,850
Capture rate:		88	%		88	%		87	%		88	%
Mortgage banking fees:
Net gain on sale of loans	$	24,243		$	19,665		$	47,474		$	36,687
Title services		7,342			6,607			13,499			11,986
Servicing fees		193			170			310			291
	$	31,778		$	26,442		$	61,283		$	48,964

Loan closing volume for the three and six months ended June 30, 2017 increased by approximately $99,200, or 11%, and $188,700, or 11%, respectively, from the same periods in 2016. The increase in loan closing volume was primarily attributable to the 9% increase in the homebuilding segment’s number of units settled during both the three and six months ended June 30, 2017 when compared to the same periods in 2016.

Segment profit for the three and six months ended June 30, 2017 increased by approximately $4,000, or 29%, and $9,600, or 39%, respectively, from the same periods in 2016. The increases were primarily attributable to an increase in mortgage banking fees, partially offset by an increase in general and administrative expenses. Mortgage banking fees increased by approximately $5,300 and $12,300 during the three and six months ended June 30, 2017, respectively, resulting from the aforementioned increase in loan closing volume and an increase in secondary marketing gains on sales of loans. General and administrative expenses increased by approximately $1,500 and $2,900 during the three and six months ended June 30, 2017, respectively, resulting from an increase in personnel costs.

Effective Tax Rate

Our effective tax rate during the three and six months ended June 30, 2017 was 29.2% and 26.5%, respectively.  For both the three and six months ended June 30, 2016, our effective tax rate was 36.7%. The 2017 effective tax rate was reduced as a result of our January 1, 2017 adoption of ASU 2016-09, which requires the excess tax benefit from stock option exercises to be recorded as a reduction to income tax expense in the period stock options are exercised.  During the three and six months ended June 30, 2017, we recognized $16,464, or $3.92 per diluted share, and $36,364, or $8.75 per diluted share, respectively, in excess tax benefits.  During the three and six months ended June 30, 2016, excess tax benefits of $2,394 and $8,678, respectively, were recorded to additional paid-in capital within shareholders’ equity. We expect to experience volatility in our effective tax rate in future quarters as the amount of the excess tax benefit from

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equity-based awards is dependent on our stock price when awards are exercised as well as on the timing of exercises, which historically has varied from quarter to quarter.

Liquidity and Capital Resources

Lines of Credit and Notes Payable

Our homebuilding business segment funds its operations from cash flows provided by operating activities, a short-term unsecured working capital revolving credit facility and capital raised in the public debt and equity markets. The unsecured Credit Agreement (the “Credit Agreement”) provides for aggregate revolving loan commitments of $200,000. Under the Credit Agreement, we may request increases of up to $300,000 to the facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments.  The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately $8,600 outstanding at June 30, 2017, and a $25,000 sublimit for a swing line commitment. The Credit Agreement termination date is July 15, 2021. There was no debt outstanding under the Credit Agreement at June 30, 2017.

Our mortgage banking subsidiary, NVRM, provides for its mortgage origination and other operating activities using cash generated from its operations, borrowings from its parent company, NVR, as well as a $150,000 revolving mortgage repurchase facility (the “Repurchase Agreement”), which is non-recourse to NVR.  The Repurchase Agreement provides for an incremental commitment pursuant to which we may request increases in the total commitment available under the Repurchase Agreement by up to $50,000 in the aggregate.  The Repurchase Agreement was renewed in July 2017 with materially consistent terms and conditions and expires on July 25, 2018.  At June 30, 2017, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement.  There was no debt outstanding under the Repurchase Agreement at June 30, 2017.

There have been no material changes in our lines of credit and notes payable during the six months ended June 30, 2017.  For additional information regarding lines of credit and notes payable, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2016.

Cash Flows

For the six months ended June 30, 2017, cash and cash equivalents increased by $132,694.  Cash provided by operating activities was $179,731.  Cash was provided by earnings for the six months ended June 30, 2017 and net proceeds of $163,686 from mortgage loan activity.  Cash was primarily used to fund the increase in homebuilding inventory of $272,851 which was primarily attributable to an increase in the number of units under construction at June 30, 2017 compared to December 31, 2016.

Net cash used in investing activities for the six months ended June 30, 2017 of $5,497 included cash used for purchases of property, plant and equipment of $9,784, partially offset by the receipt of capital distributions from our unconsolidated JVs totaling $4,270.

Net cash used in financing activities was $41,540 for the six months ended June 30, 2017.  Cash was used to repurchase 83,762 shares of our common stock at an aggregate purchase price of $159,506 under our ongoing common stock repurchase program, discussed below. Cash was provided from stock option exercise proceeds totaling $117,966.

Equity Repurchases

In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions.  This ongoing repurchase activity is conducted pursuant to publicly announced Board authorizations, and is typically executed in accordance with the safe-harbor provisions of Rule 10b-18 promulgated under the Exchange Act.  In addition, the Board resolutions authorizing us to repurchase shares of our common stock specifically prohibit us from purchasing shares from our officers, directors, Profit Sharing/401(k) Plan Trust or Employee Stock Ownership Plan Trust.  The repurchase program assists us in accomplishing our primary objective of creating increases in shareholder value.  See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, of this Quarterly Report on Form 10-Q for further discussion of repurchase activity during the second quarter of 2017.

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Recent Accounting Pronouncements

See Note 14 to the accompanying condensed consolidated financial statements for discussion of recently issued accounting pronouncements applicable to us.

Critical Accounting Policies

There have been no material changes to our critical accounting policies as previously disclosed in Part II, Item 7, of our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 3.Quantitative and Qualitative Disclosure about Market Risk

There have been no material changes in our market risks during the six months ended June 30, 2017. For additional information regarding our market risks, see Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2016.

Item 4.Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective.  There have been no changes in our internal control over financial reporting in the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.Legal Proceedings

In June 2010, we received a Request for Information from the United States Environmental Protection Agency (“EPA”) pursuant to Section 308 of the Clean Water Act. The request sought information about storm water discharge practices in connection with homebuilding projects completed or underway by us in New York and New Jersey. We cooperated with this request, and provided information to the EPA. We were subsequently informed by the United States Department of Justice (“DOJ”) that the EPA forwarded the information on the matter to the DOJ.  We have entered a consent decree with the EPA and DOJ to settle this matter.  The consent decree includes injunctive relief and payment of a civil penalty, which was accrued as of June 30, 2017.  The consent decree has been submitted for approval in the U.S. District Court for the District of New Jersey. We believe the disposition of this matter will not have a material adverse effect on our results of operations and liquidity or on our financial condition.

We are also involved in various other litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on our financial position, results of operations or cash flows. Legal costs incurred in connection with outstanding litigation are expensed as incurred.

Item 1A.Risk Factors

There have been no material changes to the risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016.

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

            (dollars in thousands, except per share data)

We had two share repurchase authorizations outstanding during the quarter ended June 30, 2017. On November 2, 2016, and February 15, 2017, we publicly announced that our Board of Directors authorized the repurchase of our outstanding common stock in one or more open market and/or privately negotiated transactions, up to an aggregate of $300,000 per authorization.  The repurchase authorizations do not have expiration dates.  We repurchased the following shares of our common stock during the second quarter of 2017:

Period	TotalNumber ofShares Purchased		Average Price Paid per Share		TotalNumberof SharesPurchased asPartofPublicly AnnouncedPlans orPrograms		MaximumNumber (or Approximate DollarValue)of SharesthatMayYet BePurchasedUnder thePlansor Programs
April 1 - 30, 2017		—	$	—		—	$	398,314
May 1 - 31, 2017		18,399	$	2,131.41		18,399	$	359,098
June 1 - 30, 2017		14,441	$	2,405.86		14,441	$	324,355
Total		32,840	$	2,252.09		32,840

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Item 6.	Exhibits
	(a) Exhibits
		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit Number	Filing Date
10.1	Ninth Amendment to Amended and Restated Master Repurchase Agreement dated July 26, 2017, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.  Filed herewith.
31.1	Certification of NVR’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2	Certification of NVR’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32	Certification of NVR’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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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.

		NVR, Inc.
Date:  July 28, 2017	By:	/s/ Daniel D. Malzahn
		Daniel D. Malzahn
		Senior Vice President, Chief Financial Officer and Treasurer

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Exhibit Index

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File Number	Exhibit Number	Filing Date
10.1	Ninth Amendment to Amended and Restated Master Repurchase Agreement dated July 26, 2017, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.  Filed herewith.
31.1	Certification of NVR’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
31.2	Certification of NVR’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.
32	Certification of NVR’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

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EX-10.1

Exhibit 10.1

NINTH AMENDMENT TO AMENDED AND RESTATED
MASTER REPURCHASE AGREEMENT

THIS NINTH AMENDMENT TO AMENDED AND RESTATED MASTER REPURCHASE AGREEMENT (this “Amendment”), dated as of July 26, 2017 (the “Effective Date”), is made and entered into among NVR MORTGAGE FINANCE, INC., a Virginia corporation (the “Seller”), U.S. BANK NATIONAL ASSOCIATION, as agent (in such capacity, the “Agent”) and a Buyer, and the other Buyers (the “Buyers”).

RECITALS

A.The Seller and the Buyers are parties to an Amended and Restated Master Repurchase Agreement dated as of August 2, 2011 as amended by a First Amendment to Amended and Restated Master Repurchase Agreement dated as of August 1, 2012, a Second Amendment to Amended and Restated Master Repurchase Agreement dated as of November 13, 2012, a Third Amendment to Amended and Restated Master Repurchase Agreement dated as of November 29, 2012, a Fourth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 31, 2013, a Fifth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 30, 2014, a Sixth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 29, 2015, a Seventh Amendment to Amended and Restated Master Purchase Agreement dated as of January 18, 2016, and an Eighth Amendment to Amended and Restated Master Purchase Agreement dated as of July 27, 2016 (as further amended, restated or otherwise modified from time to time, the “Repurchase Agreement”); and

B.The Seller and the Buyers now desire to amend certain provisions of the Repurchase Agreement as set forth herein.

AGREEMENT

In consideration of the premises herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, all parties hereto agree as follows:

Section 1.Definitions.  Capitalized terms used and not otherwise defined in this Amendment have the meanings specified in the Repurchase Agreement.

