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NVR INC (NVR)·Q2 2025 Earnings Summary

Executive Summary

  • EPS and revenue modestly beat Wall Street consensus, but year-over-year metrics declined as affordability headwinds pressured demand and margins; diluted EPS was $108.54 vs $106.20 consensus, and consolidated revenue was $2.60B vs $2.49B consensus. Values retrieved from S&P Global.
  • Homebuilding gross margin compressed to 21.5% (from 23.6% YoY) due to higher lot costs, pricing pressure, and ~$13.2M in contract land deposit impairments; net income fell 17% YoY to $333.7M.
  • Orders fell 11% and cancellations rose to 17%, while backlog declined 13% to 10,069 units ($4.75B), signaling a more cautious demand backdrop; mortgage banking income before tax dropped 34% on weaker secondary marketing gains.
  • Capital returns remained robust: NVR repurchased 65,834 shares for $471.4M in Q2 and later authorized an additional $750M buyback, reinforcing capital allocation discipline.
  • Potential stock reaction catalysts: the beat vs consensus despite margin compression, trajectory of cancellations/orders, and clarity on land impairment and pricing dynamics; appointment of former Freddie Mac CEO Michael DeVito to the board adds mortgage-market expertise.

What Went Well and What Went Wrong

What Went Well

  • EPS and revenue exceeded consensus despite macro affordability challenges; diluted EPS was $108.54 and consolidated revenue $2.60B. Values retrieved from S&P Global.
  • Average settlement price rose 3% to $465,400; mortgage loan closings increased 2% to $1.56B, with capture rate at 87%.
  • Lots controlled increased to 171,400 (from 149,700 YoY), supporting future building activity; continued significant buybacks ($471.4M in Q2).

“Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges, and contract land deposit impairments totaling approximately $13.2 million.” — NVR Q2 2025 press release

What Went Wrong

  • Homebuilding gross margin fell to 21.5% from 23.6% YoY; income before tax in homebuilding declined 15% YoY to $417.5M.
  • Demand indicators weakened: new orders down 11% to 5,379 units; cancellation rate increased to 17% vs 13% prior year; backlog units fell 13% to 10,069.
  • Mortgage banking income before tax fell 34% to $29.6M, primarily due to lower secondary marketing gains on loan sales; effective tax rate rose to 25.4% for Q2.

Financial Results

P&L vs Prior Year and Prior Quarter

MetricQ2 2024Q1 2025Q2 2025
Consolidated Revenues ($USD Billions)$2.61 $2.40 $2.60
Diluted EPS ($USD)$120.69 $94.83 $108.54
Net Income ($USD Millions)$400.9 $299.6 $333.7

Q2 2025 Actual vs S&P Global Consensus

MetricQ2 2025 ActualQ2 2025 ConsensusSurprise
Primary EPS ($USD)$108.54$106.20+2.2%
Revenue ($USD Billions)$2.60$2.49+4.4%

Values retrieved from S&P Global.

Margins

MetricQ2 2024Q1 2025Q2 2025
Homebuilding Gross Profit Margin %23.6% 21.9% 21.5%
Gross Profit Margin % (Consolidated)*—23.60%*22.94%*
EBIT Margin % (Consolidated)*—16.81%*17.27%*
EBITDA Margin % (Consolidated)*—17.05%*17.48%*
Net Income Margin % (Consolidated)*—12.31%*12.70%*

Values retrieved from S&P Global. * indicates SPGI data.

Segment Breakdown

Segment MetricQ2 2024Q2 2025
Homebuilding Revenues ($USD Billions)$2.55 $2.55
Homebuilding Income Before Tax ($USD Millions)$488.5 $417.5
Homebuilding Gross Profit Margin %23.6% 21.5%
Mortgage Loan Closings ($USD Billions)$1.53 $1.56
Mortgage Banking Income Before Tax ($USD Millions)$45.0 $29.6

KPIs

KPIQ2 2024Q1 2025Q2 2025
New Orders (units)6,067 5,345 5,379
New Orders Avg Price ($USD)$458,800 $448,500 $458,100
Cancellation Rate12.9% 16.0% 16.5%
Settlements (units)5,659 5,133 5,475
Settlements Avg Price ($USD)$450,200 $457,900 $465,400
Backlog (units)11,597 10,165 10,069
Backlog Avg Price ($USD)$470,300 $475,900 $472,100
Avg Active Communities433 401 426
Lots Controlled (end of period)149,700 167,600 171,400
Mortgage Capture Rate86% 86% 87%
Shares Repurchased (count)83,168 77,120 65,834
Aggregate Cost of Repurchases ($USD Millions)$638.98 $583.39 $471.41
Shares Outstanding (EOP)3,090,266 2,944,615 2,883,215

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial GuidanceFY/Q2 2025None disclosedNone disclosedMaintained (no formal guidance)
Capital Allocation (Share Repurchase Authorization)Announced Aug 8, 2025Prior ongoing authorizationsNew $750M authorizationRaised/renewed program

NVR did not issue forward financial guidance for Q2 2025 in the earnings materials.

