New orders, net of cancellations (“New Orders”) during 2023 were 21,729, an increase of 13% from 2022 while our average New Order sales price decreased 3% to $448.4 in 2023.

Our backlog of homes sold but not yet settled with the customer as of December 31, 2023 increased on a unit basis by 12% to 10,229 units and increased on a dollar basis by 10% to $4,756,926 when compared to December 31, 2022.

Our lot acquisition strategy is predicated upon avoiding the financial risks associated with direct land ownership and development. 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.

Selling, general and administrative ("SG&A") expenses in 2023 increased by approximately $56,600 compared to 2022, and as a percentage of revenue increased to 6.3% in 2023 from 5.2% in 2022. The increase in SG&A expense was due primarily to an increase of approximately $42,400 in personnel costs attributable in part to higher earned incentive compensation.

The supply chain disruptions experienced in the prior year have mostly subsided, and our construction cycle times have improved.

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.

Demand for new homes is sensitive to economic changes driven by conditions such as employment levels, job growth, consumer confidence, inflation and interest rates. If the housing industry suffers a downturn, our sales may decline which could have a material adverse effect on our profitability, stock performance, ability to service our debt obligations and future cash flows.

High rates of inflation generally affect the homebuilding industry adversely because of their adverse impact on interest rates. High interest rates not only increase the cost of borrowed funds to homebuilders and developers but also have a significant adverse effect on housing demand and on the affordability of permanent mortgage financing to prospective purchasers.

Our business and operations could be adversely affected by health epidemics, impacting the markets, states and local communities in which we operate. The recent COVID-19 pandemic had a significant impact on our operations and supply chains.

The housing industry is highly competitive. We compete with numerous homebuilders of varying size, ranging from local to national in scope, some of which have greater financial resources than we do. We also face competition from the home resale market.

The results of our homebuilding operations depend upon our continuing ability to control an adequate number of homebuilding lots in desirable locations. There can be no assurance that an adequate supply of building lots will continue to be available to us on terms similar to those available in the past, or that we will not be required to devote a greater amount of capital to controlling building lots than we have historically.

The mortgage banking industry is also competitive. Our main competition comes from national, regional and local mortgage bankers, credit unions, banks and mortgage brokers in each of these markets. Our mortgage banking operations compete primarily on the basis of customer service, variety of products offered, interest rates offered, prices of ancillary services and relative financing availability and costs.

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.

We engage subcontractors to perform the actual construction of our homes. Despite our quality control efforts, we may discover that our subcontractors have engaged in improper construction practices. The occurrence of such events could require us to repair the homes in accordance with our standards and as required by law.

The homebuilding business has from time to time experienced building material and labor shortages, including fluctuating lumber prices and supply. In addition, strong construction market conditions could restrict the labor force available to our subcontractors and us in one or more of our markets.

We have implemented systems and processes intended to secure our information technology systems and prevent unauthorized access to or loss of sensitive, confidential and personal data.

In 2023, our CIO and CISO presented updates on our cybersecurity initiatives quarterly; twice to our Audit Committee and twice to our full Board.

Regular review of information technology disaster recovery and business continuity processes to help ensure the ability to resume work after an incident.

During the quarter ended December 31, 2023, we fully utilized the remaining amount available under a $500 million share repurchase authorization that was publicly announced on August 2, 2023. On November 9, 2023, we publicly announced that our Board of Directors had approved a new repurchase authorization in the amount of up to $750 million.

We have never paid a cash dividend on our shares of common stock and have no current intention to do so in the future.

We believe that our current cash holdings, cash generated from operations, and cash available under our short-term unsecured credit agreement and revolving mortgage repurchase facility, as well as the public debt and equity markets, will be sufficient to satisfy both our short term and long term cash requirements for working capital to support our daily operations and meet commitments under our contractual obligations with third parties.

Our employees are our most important asset. We are committed to continually developing an inclusive culture that attracts a diverse workforce and enables them to contribute to the success of the company by emphasizing their unique perspectives and backgrounds.

All of our employees must adhere to our code of ethics and standards of business conduct that sets standards for appropriate behavior in the workplace.

Extreme weather or other events, such as significant hurricanes, tornadoes, earthquakes, forest fires, floods, snowfalls, terrorist attacks or war may affect our markets, our operations and our profitability.

In 2023, housing demand improved as the rapid rise in mortgage interest rates during 2022 began to stabilize and homebuyers adjusted to the higher mortgage interest rate environment.

Despite this increased demand, affordability continues to be a challenge as the higher rates coupled with higher home prices led to housing affordability reaching a 35-year low during 2023.

Interest rate volatility and economic uncertainty are expected to continue to impact the housing market in 2024. As a result, we expect to face continued margin pressure as we adjust our product offering and positioning to meet market demand.