Section 2.Amendments.  The Repurchase Agreement is hereby amended as follows:  

2.1Definitions.  Section 1.2 of the Repurchase Agreement is hereby amended by adding or amending and restating, as applicable, the following defined terms to read in their entireties as follows:

“Buyers’ Margin Percentage” means:

(a) for all Eligible Loans except Mortgage Loans (USBHM), Jumbo Mortgage Loans, Super Jumbo Mortgage

Loans, High LTV Mortgage Loans, State Housing Bond Mortgage Loansand Rural Development Guaranteed Housing Loans, ninety-eight percent (98%);

(b) for Mortgage Loans (USBHM), one hundred percent (100%);

(c) for Jumbo Mortgage Loans other than Mortgage Loans (USBHM), ninety-five percent (95%);

(d) for Super Jumbo Mortgage Loans other than Mortgage Loans (USBHM), ninety-three percent (93%);

(e) for High LTV Mortgage Loans and State Housing Bond Mortgage Loans, ninety-seven percent (97%);

(f) for Rural Development Guaranteed Housing Loans other than Mortgage Loans (USBHM), ninety-two percent (92%); and

(g) for Wet Loans, the Buyer’s Margin Percentage for the underlying type of Purchased Loan that would apply if such Purchased Loan were a Dry Loan.

“Conforming Mortgage Loan” means a conventional first-priority Single-family Loan that is either (i) VA guaranteed, (ii) FHA insured (including FHA insured Mortgage Loans that are high balance Mortgage Loans with required down payment levels and FHA 203k loans), or (iii) a conventional mortgage loan that fully conforms to all Fannie Mae and Freddie Mac underwriting and other requirements, excluding expanded criteria loans as defined under any Agency program.

“LIBOR Margin” means 2.125%.

“Jumbo Mortgage Loan” means a conventional Mortgage Loan that would otherwise be an Agency Conforming Mortgage Loan (and is not an FHA or VA Mortgage Loan) secured by a first Lien Mortgage except that the original principal amount is more than the maximum Agency loan amount but not more than One Million Dollars ($1,000,000).

“Super Jumbo Mortgage Loan” means a conventional Mortgage Loan that would otherwise be an Agency Conforming Mortgage Loan (and is not an FHA or VA Mortgage Loan) secured by a first Lien Mortgage except that the original principal amount is greater than One Million Dollars ($1,000,000) but not more than Two Million Dollars ($2,000,000).

2

2

“Termination Date” means the earlier of (i) July 25, 2018, and (ii) the date when the Buyers’ Commitments are terminated pursuant to this Agreement, by order of any Governmental Authority or by operation of law.

2.2Seller Request.  Section 3.1(a) of the Repurchase Agreement is amended and restated in its entirety as follows:

(a)Any request to enter into a Transaction shall be made by notice to the Agent at the initiation of the Seller.  To request a Transaction, the Seller shall deliver to the Agent and the Custodian the Mortgage Loan Transmission File for each of the Eligible Loans subject to the Transaction by electronic transmission.  The Seller shall submit no more than six (6) Mortgage Transmission Files on any Business Day, unless otherwise agreed by the Agent.  

2.3Transactions Sublimits. Section 4.2 of the Repurchase Agreement is amended and restated in its entirety as follows:

4.2. Transaction Sublimits

The following sublimits shall also be applicable to the Transactions hereunder such that after giving effect to any proposed Transaction and after giving effect to any repurchase, addition or substitution of any Mortgage Loan hereunder, the following shall be true (subject, in each case, to the Agent’s discretionary authority under Section 22.5):

(a) The Aggregate Outstanding Purchase Price of Conforming Mortgage Loans may be as much as one hundred percent (100%) of the Maximum Aggregate Commitment.

(b) The Aggregate Outstanding Purchase Price of all Purchased Loans that are Wet Loans shall not exceed (x) seventy-five percent (75%) of the Maximum Aggregate Commitment on any of the first five and last five Business Days of any month or (y) forty percent (40%) of the Maximum Aggregate Commitment on any other day (the “Wet Loans Sublimit”).

(c) The Aggregate Outstanding Purchase Price of all Purchased Loans that are of the type listed in the first column of the following table shall not exceed the percentage of the Maximum Aggregate Commitment listed in the second column of the table (the name of the Sublimit is set forth in the third column); provided, that such sublimits shall not apply to any Mortgage Loan (USBHM):

Type of Purchased Loan	Maximum Percentage of Maximum Aggregate Commitment	Name of Sublimit
High LTV Mortgage Loans	15%	“High LTV Mortgage Loans Sublimit”

3

3

Super Jumbo Mortgage Loans	10%	“Super Jumbo Mortgage Loans Sublimit”
Jumbo Mortgage Loans and Super Jumbo Mortgage Loans, collectively	25%	“Jumbo Mortgage Loans Sublimit”
Rural Development Guaranteed Housing Loans	50%	“Rural Development Guaranteed Housing Loans Sublimit”
State Housing Bond Mortgage Loan	25%	“State Housing Bond Mortgage Loan Sublimit”

(d)[Intentionally Omitted.].

2.4Negative Covenants.  Section 17 of the Repurchase Agreement is amended by amending and restating the introductory paragraph thereto to read in its entirety as follows:

Except with the prior written consent of the Required Buyers, the Seller shall comply (both directly and indirectly) with the following negative covenants, for so long as the Commitments are outstanding or until all of the Purchased Loans have been repurchased by the Seller and none of the Seller’s Obligations remain to be paid or performed under this Agreement or any of the other Repurchase Documents:

2.5Approved Investors.  Schedule AI to the Repurchase Agreement is amended and restated in its entirety to read as set forth on Schedule AI to this Amendment.

Section 3.Representations, Warranties, Authority, No Adverse Claim.  

3.1Reassertion of Representations and Warranties, No Default.  The Seller hereby represents and warrants that on and as of the date hereof and after giving effect to this Amendment (a) all of the representations and warranties in the Repurchase Agreement are true, correct, and complete in all respects as of the date hereof as though made on and as of such date, except for changes permitted by the terms of the Repurchase Agreement, and (b) there will exist no Default or Event of Default under the Repurchase Agreement, as amended by this Amendment, on such date that the Buyers have not waived.  

3.2Authority, No Conflict, No Consent Required.  The Seller represents and warrants that it has the power, legal right, and authority to enter into this Amendment and has duly authorized by proper corporate action the execution and delivery of this Amendment and none of the agreements herein contravenes or constitutes a default under any agreement, instrument, or indenture to which the Seller is a party or a signatory, any

4

4

provision of the Seller’s articles of incorporation or bylaws, or any other agreement or requirement of law or results in the imposition of any Lien on any of its property under any agreement binding on or applicable to the Seller or any of its property except, if any, in favor of the Buyers.  The Seller represents and warrants that no consent, approval, or authorization of or registration or declaration with any Person, including but not limited to any governmental authority, is required in connection with the execution and delivery by the Seller of this Amendment or the performance of obligations of the Seller herein described, except for those that the Seller has obtained or provided and as to which the Seller has delivered certified copies of documents evidencing each such action to the Buyers.

3.3No Adverse Claim.  The Seller hereby warrants, acknowledges, and agrees that no events have taken place and no circumstances exist at the date hereof that would give the Seller a basis to assert a defense, offset, or counterclaim to any claim of the Agent or the Buyers with respect to the Seller’s obligations under the Repurchase Agreement as amended by this Amendment.

Section 4.Conditions Precedent.  The effectiveness of the amendments hereunder shall be subject to satisfaction of the following conditions precedent:

4.1The Agent shall have received the following documents in a quantity sufficient that the Seller and each Buyer may each have a fully executed original of each such document:

(a)this Amendment duly executed by the Seller, the Agent, and the Buyers;

(b)a certificate of the Secretary or an Assistant Secretary of the Seller certifying (i) that there has been no change to Seller’s articles of incorporation or bylaws since copies of the same were delivered to the Agent on August 5, 2008; (ii) as to a copy attached thereto of resolutions authorizing the execution, delivery, and performance of this Amendment, and the other documents and agreements executed and delivered in connection herewith; and (iii) as to the names, incumbency, and specimen signatures of the persons authorized to execute this Amendment on behalf of the Seller; and

(c)such other documents as the Agent reasonably requests.

4.2The Seller shall have paid any outstanding Agent’s Fees and any other fees then due under Article 9 of the Repurchase Agreement.

Section 5.Miscellaneous.

5.1Ratifications.  The terms and provisions set forth in this Amendment shall modify and supersede all inconsistent terms and provisions set forth in the Repurchase Agreement and the other Repurchase Documents.  Except as expressly modified and superseded by this Amendment, the terms and provisions of the Repurchase Agreement

5

5

and each other Repurchase Document are ratified and confirmed and shall continue in full force and effect.

5.2Survival.  The representations and warranties made by the Seller in this Amendment shall survive the execution and delivery of this Amendment.

5.3Reference to Repurchase Agreement.  Each of the Repurchase Documents, including the Repurchase Agreement and any and all other agreements, documents, or instruments now or hereafter executed and delivered pursuant to the terms hereof or pursuant to the terms of the Repurchase Agreement as amended hereby, is hereby amended so that any reference in such Repurchase Document to the Repurchase Agreement shall refer to the Repurchase Agreement as amended and modified hereby.

5.4Applicable Law.  This Amendment shall be governed by and construed in accordance with the laws of the State of New York as applicable to the Repurchase Agreement.

5.5Successors and Assigns.  This Amendment is binding upon and shall inure to the benefit of the Agent, the Buyers, the Seller, and their respective successors and assigns, except that the Seller may not assign or transfer any of its rights or obligations hereunder without the prior written consent of each of the Buyers.

5.6Counterparts.  This Amendment may be executed in one or more counterparts, each of which when so executed shall be deemed to be an original, but all of which when taken together shall constitute one and the same instrument.

5.7Headings.  The headings, captions, and arrangements used in this Amendment are for convenience only and shall not affect the interpretation of this Amendment.

5.8ENTIRE AGREEMENT.  THIS AMENDMENT AND THE OTHER REPURCHASE DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO, AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

6

6

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed as of the date first written above.

