Modified

Demand conditions to start 2026 remained challenging remained challenging through the second quarter of 2026 as the result of elevated mortgage interest rates, higher housing costs, and general economic uncertainty. As volatility Volatility in geopolitical conditions increased , in part due to tensions in Marchthe Middle East, it has also negatively impacted inflation and interest rates, further weakening consumer confidence. We have continued responding to these conditions by adjusting production cadence and sales prices where necessary and focusing sales incentives on discounts on spec inventory (houses without customer orders), closing cost incentives, and mortgage interest rate buydowns. These pricing actions contributed to a 36% increase in net new orders in units, but lower average selling prices and gross margins, during the firstsecond quarter of 2026 compared to 2025the prior year period. Closings decreased 78% in the firstsecond quarter of 2026 compared to 2025the prior year period primarily due to a lower order backlog entering 2026 compared to 2025.