On October 24, 2023, NVR Inc (NVR, Financial), one of the nation's largest homebuilding and mortgage banking companies, announced its third-quarter earnings for the period ending September 30, 2023. Despite a decrease in consolidated revenues, the company reported a 5% increase in net income compared to the same period in 2022.
Financial Performance Overview
NVR Inc (NVR, Financial) reported a net income of $433.2 million for Q3 2023, marking a 5% increase from the $411.4 million net income reported in Q3 2022. The diluted earnings per share also increased by 6% to $125.26 from $118.51 in Q3 2022. However, the company's consolidated revenues for Q3 2023 totaled $2.57 billion, a 7% decrease from $2.78 billion in Q3 2022. For the nine months ended September 30, 2023, consolidated revenues were $7.09 billion, a 9% decrease from $7.81 billion reported in 2022.
Homebuilding and Mortgage Banking Performance
The company's homebuilding segment saw new orders increase by 7% to 4,746 units in Q3 2023, compared to 4,421 units in Q3 2022. The average sales price of new orders in Q3 2023 was $456,100, a 1% increase compared to Q3 2022. However, homebuilding revenues decreased by 8% to $2.51 billion in Q3 2023 from $2.74 billion in Q3 2022.
In the mortgage banking segment, closed loan production in Q3 2023 totaled $1.62 billion, a decrease of 2% compared to Q3 2022. Despite this, income before tax from the mortgage banking segment increased by 119% to $38.5 million in Q3 2023 from $17.6 million in Q3 2022, primarily due to an increase in secondary marketing gains on sales of loans.
Effective Tax Rate and Other Financial Details
The company's effective tax rate for the three and nine months ended September 30, 2023, was 19.7% and 18.2%, respectively, compared to 23.6% and 24.3% for the same periods in 2022. The decrease in the effective tax rate is primarily attributable to a higher income tax benefit recognized for excess tax benefits from stock option exercises.
Looking Ahead
Despite the challenges presented by the current economic climate, NVR Inc (NVR, Financial) continues to demonstrate resilience with a 5% increase in net income for Q3 2023. The company's ability to increase new orders in its homebuilding segment and achieve a significant increase in income before tax in its mortgage banking segment indicates a strong operational performance. However, the decrease in consolidated revenues and mortgage closed loan production suggests areas for potential improvement.