	NVR MORTGAGE FINANCE, Inc., as Seller
By:	/s/ Robert W. Henley
Name:	Robert W. Henley
Title:	President

[Signature Page 1 to Ninth Amendment to
Amended and Restated Master Repurchase Agreement]

	U.S. BANK NATIONAL ASSOCIATION, as Agent and as a Buyer
By:	/s/ Kathleen Connor
Name:	Kathleen Connor
Title:	Senior Vice President

[Signature Page 2 to Ninth Amendment to
Amended and Restated Master Repurchase Agreement]

SCHEDULE AI to

NINTH Amendment to

Amended and Restated

Master Repurchase Agreement

SCHEDULE AI

TO MASTER REPURCHASE AGREEMENT

Approved Investors List
Investor	S&P CP Rating	Moody’s CP Rating	Related Parent Company	Product Approval
Amerihome Mortgage Company	N/A	N/A		Conforming/Non-conforming
BB&T	A-1	P-1	Branch Banking and Trust Company	Conforming/Non-conforming
Caliber Home Loans, Inc.	N/A	N/A		Conforming
Citimortgage, Inc.	A-1	P-1	Citibank, NA	Conforming/Non-conforming
Coastal Federal Credit Union of Raleigh	N/A	N/A		Conforming/Non-conforming
Dollar Bank, FSB	N/A	N/A		Conforming/Non-conforming
Everbank Financial Corp	N/A	N/A		Conforming/Non-conforming
Federal Home Loan Mortgage Corp. (Freddie Mac)	N/A	N.A		Conforming
Federal National Mortgage Assoc. (Fannie Mae)	N/A	N/A		Conforming
Fifth Third Bank	A-2	P-2		Conforming
First Guaranty Mortgage Corporation	N/A	N/A		Conforming
First National Bank of Pennsylvania	N/A	N/A	FNB Corporation	Conforming/Non-conforming
Government National Mortgage Assoc.	N/A	N/A		Conforming
Huntington Bank	N/A	N/A		Conforming/Non-conforming
Impac Mortgage Corp	N/A	N/A		Conforming/Non-conforming
Lakeview Loan Servicing	N/A	N/A		Conforming/Non-conforming
JPMorgan Chase Bank	A-1	P-1	JPMorgan Chase Bank, N.A.	Conforming/Non-conforming
PennyMac Loan Services, LLC	N/A	N/A	PennyMac Mortgage Inv Trust	Conforming/Non-conforming
Pentagon Federal Credit Union	N/A	N/A		Conforming/Non-conforming
Redwood Residential Acquisition Corporation	N/A	N/A		Conforming
Roundpoint Mortgage Servicing Corp	N/A	N/A		Conforming
Sandy Spring Bank	N/A	N/A		Conforming/Non-conforming
Flagstar	N/A	N/A		Conforming
SunTrust Mortgage, Inc.	A-2	P-2	Suntrust Banks, Inc.	Conforming/Non-conforming
US Bank Home Mortgage	A-1	P-1		Conforming/Non-conforming
Wells Fargo Home Mortgage	A-1	P-1	Wells Fargo Bank, N.A.	Conforming/Non-conforming

Sch. AI-1

Housing Agencies
Investor	S&P CP Rating	Moody’s CP Rating	Related Parent Company	Product Approval
Delaware State Housing Authority	N/A	N/A		Conforming
District of Columbia Housing Finance Agency	N/A	N/A		Conforming
Florida Housing Finance Corporation	N/A	N/A		Conforming
Housing Finance Authority of Hillsborough County, FL	N/A	N/A		Conforming
Housing Opportunities Commission	N/A	N/A		Conforming
Illinois Housing Development Authority	N/A	N/A		Conforming
Indiana Housing & Community Development Authority	N/A	N/A		Conforming
Kentucky Housing Corp.	N/A	N/A		Conforming
Maryland Community Development	N/A	N/A		Conforming
New Jersey Housing Finance	N/A	N/A		Conforming
North Carolina Housing Finance	N/A	N/A		Conforming
Ohio Housing Finance Agency	N/A	N/A		Conforming
Pennsylvania Housing Finance	N/A	N/A		Conforming
South Carolina Housing Finance	N/A	N/A		Conforming
State of New York Mortgage Agency	N/A	N/A		Conforming
Tennessee Housing Finance	N/A	N/A		Conforming
Virginia Housing Finance	N/A	N/A		Conforming
West Virginia Housing Finance	N/A	N/A		Conforming
Port of Greater Cincinnati	N/A	N/A		Conforming
National Homebuyer Fund	N/A	N/A		Conforming

Sch. AI-2

EX-31.1

Exhibit 31.1

SARBANES-OXLEY ACT SECTION 302 CERTIFICATIONS

I, Paul C. Saville, certify that:

1. I have reviewed this report on Form 10-Q of NVR, 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 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 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:  July 28, 2017	By:	/s/ Paul C. Saville
		Paul C. Saville
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

SARBANES-OXLEY ACT SECTION 302 CERTIFICATIONS

I, Daniel D. Malzahn, certify that:

1. I have reviewed this report on Form 10-Q of NVR, 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 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 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:  July 28, 2017	By:	/s/ Daniel D. Malzahn
		Daniel D. Malzahn
		Senior Vice President, Chief Financial Officer and Treasurer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of NVR, Inc. for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of NVR, Inc., hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NVR, Inc.

Date:  July 28, 2017	By:	/s/ Paul C. Saville
		Paul C. Saville
		President and Chief Executive Officer
	By:	/s/ Daniel D. Malzahn
		Daniel D. Malzahn
		Senior Vice President, Chief Financial Officer and Treasurer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 24, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	NVR
Entity Registrant Name	NVR INC
Entity Central Index Key	0000906163
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		3,743,620

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents	$ 529,313	$ 396,619
Inventory:
Land under development	46,685
Contract land deposits, net	358,405	379,844
Total assets	2,918,087	2,643,943
LIABILITIES AND SHAREHOLDERS' EQUITY
Total liabilities	1,382,310	1,339,502
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both June 30, 2017 and December 31, 2016	206	206
Additional paid-in capital	1,607,958	1,515,828
Deferred compensation trust – 108,636 and 108,640 shares of NVR, Inc. common stock as of June 30, 2017 and December 31, 2016, respectively	(17,371)	(17,375)
Deferred compensation liability	17,371	17,375
Retained earnings	5,945,219	5,695,376
Less treasury stock at cost – 16,807,724 and 16,862,327 shares as of June 30, 2017 and December 31, 2016, respectively	(6,017,606)	(5,906,969)
Total shareholders' equity	1,535,777	1,304,441
Total liabilities and shareholders' equity	2,918,087	2,643,943
Homebuilding [Member]
ASSETS
Cash and cash equivalents	518,482	375,748
Restricted cash	15,963	17,561
Receivables	22,110	18,937
Inventory:
Lots and housing units, covered under sales agreements with customers	1,155,047	883,868
Unsold lots and housing units	147,195	145,065
Land under development	46,685	46,999
Building materials and other	16,024	16,168
Total Inventory	1,364,951	1,092,100
Assets related to consolidated variable interest entity	1,243	1,251
Contract land deposits, net	358,405	379,844
Property, plant and equipment, net	43,995	45,915
Reorganization value in excess of amounts allocable to identifiable assets, net	41,580	41,580
Goodwill and finite-lived intangible assets, net	1,908	2,599
Other assets	265,539	257,811
Total assets	2,634,176	2,233,346
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	271,899	251,212
Accrued expenses and other liabilities	317,168	336,318
Liabilities related to consolidated variable interest entity	874	882
Customer deposits	165,684	122,236
Senior notes	596,760	596,455
Total liabilities	1,352,385	1,307,103
Mortgage Banking [Member]
ASSETS
Cash and cash equivalents	9,632	19,657
Restricted cash	2,900	1,857
Mortgage loans held for sale, net	241,398	351,958
Inventory:
Property, plant and equipment, net	5,530	4,903
Reorganization value in excess of amounts allocable to identifiable assets, net	7,347	7,347
Other assets	17,104	24,875
Total assets	283,911	410,597
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and other liabilities	29,925	32,399
Total liabilities	$ 29,925	$ 32,399

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Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - $ / shares	Jun. 30, 2017	Dec. 31, 2016
Statement Of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	60,000,000	60,000,000
Common stock, shares issued	20,555,330	20,555,330
Deferred compensation trust, shares	108,636	108,640
Treasury stock, shares	16,807,724	16,862,327

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Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest expense	$ (5,914)	$ (4,814)	$ (11,750)	$ (9,902)
Income before taxes	208,968	144,720	341,129	248,032
Income tax expense	(61,091)	(53,044)	(90,329)	(91,053)
Net income	$ 147,877	$ 91,676	$ 250,800	$ 156,979
Basic earnings per share	$ 39.46	$ 23.51	$ 67.30	$ 40.34
Diluted earnings per share	$ 35.19	$ 22.01	$ 60.36	$ 37.82
Basic weighted average shares outstanding	3,748	3,900	3,726	3,892
Diluted weighted average shares outstanding	4,202	4,165	4,155	4,151
Homebuilding [Member]
Revenues	$ 1,512,714	$ 1,361,741	$ 2,760,301	$ 2,483,245
Other income	1,447	753	2,549	1,520
Cost of sales	(1,218,083)	(1,126,369)	(2,244,100)	(2,052,129)
Selling, general and administrative	(99,100)	(100,043)	(199,004)	(198,058)
Operating income	196,978	136,082	319,746	234,578
Interest expense	(5,641)	(4,554)	(11,219)	(9,396)
Income before taxes	191,337	131,528	308,527	225,182
Mortgage Banking [Member]
Mortgage banking fees	31,778	26,442	61,283	48,964
Interest income	1,554	1,437	3,215	3,111
Other income	506	409	815	667
General and administrative	(15,934)	(14,836)	(32,180)	(29,386)
Interest expense	(273)	(260)	(531)	(506)
Income before taxes	$ 17,631	$ 13,192	$ 32,602	$ 22,850

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income	$ 250,800	$ 156,979
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,494	10,934
Equity-based compensation expense	21,467	21,378
Contract land deposit impairments (recoveries), net	3,567	(1,436)
Gain on sale of loans, net	(47,474)	(36,687)
Mortgage loans closed	(1,772,432)	(1,558,775)
Mortgage loans sold and principal payments on mortgage loans held for sale	1,936,118	1,644,385
Distribution of earnings from unconsolidated joint ventures	3,611	6,135
Net change in assets and liabilities:
Increase in inventory	(272,851)	(240,708)
Decrease (increase) in contract land deposits	17,872	(30,340)
Increase in receivables	(2,888)	(7,406)
(Decrease) increase in accounts payable and accrued expenses	(3,013)	35,357
Increase in customer deposits	43,448	30,781
Other, net	(9,988)	(18,025)
Net cash provided by operating activities	179,731	12,572
Cash flows from investing activities:
Investments in and advances to unconsolidated joint ventures	(455)	(321)
Distribution of capital from unconsolidated joint ventures	4,270	7,003
Purchase of property, plant and equipment	(9,784)	(11,773)
Proceeds from the sale of property, plant and equipment	472	446
Net cash used in investing activities	(5,497)	(4,645)
Cash flows from financing activities:
Purchase of treasury stock	(159,506)	(96,508)
Distributions to partner in consolidated variable interest entity		(150)
Proceeds from the exercise of stock options	117,966	27,909
Net cash used in financing activities	(41,540)	(68,749)
Net increase (decrease) in cash and cash equivalents	132,694	(60,822)
Cash and cash equivalents, beginning of the period	396,619	425,316
Cash and cash equivalents, end of the period	529,313	364,494
Supplemental disclosures of cash flow information:
Interest paid during the period, net of interest capitalized	11,293	9,566
Income taxes paid during the period, net of refunds	$ 99,370	$ 90,078

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Basis of Presentation

6 Months Ended

Jun. 30, 2017

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

The accompanying unaudited, condensed consolidated financial statements include the accounts of NVR, Inc. (“NVR” or the “Company”) and its subsidiaries and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 2 and 3 to the accompanying condensed consolidated financial statements).  Intercompany accounts and transactions have been eliminated in consolidation.  The statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.  In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation have been included.  Operating results for the three and six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

On January 1, 2017, the Company adopted Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation:  Improvements to Employee Share-Based Payment Accounting.  In connection with the adoption of ASU 2016-09, the Company:

• Recorded the excess tax benefit from stock option exercises as a reduction to income tax expense prospectively beginning January 1, 2017.  In the prior year, the excess tax benefit was recorded to additional paid-in capital within shareholders’ equity.  The excess tax benefit recognized during the three months ended June 30, 2017 and 2016 was $16,464 and $2,394, respectively.  The excess tax benefit recognized during the six months ended June 30, 2017 and 2016 was $36,364 and $8,678, respectively.