Earnings Call Themes & Trends

No Q2 2025 earnings call transcript was found in our document corpus or on company IR/Yahoo Finance transcript pages.

TopicPrevious Mentions (Q4 2024 and Q1 2025)Current Period (Q2 2025)Trend
Affordability & Pricing PressureQ1: Gross margin fell to 21.9% on higher lot costs and pricing pressure; cancellations 16% Margin 21.5%; cancellations 16.5%; commentary notes affordability pressure Ongoing pressure; slight sequential margin improvement vs Q1 but below YoY
Lot CostsQ1: Higher lot costs pressured margins Continued margin impact cited Persisting headwind
Contract Land Deposit ImpairmentsNot highlighted in Q4/Q1~$13.2M impairments in Q2 New negative factor in Q2
Demand/Orders & BacklogQ4: New orders -8%; backlog 9,953 units; cancellations 16.9% New orders -11%; backlog 10,069 units; cancellations 16.5% Demand softness persists
Mortgage Secondary Marketing GainsQ4: Gains improved; mortgage PBT +55% YoY Q2: Mortgage PBT down 34% on lower secondary marketing gains Reversal; weaker secondary market
Lots ControlledQ4: 162,400 171,400 (+14% YoY) Strengthening land position
CommunitiesQ4: Avg active 426 426 (flat YoY), down from 433 prior year timeframe Slight contraction vs prior year average

Management Commentary

  • “Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to continued affordability challenges, and contract land deposit impairments totaling approximately $13.2 million.”
  • “Income before tax from the mortgage banking segment totaled $29.6 million… This decrease was primarily attributable to a decrease in secondary marketing gains on sales of loans.”
  • Effective tax rate rose to 25.4% for Q2; lower excess tax benefits from stock option exercises ($3.5M vs $6.8M prior year quarter) drove the increase.
  • Strategic governance: Michael J. DeVito, former CEO of Freddie Mac and ex–Wells Fargo home lending leader, joined the board (effective July 1, 2025).

Q&A Highlights

No Q2 2025 earnings call transcript was available; Q&A highlights could not be retrieved. We searched company IR and public transcript sources but found no transcript.

Estimates Context

  • NVR beat S&P Global consensus for Q2 2025: EPS $108.54 vs $106.20, and revenue $2.60B vs $2.49B. Values retrieved from S&P Global.
  • Estimate breadth was limited (5 estimates for both EPS and revenue). Values retrieved from S&P Global.
  • Given margin compression and rising cancellations, some models may need lower gross margin and mortgage PBT assumptions despite top-line resilience.

S&P Global Consensus Snapshot (Q2 2025)

MetricConsensus# of Estimates
Primary EPS ($USD)106.205
Revenue ($USD Billions)2.495

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat with caution: modest top- and bottom-line beats vs consensus alongside notable margin compression and softer orders/cancellations—positioning for near-term estimate fine-tuning on margins rather than revenue. Values retrieved from S&P Global.
  • Margin drivers matter: higher lot costs and pricing pressure, plus ~$13.2M land deposit impairments, are the primary reasons margins fell; monitor cadence of impairments and lot cost inflation.
  • Demand signals mixed: cancellations at 16.5% and backlog down 13% suggest affordability is constraining conversion; track ASP/discounting and cancellation trend into Q3.
  • Mortgage dynamics reversed: after strength in Q4, mortgage PBT fell 34% on weaker secondary marketing gains—watch rate volatility and secondary market conditions.
  • Balance sheet and land pipeline strong: 171,400 lots controlled and substantial cash (homebuilding cash $1.73B at quarter-end) support flexibility through cycle.
  • Capital returns remain a pillar: $471.4M repurchased in Q2 and new $750M authorization post-quarter provide downside support; buyback pacing will influence share count/EPS trajectory.
  • Governance upgrade: board addition of ex–Freddie Mac CEO brings mortgage-market acumen; potential benefits for mortgage banking risk management and strategy.

Sources: NVR Q2 2025 8-K and press release, Q1 2025 and Q4 2024 8-Ks, and company press releases.