• Presented the aforementioned excess tax benefit recognized as an operating activity on the statement of cash flows and retrospectively adjusted the prior year Statement of Cash Flows accordingly. In the prior year, the excess tax benefit was recognized as a cash inflow from financing activities and a corresponding cash outflow from operating activities. The retrospective adjustment resulted in an $8,678 increase to net cash provided by operating activities and an $8,678 increase to net cash used in financing activities in the Consolidated Statement of Cash Flows for the six months ended June 30, 2016.

• Made the election to recognize forfeitures of equity-based awards in the period in which they occur.  This election was applied using the modified retrospective transition method, which resulted in the Company recording a cumulative-effect adjustment, net of tax, to reduce beginning retained earnings by $957.  In the prior year, the Company estimated forfeitures based on its historical forfeiture rate.

No other adjustments were made as a result of the adoption of ASU 2016-09.

The Company also adopted ASU 2015-11, Inventory – Simplifying the Measurement of Inventory effective January 1, 2017.  The standard requires inventory to be measured at the lower of cost or net realizable value.  Under prior GAAP, impaired inventory was written down to net realizable value less a normal profit margin.  Under the new standard, impaired inventory will only be written down to the net realizable value. ASU 2015-11 was adopted prospectively and did not have a material effect on the Company’s consolidated financial statements.

For the three and six months ended June 30, 2017 and 2016, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements.

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Variable Interest Entities

6 Months Ended

Jun. 30, 2017

Variable Interest Entity Reporting Entity Involvement Maximum Loss Exposure [Abstract]

Variable Interest Entities

2. Variable Interest Entities

Fixed Price Finished Lot Purchase Agreements (“Lot Purchase Agreements”)

NVR generally does not engage in the land development business.  Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements.  The Lot Purchase Agreements require deposits that may be forfeited if NVR fails to perform under the Lot Purchase Agreements.  The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots.

NVR believes this lot acquisition strategy reduces the financial requirements and risks associated with direct land ownership and land development.  NVR may, at its option, choose for any reason and at any time not to perform under these Lot Purchase Agreements by delivering notice of its intent not to acquire the finished lots under contract.  NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained within the Lot Purchase Agreements.  In other words, if NVR does not perform under a Lot Purchase Agreement, NVR loses only its deposit.  None of the creditors of any of the development entities with which NVR enters Lot Purchase Agreements have recourse to the general credit of NVR.  NVR generally does not have any specific performance obligations to purchase a certain number or any of the lots, nor does NVR guarantee completion of the development by the developer or guarantee any of the developers’ financial or other liabilities.

NVR is not involved in the design or creation of the development entities from which the Company purchases lots under Lot Purchase Agreements.  The developer’s equity holders have the power to direct 100% of the operating activities of the development entity.  NVR has no voting rights in any of the development entities.  The sole purpose of the development entity’s activities is to generate positive cash flow returns for the equity holders.  Further, NVR does not share in any of the profit or loss generated by the project’s development.  The profits and losses are passed directly to the developer’s equity holders.

The deposit placed by NVR pursuant to the Lot Purchase Agreement is deemed to be a variable interest in the respective development entities.  Those development entities are deemed to be variable interest entities (“VIE”).  Therefore, the development entities with which NVR enters into Lot Purchase Agreements, including the joint venture limited liability corporations discussed below, are evaluated for possible consolidation by NVR.  An enterprise must consolidate a VIE when that enterprise has a controlling financial interest in the VIE.  An enterprise is deemed to have a controlling financial interest if it has (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE.

NVR believes the activities that most significantly impact a development entity’s economic performance are the operating activities of the entity.  The development entity’s equity investors bear the full risk during the development process. Unless and until a development entity completes finished building lots through the development process, the entity does not earn any revenues.  The operating development activities are managed solely by the development entity’s equity investors.

The development entities with which NVR contracts to buy finished lots typically select the respective projects, obtain the necessary zoning approvals, obtain the financing required with no support or guarantees from NVR, select who will purchase the finished lots and at what price, and manage the completion of the infrastructure improvements, all for the purpose of generating a cash flow return to the development entity’s equity holders and all independent of NVR.  The Company possesses no more than limited protective legal rights through the Lot Purchase Agreement in the specific finished lots that it is purchasing, and NVR possesses no participative rights in the development entities.  Accordingly, NVR does not have the power to direct the activities of a developer that most significantly impact the developer’s economic performance.  For this reason, NVR has concluded that it is not the primary beneficiary of the development entities with which the Company enters into Lot Purchase Agreements, and therefore, NVR does not consolidate any of these VIEs.

As of June 30, 2017, NVR controlled approximately 79,100 lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately $380,900 and $2,400, respectively.  As noted above, NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained in the Lot Purchase Agreements.

In addition, NVR has certain properties under contract with land owners that are expected to yield approximately 8,400 lots, which are not included in the number of total lots controlled.  Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with deposits in cash and letters of credit totaling approximately $11,600 and $200, respectively, as of June 30, 2017, of which approximately $5,500 is refundable if certain contractual conditions are not met.  NVR generally expects to assign the raw land contracts to a land developer and simultaneously enter into a Lot Purchase Agreement with the assignee if the project is determined to be feasible.

NVR’s total risk of loss related to contract land deposits as of June 30, 2017 and December 31, 2016 was as follows:

	June 30, 2017			December 31, 2016
Contract land deposits	$	392,503		$	411,150
Loss reserve on contract land deposits		(34,098	)		(31,306	)
Contract land deposits, net		358,405			379,844
Contingent obligations in the form of letters of credit		2,575			2,379
Specific performance obligations (1)		1,505			1,505
Total risk of loss	$	362,485		$	383,728

(1) As of both June 30, 2017 and December 31, 2016, the Company was committed to purchase 10 finished lots under specific performance obligations.

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Joint Ventures

6 Months Ended

Jun. 30, 2017

Equity Method Investments And Joint Ventures [Abstract]

Joint Ventures

3. Joint Ventures

On a limited basis, NVR obtains finished lots using joint venture limited liability corporations (“JVs”). The JVs are typically structured such that NVR is a non-controlling member and is at risk only for the amount the Company has invested, or has committed to invest, in addition to any deposits placed under Lot Purchase Agreements with the joint venture. NVR is not a borrower, guarantor or obligor on any debt of the JVs, as applicable. The Company enters into Lot Purchase Agreements to purchase lots from these JVs, and as a result has a variable interest in these JVs.

At June 30, 2017, the Company had an aggregate investment totaling approximately $44,000 in six JVs that are expected to produce approximately 7,350 finished lots, of which approximately 4,050 lots were controlled by the Company and the remaining approximately 3,300 lots were either under contract with unrelated parties or not currently under contract. In addition, NVR had additional funding commitments totaling approximately $5,800 in the aggregate to three of the JVs at June 30, 2017. The Company has determined that it is not the primary beneficiary of five of the JVs because either NVR and the other JV partner share power or the other JV partner has the controlling financial interest. The aggregate investment in unconsolidated JVs was approximately $43,600 and $49,000 at June 30, 2017 and December 31, 2016, respectively, and is reported in the “Other assets” line item on the accompanying condensed consolidated balance sheets. For the remaining JV, NVR has concluded that it is the primary beneficiary because the Company has the controlling financial interest in the JV.

The condensed balance sheets as of June 30, 2017 and December 31, 2016 of the consolidated JV were as follows:

	June 30, 2017		December 31, 2016
Assets:
Cash	$	1,199	$	1,214
Other assets		44		37
Total assets	$	1,243	$	1,251
Liabilities and equity:
Accrued expenses	$	542	$	550
Equity		701		701
Total liabilities and equity	$	1,243	$	1,251

The Company recognizes income from the JVs as a reduction to the lot cost of the lots purchased from the respective JVs when the homes are settled and is based on the expected total profitability and the total number of lots expected to be produced by the respective JVs. Distributions received from the unconsolidated JVs are allocated between return of capital and distributions of earnings based on the ratio of capital contributed by NVR to the total expected returns for the respective JVs, and are classified within the accompanying condensed consolidated statements of cash flows as cash flows from investing activities and operating activities, respectively.

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Land Under Development

6 Months Ended

Jun. 30, 2017

Real Estate [Abstract]

Land Under Development

4. Land Under Development

On a limited basis, NVR directly acquires raw land parcels already zoned for its intended use to develop into finished lots.  Land under development includes the land acquisition costs, direct improvement costs, capitalized interest where applicable, and real estate taxes.

In January 2017, the Company purchased a raw land parcel for approximately $14,400.  The parcel is expected to produce approximately 90 lots.

As of June 30, 2017, NVR directly owned a total of four separate raw land parcels with a carrying value of $46,685 that are expected to produce approximately 550 finished lots. The Company also has additional funding commitments of approximately $10,000 under a joint development agreement related to one parcel, a portion of which the Company expects will be offset by development credits of approximately $5,400.

None of the raw parcels had any indicators of impairment as of June 30, 2017. Based on market conditions, NVR may on a limited basis continue to directly acquire additional raw parcels to develop into finished lots.

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Capitalized Interest

6 Months Ended

Jun. 30, 2017

Interest Costs Incurred Capitalized [Abstract]

Capitalized Interest

5. Capitalized Interest

The Company capitalizes interest costs to land under development during the active development of finished lots.  In addition, the Company capitalizes interest costs to its joint venture investments while the investments are considered qualified assets pursuant to Accounting Standards Codification 835-20, Interest. Capitalized interest is transferred to sold or unsold inventory as the development of finished lots is completed, then charged to cost of sales upon the Company’s settlement of homes and the respective lots.  Interest incurred in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred. NVR’s interest costs incurred, capitalized, expensed and charged to cost of sales during the three and six months ended June 30, 2017 and 2016 was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Interest capitalized, beginning of period	$	5,564		$	5,358		$	5,106		$	4,434
Interest incurred		6,580			6,397			13,139			12,785
Interest charged to interest expense		(5,914	)		(4,814	)		(11,750	)		(9,902	)
Interest charged to cost of sales		(278	)		(2,365	)		(543	)		(2,741	)
Interest capitalized, end of period	$	5,952		$	4,576		$	5,952		$	4,576

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Earnings per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Earnings per Share

6. Earnings per Share

The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Weighted average number of shares outstanding used to calculate basic EPS		3,748		3,900		3,726		3,892
Dilutive securities:
Stock options and restricted share units		454		265		429		259
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS		4,202		4,165		4,155		4,151

The following stock options and restricted share units issued under equity incentive plans were outstanding during the three and six months ended June 30, 2017 and 2016, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Anti-dilutive securities		9		78		15		78

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Shareholders' Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Shareholders' Equity

7. Shareholders’ Equity

A summary of changes in shareholders’ equity is presented below:

	Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Deferred Compensation Trust			Deferred Compensation Liability			Total
Balance, December 31, 2016	$	206	$	1,515,828		$	5,695,376		$	(5,906,969	)	$	(17,375	)	$	17,375		$	1,304,441
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax		—		1,566			(957	)		—			—			—			609
Net income		—		—			250,800			—			—			—			250,800
Deferred compensation activity		—		—			—			—			4			(4	)		—
Purchase of common stock for treasury		—		—			—			(159,506	)		—			—			(159,506	)
Equity-based compensation		—		21,467			—			—			—			—			21,467
Proceeds from stock options exercised		—		117,966			—			—			—			—			117,966
Treasury stock issued upon option exercise and restricted share vesting		—		(48,869	)		—			48,869			—			—			—
Balance, June 30, 2017	$	206	$	1,607,958		$	5,945,219		$	(6,017,606	)	$	(17,371	)	$	17,371		$	1,535,777

The Company repurchased 84 shares of its common stock during the six months ended June 30, 2017. The Company settles stock option exercises and vesting of restricted share units by issuing shares of treasury stock.  Approximately 138 shares were issued from the treasury account during the six months ended June 30, 2017 in settlement of stock option exercises and vesting of restricted share units.  Shares are relieved from the treasury account based on the weighted average cost basis of treasury shares acquired.

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Product Warranties

6 Months Ended

Jun. 30, 2017

Product Warranties Disclosures [Abstract]

Product Warranties

8. Product Warranties

The Company establishes warranty and product liability reserves (“Warranty Reserve”) to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to NVR’s homebuilding business.  Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases.  The following table reflects the changes in the Company’s Warranty Reserve during the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Warranty reserve, beginning of period	$	93,503		$	86,692		$	93,895		$	87,407
Provision		13,206			12,867			22,167			21,709
Payments		(11,315	)		(11,606	)		(20,668	)		(21,163	)
Warranty reserve, end of period	$	95,394		$	87,953		$	95,394		$	87,953

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Segment Disclosures

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Disclosures

9. Segment Disclosures

The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as a single 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, Florida and Tennessee

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 the Company’s cost of capital.  In addition, certain assets, including goodwill and intangible assets and consolidation adjustments as discussed further below, are not allocated to the operating segments as those assets are neither included in the operating segment’s corporate capital allocation charge, nor in the CODM’s evaluation of the operating segment’s performance.  The Company records 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 charged to the operating segment upon the determination to terminate a Lot Purchase Agreement with the developer, or to restructure a Lot Purchase Agreement 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.  NVR’s overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to the Company’s 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 the Company’s operating segments.  External corporate interest expense primarily consists of interest charges on the Company’s 3.95% Senior Notes due 2022 (the “Senior Notes”) and is 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues:
Homebuilding Mid Atlantic	$	872,148	$	772,147	$	1,594,416	$	1,405,718
Homebuilding North East		127,541		108,766		233,771		205,919
Homebuilding Mid East		313,237		306,257		556,268		550,534
Homebuilding South East		199,788		174,571		375,846		321,074
Mortgage Banking		31,778		26,442		61,283		48,964
Total consolidated revenues	$	1,544,492	$	1,388,183	$	2,821,584	$	2,532,209

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Profit before taxes:
Homebuilding Mid Atlantic	$	100,621		$	63,730		$	165,109		$	110,339
Homebuilding North East		14,112			5,578			23,218			9,643
Homebuilding Mid East		35,986			30,056			58,145			52,789
Homebuilding South East		22,911			15,825			37,481			28,611
Mortgage Banking		18,004			13,973			33,957			24,348
Total segment profit before taxes		191,634			129,162			317,910			225,730
Reconciling items:
Contract land deposit reserve adjustment (1)		(2,064	)		1,307			(2,792	)		2,636
Equity-based compensation expense		(10,878	)		(10,829	)		(21,467	)		(21,378	)
Corporate capital allocation (2)		49,646			46,259			95,833			90,574
Unallocated corporate overhead		(23,360	)		(26,517	)		(50,594	)		(56,026	)
Consolidation adjustments and other		9,614			9,877			13,427			15,862
Corporate interest expense		(5,624	)		(4,539	)		(11,188	)		(9,366	)
Reconciling items sub-total		17,334			15,558			23,219			22,302
Consolidated profit before taxes	$	208,968		$	144,720		$	341,129		$	248,032

	June 30, 2017			December 31, 2016
Assets:
Homebuilding Mid Atlantic	$	1,177,147		$	1,054,779
Homebuilding North East		148,272			126,720
Homebuilding Mid East		274,846			222,736
Homebuilding South East		263,780			214,225
Mortgage Banking		276,564			403,250
Total segment assets		2,140,609			2,021,710
Reconciling items:
Consolidated variable interest entity		1,243			1,251
Cash and cash equivalents		518,482			375,748
Deferred taxes		176,401			170,652
Intangible assets and goodwill		50,835			51,526
Contract land deposit reserve		(34,098	)		(31,306	)
Consolidation adjustments and other		64,615			54,362
Reconciling items sub-total		777,478			622,233
Consolidated assets	$	2,918,087		$	2,643,943

(1) This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.

(2) 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Corporate capital allocation charge:
Homebuilding Mid Atlantic	$	31,005	$	28,766	$	60,130	$	55,951
Homebuilding North East		4,133		4,447		7,947		9,400
Homebuilding Mid East		7,535		7,458		14,277		14,157
Homebuilding South East		6,973		5,588		13,479		11,066
Total	$	49,646	$	46,259	$	95,833	$	90,574

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Fair Value

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value

10. Fair Value

GAAP assigns a fair value hierarchy to the inputs used to measure fair value.  Level 1 inputs are quoted prices in active markets for identical assets and liabilities.  Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly.  Level 3 inputs are unobservable inputs.

Financial Instruments

The estimated fair value of NVR’s Senior Notes as of June 30, 2017 was $630,000.  The estimated fair value is based on recent market prices of similar transactions, which is classified as Level 2 within the fair value hierarchy.  The carrying value of the Senior Notes was $596,760 at June 30, 2017.  Except as otherwise noted below, NVR believes that insignificant differences exist between the carrying value and the fair value of its financial instruments, which consist of cash equivalents, due to their short term nature.

Derivative Instruments and Mortgage Loans Held for Sale

In the normal course of business, NVR’s wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”), enters into contractual commitments to extend credit to NVR’s homebuyers with fixed expiration dates.  The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by NVRM.  All mortgagors are evaluated for credit worthiness prior to the extension of the commitment.  Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to a broker/dealer.  To mitigate the effect of the interest rate risk inherentin providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers.  The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments.  NVRM does not engage in speculative or trading derivative activities.  Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers are undesignated derivatives and, accordingly, are marked to fair value through earnings.  At June 30, 2017, there were contractual commitments to extend credit to borrowers aggregating $655,409 and open forward delivery contracts aggregating $777,148, which hedge both the rate lock loan commitments and closed loans held for sale.

The fair value of NVRM’s rate lock commitments to borrowers and the related input levels include, as applicable:

i) the assumed gain/loss of the expected resultant loan sale (Level 2);

ii) the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and

iii) the value of the servicing rights associated with the loan (Level 2).

The assumed gain/loss considers the excess servicing to be received or buydown fees to be paid upon securitization of the loan.  The excess servicing and buydown fees are calculated pursuant to contractual terms with investors.  To calculate the effects of interest rate movements, NVRM utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount.  NVRM sells all of its loans on a servicing released basis, and receives a servicing released premium upon sale.  Thus, the value of the servicing rights, which averaged 111 basis points of the loan amount as of June 30, 2017, is included in the fair value measurement and is based upon contractual terms with investors and varies depending on the loan type.  NVRM assumes an approximate 15% fallout rate when measuring the fair value of rate lock commitments.  Fallout is defined as locked loan commitments for which NVRM does not close a mortgage loan and is based on historical experience.

The fair value of NVRM’s forward sales contracts to broker/dealers solely considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2).  The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold.  Fair value is measured using Level 2 inputs.  The fair value of loans held for sale of $241,398 included on the accompanying condensed consolidated balance sheet has been increased by $1,057 from the aggregate principal balance of $240,341.

The undesignated derivative instruments are included on the accompanying condensed consolidated balance sheet, as of June 30, 2017, as follows:

	Fair Value		Balance Sheet Location
Rate lock commitments:
Gross assets	$	6,559
Gross liabilities		5,048
Net rate lock commitments	$	1,511	NVRM - Other assets
Forward sales contracts:
Gross assets	$	3,003
Gross liabilities		26
Net forward sales contracts	$	2,977	NVRM - Other assets

The fair value measurement as of June 30, 2017 was as follows:

	Notional or Principal Amount		Assumed Gain/(Loss) From Loan Sale			Interest Rate Movement Effect			Servicing Rights Value		Security Price Change		Total Fair Value Measurement Gain/(Loss)
Rate lock commitments	$	655,409	$	(2,645	)	$	(2,111	)	$	6,267	$	—	$	1,511
Forward sales contracts	$	777,148		—			—			—		2,977		2,977
Mortgages held for sale	$	240,341		(997	)		(549	)		2,603		—		1,057
Total fair value measurement			$	(3,642	)	$	(2,660	)	$	8,870	$	2,977	$	5,545

For the three and six months ended June 30, 2017, NVRM recorded a fair value adjustment to income of $3,376 and $1,359, respectively.  For the three and six months ended June 30, 2016, NVRM recorded a fair value adjustment to income of $589 and a fair value adjustment to expense of $67, respectively.  Unrealized gains/losses from the change in the fair value measurements are included in earnings as a component of mortgage banking fees in the accompanying condensed consolidated statements of income.  The fair value measurement will be impacted in the future by the change in the value of the servicing rights, interest rate movements, security price fluctuations, and the volume and product mix of NVRM’s closed loans and locked loan commitments.

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Debt

6 Months Ended

Jun. 30, 2017

Debt Disclosure [Abstract]

Debt

11. Debt

Senior Notes

As of June 30, 2017, the Company had Senior Notes outstanding with a principal balance of $600,000. The Senior Notes mature on September 15, 2022 and bear interest at 3.95%, payable semi-annually in arrears on March 15 and September 15. The Senior Notes were issued at a discount to yield 3.97% and have been reflected net of the unamortized discount and unamortized debt issuance costs in the accompanying condensed consolidated balance sheet.

Credit Agreement

NVR has an unsecured Credit Agreement (the “Credit Agreement”), which provides for aggregate revolving loan commitments of $200,000 (the “Facility”). Under the Credit Agreement, the Company may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments.  The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit, of which approximately $8,600 was outstanding at June 30, 2017, and a $25,000 sublimit for a swing line commitment. The Credit Agreement termination date is July 15, 2021. There was no debt outstanding under the Facility at June 30, 2017.

Repurchase Agreement

NVRM provides for its mortgage origination and other operating activities using cash generated from its operations, borrowings from its parent company, NVR, as well as a revolving mortgage repurchase agreement (the “Repurchase Agreement”), which is non-recourse to NVR.  The Repurchase Agreement provides for loan purchases up to $150,000, subject to certain sub-limits, and provides for an incremental commitment pursuant to which NVRM may from time to time request increases in the total commitment available under the Repurchase Agreement by up to $50,000 in the aggregate. Amounts outstanding under the Repurchase Agreement are collateralized by the Company’s mortgage loans held for sale. The Repurchase Agreement was renewed in July 2017 with materially consistent terms and conditions and expires onJuly 25, 2018. At June 30, 2017, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. There was no debt outstanding under the Repurchase Agreement at June 30, 2017.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2017

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

12. Commitments and Contingencies

In June 2010, the Company received a Request for Information from the United States Environmental Protection Agency (“EPA”) pursuant to Section 308 of the Clean Water Act. The request sought information about storm water discharge practices in connection with homebuilding projects completed or underway by the Company in New York and New Jersey. The Company cooperated with this request, and provided information to the EPA. The Company was subsequently informed by the United States Department of Justice (“DOJ”) that the EPA forwarded the information on the matter to the DOJ. The Company has entered a consent decree with the EPA and DOJ to settle this matter. The consent decree includes injunctive relief and payment of a civil penalty, which was accrued as of June 30, 2017. The consent decree has been submitted for approval in the U.S. District Court for the District of New Jersey. The Company believes the disposition of this matter will not have a material adverse effect on its results of operations and liquidity or on its financial condition.

The Company and its subsidiaries are also involved in various other litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. Legal costs incurred in connection with outstanding litigation are expensed as incurred.

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Income Taxes

6 Months Ended

Jun. 30, 2017

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The Company’s effective tax rate for the three and six months ended June 30, 2017 was 29.2% and 26.5%, respectively.  For both the three and six months ended June 30, 2016, the Company’s effective tax rate was 36.7%.  The 2017 effective tax rate was reduced as a result of the Company’s adoption of ASU 2016-09, which requires the excess tax benefit from stock option exercises to be recorded as a reduction to income tax expense in the period stock options are exercised.  During the three and six months ended June 30, 2017, the Company recognized $16,464 and $36,364, respectively, in excess tax benefits. During the three and six months ended June 30, 2016, excess tax benefits of $2,394 and $8,678, respectively, were recorded to additional paid-in capital within shareholders’ equity.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2017

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

Recent Accounting Pronouncements

14. Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.  The standard will replace most existing revenue recognition guidance in GAAP when it becomes effective. The standard is effective for the Company as of January 1, 2018. The Company plans to adopt the standard using the cumulative effect transition method. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures.

In February 2016, FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on-balance sheet with a liability equal to the present value of lease payments over the lease term and a right-of-use asset for the right to use the underlying asset over the lease term. Lessees will recognize expenses on their income statements in a manner similar to current GAAP. The standard also requires additional disclosures of key information about leasing arrangements. The standard is effective for the Company as of January 1, 2019. The Company believes that the adoption of this standard will have a material effect on both assets and liabilities presented on the balance sheet, and is further evaluating the impact of its adoption.

In June 2016, FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes the way impairment of financial assets is recognized. The standard will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The standard’s provisions will be applied as a cumulative-effect adjustment to beginning retained earnings as of the effective date. The standard is effective for the Company as of January 1, 2020. Early adoption is permitted for annual and interim periods beginning January 1, 2019. The Company is currently evaluating the effect that the standard will have on its consolidated financial statements and related disclosures.

In August 2016, FASB issued ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments. The objective of the standard is to address the diversity in practice of how certain cash receipts and payments are presented on the statement of cash flows. The standard requires that the guidance be applied retrospectively in the first interim and annual periods in which an entity adopts the guidance. The standard is effective for the Company as of January 1, 2018. The Company expects the standard to affect the presentation of the distributions from joint ventures in the consolidated statement of cash flows.

In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. As a result, restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total cash amounts shown on the statement of cash flows. The standard is effective for the Company as of January 1, 2018. The Company does not believe that the adoption of this standard will have a material effect on its consolidated statements of cash flows and related disclosures.

In January 2017, FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard’s objective is to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. Under the amendments in the standard, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would then be recognized, not to exceed the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on January 1, 2020, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures.

In May 2017, FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting.  The amendments in the standard clarify when changes in a share-based payment award must be accounted for as a modification, and will allow entities to make certain changes to share-based payment awards without accounting for them as modifications.  Under the new guidance, entities will only apply modification accounting if there are substantive changes made to share-based payment awards.  If a change made to a share-based payment award does not affect the fair value, vesting conditions and classification as either an equity or liability instrument, modification accounting will not need to be applied.  The standard is effective for the Company on January 1, 2018, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures.

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Variable Interest Entities (Tables)

6 Months Ended

Jun. 30, 2017

Variable Interest Entity Reporting Entity Involvement Maximum Loss Exposure [Abstract]

Total Risk of Loss Related to Contract Land Deposits

NVR’s total risk of loss related to contract land deposits as of June 30, 2017 and December 31, 2016 was as follows:

	June 30, 2017			December 31, 2016
Contract land deposits	$	392,503		$	411,150
Loss reserve on contract land deposits		(34,098	)		(31,306	)
Contract land deposits, net		358,405			379,844
Contingent obligations in the form of letters of credit		2,575			2,379
Specific performance obligations (1)		1,505			1,505
Total risk of loss	$	362,485		$	383,728

(1) As of both June 30, 2017 and December 31, 2016, the Company was committed to purchase 10 finished lots under specific performance obligations.

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Joint Ventures (Tables)

6 Months Ended

Jun. 30, 2017

Consolidated Joint Venture

Schedule Of Equity Method Investments [Line Items]

Condensed Balance Sheets

The condensed balance sheets as of June 30, 2017 and December 31, 2016 of the consolidated JV were as follows:

	June 30, 2017		December 31, 2016
Assets:
Cash	$	1,199	$	1,214
Other assets		44		37
Total assets	$	1,243	$	1,251
Liabilities and equity:
Accrued expenses	$	542	$	550
Equity		701		701
Total liabilities and equity	$	1,243	$	1,251

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Capitalized Interest (Tables)

6 Months Ended

Jun. 30, 2017

Interest Costs Incurred Capitalized [Abstract]

Summary of Interest Costs Incurred, Capitalized, Expensed and Charged to Cost of Sales

NVR’s interest costs incurred, capitalized, expensed and charged to cost of sales during the three and six months ended June 30, 2017 and 2016 was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Interest capitalized, beginning of period	$	5,564		$	5,358		$	5,106		$	4,434
Interest incurred		6,580			6,397			13,139			12,785
Interest charged to interest expense		(5,914	)		(4,814	)		(11,750	)		(9,902	)
Interest charged to cost of sales		(278	)		(2,365	)		(543	)		(2,741	)
Interest capitalized, end of period	$	5,952		$	4,576		$	5,952		$	4,576

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2017

Earnings Per Share [Abstract]

Weighted Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings Per Share

The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for thethree and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Weighted average number of shares outstanding used to calculate basic EPS		3,748		3,900		3,726		3,892
Dilutive securities:
Stock options and restricted share units		454		265		429		259
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS		4,202		4,165		4,155		4,151

Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following stock options and restricted share units issued under equity incentive plans were outstanding during the three and six months ended June 30, 2017 and 2016, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Anti-dilutive securities		9		78		15		78

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Summary of Changes in Shareholders' Equity

A summary of changes in shareholders’ equity is presented below:

	Common Stock		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Deferred Compensation Trust			Deferred Compensation Liability			Total
Balance, December 31, 2016	$	206	$	1,515,828		$	5,695,376		$	(5,906,969	)	$	(17,375	)	$	17,375		$	1,304,441
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax		—		1,566			(957	)		—			—			—			609
Net income		—		—			250,800			—			—			—			250,800
Deferred compensation activity		—		—			—			—			4			(4	)		—
Purchase of common stock for treasury		—		—			—			(159,506	)		—			—			(159,506	)
Equity-based compensation		—		21,467			—			—			—			—			21,467
Proceeds from stock options exercised		—		117,966			—			—			—			—			117,966
Treasury stock issued upon option exercise and restricted share vesting		—		(48,869	)		—			48,869			—			—			—
Balance, June 30, 2017	$	206	$	1,607,958		$	5,945,219		$	(6,017,606	)	$	(17,371	)	$	17,371		$	1,535,777

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Product Warranties (Tables)

6 Months Ended

Jun. 30, 2017

Product Warranties Disclosures [Abstract]

Summary of Changes in Product Warranties Reserve

The following table reflects the changes in the Company’s Warranty Reserve during the three and six months ended June 30, 2017 and 2016:

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Warranty reserve, beginning of period	$	93,503		$	86,692		$	93,895		$	87,407
Provision		13,206			12,867			22,167			21,709
Payments		(11,315	)		(11,606	)		(20,668	)		(21,163	)
Warranty reserve, end of period	$	95,394		$	87,953		$	95,394		$	87,953

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Segment Disclosures (Tables)

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Revenues

The following tables present segment revenues, profit and assets, with reconciliations to the amounts reported for the consolidated enterprise, where applicable:

	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Revenues:
Homebuilding Mid Atlantic	$	872,148	$	772,147	$	1,594,416	$	1,405,718
Homebuilding North East		127,541		108,766		233,771		205,919
Homebuilding Mid East		313,237		306,257		556,268		550,534
Homebuilding South East		199,788		174,571		375,846		321,074
Mortgage Banking		31,778		26,442		61,283		48,964
Total consolidated revenues	$	1,544,492	$	1,388,183	$	2,821,584	$	2,532,209

Profit before Taxes

	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Profit before taxes:
Homebuilding Mid Atlantic	$	100,621		$	63,730		$	165,109		$	110,339
Homebuilding North East		14,112			5,578			23,218			9,643
Homebuilding Mid East		35,986			30,056			58,145			52,789
Homebuilding South East		22,911			15,825			37,481			28,611
Mortgage Banking		18,004			13,973			33,957			24,348
Total segment profit before taxes		191,634			129,162			317,910			225,730
Reconciling items:
Contract land deposit reserve adjustment (1)		(2,064	)		1,307			(2,792	)		2,636
Equity-based compensation expense		(10,878	)		(10,829	)		(21,467	)		(21,378	)
Corporate capital allocation (2)		49,646			46,259			95,833			90,574
Unallocated corporate overhead		(23,360	)		(26,517	)		(50,594	)		(56,026	)
Consolidation adjustments and other		9,614			9,877			13,427			15,862
Corporate interest expense		(5,624	)		(4,539	)		(11,188	)		(9,366	)
Reconciling items sub-total		17,334			15,558			23,219			22,302
Consolidated profit before taxes	$	208,968		$	144,720		$	341,129		$	248,032

(1) This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments.

(2) 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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Corporate capital allocation charge:
Homebuilding Mid Atlantic	$	31,005	$	28,766	$	60,130	$	55,951
Homebuilding North East		4,133		4,447		7,947		9,400
Homebuilding Mid East		7,535		7,458		14,277		14,157
Homebuilding South East		6,973		5,588		13,479		11,066
Total	$	49,646	$	46,259	$	95,833	$	90,574

Assets

	June 30, 2017			December 31, 2016
Assets:
Homebuilding Mid Atlantic	$	1,177,147		$	1,054,779
Homebuilding North East		148,272			126,720
Homebuilding Mid East		274,846			222,736
Homebuilding South East		263,780			214,225
Mortgage Banking		276,564			403,250
Total segment assets		2,140,609			2,021,710
Reconciling items:
Consolidated variable interest entity		1,243			1,251
Cash and cash equivalents		518,482			375,748
Deferred taxes		176,401			170,652
Intangible assets and goodwill		50,835			51,526
Contract land deposit reserve		(34,098	)		(31,306	)
Consolidation adjustments and other		64,615			54,362
Reconciling items sub-total		777,478			622,233
Consolidated assets	$	2,918,087		$	2,643,943

Corporate Capital Allocation Charge

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 June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Corporate capital allocation charge:
Homebuilding Mid Atlantic	$	31,005	$	28,766	$	60,130	$	55,951
Homebuilding North East		4,133		4,447		7,947		9,400
Homebuilding Mid East		7,535		7,458		14,277		14,157
Homebuilding South East		6,973		5,588		13,479		11,066
Total	$	49,646	$	46,259	$	95,833	$	90,574

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Fair Value (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Undesignated Derivative Instruments

The undesignated derivative instruments are included on the accompanying condensed consolidated balance sheet, as of June 30, 2017, as follows:

	Fair Value		Balance Sheet Location
Rate lock commitments:
Gross assets	$	6,559
Gross liabilities		5,048
Net rate lock commitments	$	1,511	NVRM - Other assets
Forward sales contracts:
Gross assets	$	3,003
Gross liabilities		26
Net forward sales contracts	$	2,977	NVRM - Other assets

Fair Value Measurement

The fair value measurement as of June 30, 2017 was as follows:

	Notional or Principal Amount		Assumed Gain/(Loss) From Loan Sale			Interest Rate Movement Effect			Servicing Rights Value		Security Price Change		Total Fair Value Measurement Gain/(Loss)
Rate lock commitments	$	655,409	$	(2,645	)	$	(2,111	)	$	6,267	$	—	$	1,511
Forward sales contracts	$	777,148		—			—			—		2,977		2,977
Mortgages held for sale	$	240,341		(997	)		(549	)		2,603		—		1,057
Total fair value measurement			$	(3,642	)	$	(2,660	)	$	8,870	$	2,977	$	5,545

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Basis of Presentation - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax	$ 609		$ 609
Retained Earnings [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax	(957)		(957)
Accounting Standards Update (“ASU”) 2016-09 [Member]
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Excess tax benefit from option exercises recognized as a reduction to income tax expense	$ 16,464		36,364
Excess tax benefit recognized		$ 2,394		$ 8,678
Increase to net cash provided by operating activities			8,678
Increase to net cash used in financing activities			$ 8,678

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Variable Interest Entities - Additional Information (Detail) $ in Thousands	Jun. 30, 2017 USD ($) Lot	Dec. 31, 2016 USD ($)
Variable Interest Entity [Line Items]
Contract land deposits in cash	$ 392,503	$ 411,150
Variable Interest Entities [Member]
Variable Interest Entity [Line Items]
Maximum range of deposits required under the purchase agreements	10.00%
Lots controlled by NVR | Lot	79,100
Contract land deposits in cash under Lot Purchase Agreements	$ 380,900
Letters of credit related to lots	$ 2,400
Contract on Raw Ground with Landowners [Member]
Variable Interest Entity [Line Items]
Lots controlled by NVR | Lot	8,400
Contract land deposits in cash	$ 11,600
Letters of credit related to land contract	200
Refundable deposits and letters of credit	$ 5,500

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Variable Interest Entities - Total Risk of Loss Related to Contract Land Deposits (Detail) - USD ($) $ in Thousands		Jun. 30, 2017	Dec. 31, 2016
Variable Interest Entity Reporting Entity Involvement Maximum Loss Exposure [Abstract]
Contract land deposits		$ 392,503	$ 411,150
Loss reserve on contract land deposits		(34,098)	(31,306)
Contract land deposits, net		358,405	379,844
Contingent obligations in the form of letters of credit		2,575	2,379
Specific performance obligations	[1]	1,505	1,505
Total risk of loss		$ 362,485	$ 383,728

[1] As of both June 30, 2017 and December 31, 2016, the Company was committed to purchase 10 finished lots under specific performance obligations.

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Variable Interest Entities - Total Risk of Loss Related to Contract Land Deposits (Parenthetical) (Detail) - Lot	Jun. 30, 2017	Dec. 31, 2016
Variable Interest Entity Reporting Entity Involvement Maximum Loss Exposure [Abstract]
Finished lots committed to purchase under specific performance obligations	10	10

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Joint Ventures - Additional Information (Detail) $ in Thousands	Jun. 30, 2017 USD ($) Lot JointVenture	Dec. 31, 2016 USD ($)
Joint Ventures [Line Items]
Aggregate investment | $	$ 44,000
Number of joint ventures | JointVenture	6
Expected production of finished lots | Lot	7,350
Total lots controlled by company under the joint venture | Lot	4,050
Total lots either under contract with unrelated parties or not under the current contract | Lot	3,300
Additional funding commitments in the aggregate | $	$ 5,800
Number of joint ventures with additional funding commitment | JointVenture	3
Number of joint ventures NVR is not primary beneficiary | JointVenture	5
Other Assets [Member]
Joint Ventures [Line Items]
Aggregate investment | $	$ 43,600	$ 49,000

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Joint Ventures - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Assets:
Cash	$ 529,313	$ 396,619	$ 364,494	$ 425,316
Liabilities and equity:
Equity	1,535,777	1,304,441
Total liabilities and shareholders' equity	2,918,087	2,643,943
Consolidated Joint Venture
Assets:
Cash	1,199	1,214
Other assets	44	37
Total assets	1,243	1,251
Liabilities and equity:
Accrued expenses	542	550
Equity	701	701
Total liabilities and shareholders' equity	$ 1,243	$ 1,251

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Land Under Development - Additional Information (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($) Lot Parcel	Jan. 31, 2017 USD ($) Lot
Real Estate [Abstract]
Acquisition costs of raw land parcel		$ 14,400
Number of lots expected to be produce from raw land parcel | Lot		90
Number of raw parcels of land owned | Parcel	4
Carrying value of raw parcels of land	$ 46,685
Number of finished lots expected to be developed from raw parcels of land | Lot	550
Aggregate additional funding commitments related to raw land property under joint development	$ 10,000
Expected development credits that will offset the aggregate additional funding commitments related to raw land property development	$ 5,400

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Capitalized Interest - Summary of Interest Costs Incurred, Capitalized, Expensed and Charged to Cost of Sales (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Interest Costs Incurred Capitalized [Abstract]
Interest capitalized, beginning of period	$ 5,564	$ 5,358	$ 5,106	$ 4,434
Interest incurred	6,580	6,397	13,139	12,785
Interest expense	(5,914)	(4,814)	(11,750)	(9,902)
Interest charged to cost of sales	(278)	(2,365)	(543)	(2,741)
Interest capitalized, end of period	$ 5,952	$ 4,576	$ 5,952	$ 4,576

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Earnings Per Share - Weighted Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Weighted average number of shares outstanding used to calculate basic EPS	3,748	3,900	3,726	3,892
Dilutive securities:
Stock options and restricted share units	454	265	429	259
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS	4,202	4,165	4,155	4,151

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Earnings Per Share - Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share [Abstract]
Anti-dilutive securities	9	78	15	78

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Shareholders' Equity - Summary of Changes in Shareholders' Equity (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			$ 1,304,441
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax	$ 609		609
Net income	147,877	$ 91,676	250,800	$ 156,979
Purchase of common stock for treasury			(159,506)
Equity-based compensation			21,467
Proceeds from stock options exercised			117,966
Ending Balance	1,535,777		1,535,777
Common Stock [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			206
Ending Balance	206		206
Additional Paid-In-Capital [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			1,515,828
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax	1,566		1,566
Equity-based compensation			21,467
Proceeds from stock options exercised			117,966
Treasury stock issued upon option exercise and restricted share vesting			(48,869)
Ending Balance	1,607,958		1,607,958
Retained Earnings [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			5,695,376
Cumulative-effect adjustment from adoption of ASU 2016-09, net of tax	(957)		(957)
Net income			250,800
Ending Balance	5,945,219		5,945,219
Treasury Stock [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			(5,906,969)
Purchase of common stock for treasury			(159,506)
Treasury stock issued upon option exercise and restricted share vesting			48,869
Ending Balance	(6,017,606)		(6,017,606)
Deferred Compensation Trust [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			(17,375)
Deferred compensation activity			4
Ending Balance	(17,371)		(17,371)
Deferred Compensation Liability [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning Balance			17,375
Deferred compensation activity			(4)
Ending Balance	$ 17,371		$ 17,371

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Shareholders' Equity - Additional Information (Detail) shares in Thousands	6 Months Ended
	Jun. 30, 2017 shares
Equity [Abstract]
Common stock repurchased	84
Reissued shares during the period, shares	138

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Product Warranties - Summary of Changes in Product Warranties Reserve (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Product Warranties Disclosures [Abstract]
Warranty reserve, beginning of period	$ 93,503	$ 86,692	$ 93,895	$ 87,407
Provision	13,206	12,867	22,167	21,709
Payments	(11,315)	(11,606)	(20,668)	(21,163)
Warranty reserve, end of period	$ 95,394	$ 87,953	$ 95,394	$ 87,953

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Segment Disclosures - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 Segment
Senior Notes due 2022 [Member]
Segment Reporting Information [Line Items]
Senior notes interest rate	3.95%
Senior notes maturity	Sep. 15, 2022
Homebuilding [Member]
Segment Reporting Information [Line Items]
Number of reportable segments	4
Mortgage Banking [Member]
Segment Reporting Information [Line Items]
Number of reportable segments	1

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Segment Disclosures - Revenues (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Revenue Reconciling Item [Line Items]
Total consolidated revenues	$ 1,544,492	$ 1,388,183	$ 2,821,584	$ 2,532,209
Homebuilding [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Revenues	1,512,714	1,361,741	2,760,301	2,483,245
Homebuilding [Member] | Mid Atlantic [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Revenues	872,148	772,147	1,594,416	1,405,718
Homebuilding [Member] | North East [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Revenues	127,541	108,766	233,771	205,919
Homebuilding [Member] | Mid East [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Revenues	313,237	306,257	556,268	550,534
Homebuilding [Member] | South East [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Revenues	199,788	174,571	375,846	321,074
Mortgage Banking [Member]
Segment Reporting Revenue Reconciling Item [Line Items]
Mortgage Banking	$ 31,778	$ 26,442	$ 61,283	$ 48,964

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Segment Disclosures - Profit before Taxes (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	$ 208,968	$ 144,720	$ 341,129	$ 248,032
Equity-based compensation expense			(21,467)	(21,378)
Corporate interest expense	(5,914)	(4,814)	(11,750)	(9,902)
Homebuilding [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	191,337	131,528	308,527	225,182
Corporate interest expense	(5,641)	(4,554)	(11,219)	(9,396)
Mortgage Banking [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	17,631	13,192	32,602	22,850
Corporate interest expense	(273)	(260)	(531)	(506)
Operating Segments [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	191,634	129,162	317,910	225,730
Operating Segments [Member] | Homebuilding [Member] | Mid Atlantic [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	100,621	63,730	165,109	110,339
Operating Segments [Member] | Homebuilding [Member] | North East [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	14,112	5,578	23,218	9,643
Operating Segments [Member] | Homebuilding [Member] | Mid East [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	35,986	30,056	58,145	52,789
Operating Segments [Member] | Homebuilding [Member] | South East [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	22,911	15,825	37,481	28,611
Operating Segments [Member] | Mortgage Banking [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	18,004	13,973	33,957	24,348
Corporate and Reconciling Items [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Profit before taxes	17,334	15,558	23,219	22,302
Contract land deposit reserve adjustment	(2,064)	1,307	(2,792)	2,636
Equity-based compensation expense	(10,878)	(10,829)	(21,467)	(21,378)
Corporate capital allocation	49,646	46,259	95,833	90,574
Unallocated corporate overhead	(23,360)	(26,517)	(50,594)	(56,026)
Consolidation adjustments and other	9,614	9,877	13,427	15,862
Corporate interest expense	(5,624)	(4,539)	(11,188)	(9,366)
Corporate and Reconciling Items [Member] | Homebuilding [Member] | Mid Atlantic [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Corporate capital allocation	31,005	28,766	60,130	55,951
Corporate and Reconciling Items [Member] | Homebuilding [Member] | North East [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Corporate capital allocation	4,133	4,447	7,947	9,400
Corporate and Reconciling Items [Member] | Homebuilding [Member] | Mid East [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Corporate capital allocation	7,535	7,458	14,277	14,157
Corporate and Reconciling Items [Member] | Homebuilding [Member] | South East [Member]
Segment Reporting Reconciling Item For Operating Profit Loss From Segment To Consolidated [Line Items]
Corporate capital allocation	$ 6,973	$ 5,588	$ 13,479	$ 11,066

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Segment Disclosures - Assets (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Segment Reporting Asset Reconciling Item [Line Items]
Assets	$ 2,918,087	$ 2,643,943
Cash and cash equivalents	529,313	396,619	$ 364,494	$ 425,316
Contract land deposit reserve	(34,098)	(31,306)
Homebuilding [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	2,634,176	2,233,346
Consolidated variable interest entity	1,243	1,251
Cash and cash equivalents	518,482	375,748
Intangible assets and goodwill	1,908	2,599
Mortgage Banking [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	283,911	410,597
Cash and cash equivalents	9,632	19,657
Operating Segments [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	2,140,609	2,021,710
Operating Segments [Member] | Homebuilding [Member] | Mid Atlantic [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	1,177,147	1,054,779
Operating Segments [Member] | Homebuilding [Member] | North East [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	148,272	126,720
Operating Segments [Member] | Homebuilding [Member] | Mid East [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	274,846	222,736
Operating Segments [Member] | Homebuilding [Member] | South East [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	263,780	214,225
Operating Segments [Member] | Mortgage Banking [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	276,564	403,250
Corporate and Reconciling Items [Member]
Segment Reporting Asset Reconciling Item [Line Items]
Assets	777,478	622,233
Consolidated variable interest entity	1,243	1,251
Cash and cash equivalents	518,482	375,748
Deferred taxes	176,401	170,652
Intangible assets and goodwill	50,835	51,526
Contract land deposit reserve	(34,098)	(31,306)
Consolidation adjustments and other	$ 64,615	$ 54,362

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Segment Disclosures - Corporate Capital Allocation Charge (Detail) - Corporate and Reconciling Items [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Other Significant Reconciling Item [Line Items]
Corporate capital allocation charge	$ 49,646	$ 46,259	$ 95,833	$ 90,574
Homebuilding [Member] | Mid Atlantic [Member]
Segment Reporting Other Significant Reconciling Item [Line Items]
Corporate capital allocation charge	31,005	28,766	60,130	55,951
Homebuilding [Member] | North East [Member]
Segment Reporting Other Significant Reconciling Item [Line Items]
Corporate capital allocation charge	4,133	4,447	7,947	9,400
Homebuilding [Member] | Mid East [Member]
Segment Reporting Other Significant Reconciling Item [Line Items]
Corporate capital allocation charge	7,535	7,458	14,277	14,157
Homebuilding [Member] | South East [Member]
Segment Reporting Other Significant Reconciling Item [Line Items]
Corporate capital allocation charge	$ 6,973	$ 5,588	$ 13,479	$ 11,066

XML

Fair Value - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total Fair Value Measurement Gain/(Loss)			$ 5,545
Homebuilding [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior Notes carrying value	$ 596,760		596,760		$ 596,455
Homebuilding [Member] | Senior Notes due 2022 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior Notes carrying value	596,760		596,760
Homebuilding [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Senior Notes due 2022 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior Notes fair value	630,000		630,000
Mortgage Banking [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of mortgage loans held for sale	241,398		241,398		$ 351,958
Mortgage Banking [Member] | Level 2 [Member] | Not Designated as Hedging Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value adjustment income (expense)	3,376	$ 589	1,359	$ (67)
Mortgage Banking [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Rate Lock Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount of contractual commitments	$ 655,409		$ 655,409
Average basis points of loan amount	1.11%		1.11%
Fallout rate of measuring fair value of rate lock commitments	15.00%		15.00%
Total Fair Value Measurement Gain/(Loss)			$ 1,511
Mortgage Banking [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Forward Sales Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount of contractual commitments	$ 777,148		777,148
Total Fair Value Measurement Gain/(Loss)			2,977
Mortgage Banking [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgages Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional amount of contractual commitments	240,341		240,341
Fair value of mortgage loans held for sale	$ 241,398		241,398
Total Fair Value Measurement Gain/(Loss)			$ 1,057

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Fair Value - Undesignated Derivative Instruments (Detail) - Mortgage Banking [Member] - Level 2 [Member] - Fair Value, Measurements, Recurring [Member] $ in Thousands	Jun. 30, 2017 USD ($)
Rate Lock Commitments [Member]
Derivatives Fair Value [Line Items]
Gross assets	$ 6,559
Gross liabilities	5,048
Net rate lock commitments and forward sales contracts	1,511
Forward Sales Contracts [Member]
Derivatives Fair Value [Line Items]
Gross assets	3,003
Gross liabilities	26
Net rate lock commitments and forward sales contracts	$ 2,977

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Fair Value - Fair Value Measurement (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assumed Gain/(Loss) From Loan Sale	$ (3,642)
Interest Rate Movement Effect	(2,660)
Servicing Rights Value	8,870
Security Price Change	2,977
Total Fair Value Measurement Gain/(Loss)	5,545
Mortgage Banking [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Rate Lock Commitments [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional or Principal Amount	655,409
Assumed Gain/(Loss) From Loan Sale	(2,645)
Interest Rate Movement Effect	(2,111)
Servicing Rights Value	6,267
Total Fair Value Measurement Gain/(Loss)	1,511
Mortgage Banking [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Forward Sales Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional or Principal Amount	777,148
Security Price Change	2,977
Total Fair Value Measurement Gain/(Loss)	2,977
Mortgage Banking [Member] | Level 2 [Member] | Fair Value, Measurements, Recurring [Member] | Mortgages Held for Sale [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Notional or Principal Amount	240,341
Assumed Gain/(Loss) From Loan Sale	(997)
Interest Rate Movement Effect	(549)
Servicing Rights Value	2,603
Total Fair Value Measurement Gain/(Loss)	$ 1,057

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Debt - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2017 USD ($)
Senior Notes due 2022 [Member]
Debt Instrument [Line Items]
Senior notes principal amount	$ 600,000,000
Senior notes effective interest rate	3.97%
Senior notes maturity date	Sep. 15, 2022
Senior notes interest rate	3.95%
Frequency of senior notes payment	semi-annually in arrears on March 15 and September 15
Credit Agreement [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maximum loan borrowing capacity	$ 200,000,000
Increase in commitment available	$ 300,000,000
Expiration date	Jul. 15, 2021
Debt outstanding	$ 0
Credit Agreement [Member] | Revolving Credit Facility [Member] | Sublimit for Issuance of Letters of Credit [Member]
Debt Instrument [Line Items]
Maximum loan borrowing capacity	100,000,000
Letters of credit outstanding	8,600,000
Credit Agreement [Member] | Revolving Credit Facility [Member] | Sublimit for Swing Line Commitment [Member]
Debt Instrument [Line Items]
Maximum loan borrowing capacity	25,000,000
Repurchase Agreement [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maximum loan borrowing capacity	150,000,000
Increase in commitment available	$ 50,000,000
Expiration date	Jul. 25, 2018
Debt outstanding	$ 0
Borrowing base limitations	$ 0

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Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Tax [Line Items]
Effective tax rate	29.20%	36.70%	26.50%	36.70%
Accounting Standards Update (“ASU”) 2016-09 [Member]
Income Tax [Line Items]
Excess tax benefit from option exercises recognized as a reduction to income tax expense	$ 16,464		$ 36,364
Excess tax benefit recognized		$ 2,394		$ 8,678