A combination of improved market conditions and strategic pricing initiatives drove a “great start” to 2023 for M.D.C. Holdings, the 11th largest company on the 2023 BUILDER 100 list.
“Net new orders in the first quarter increased significantly relative to the fourth quarter of 2022, as buyers returned to the market for the start of the spring selling season,” M.D.C. executive chairman Larry Mizel said. “Order momentum built as the quarter progressed, and we saw order totals increase on a sequential basis each month.”
Consistent with public builders who have already reported first quarter earnings, M.D.C. Holdings outperformed expectations for both revenue and profits per share in the first quarter. The builder reported revenue of $1.02 billion in the first quarter and profits per share of $1.08, significantly higher than analyst expectations of $0.54 per share. M.D.C. president and CEO David Mandarich said limited existing-home inventory, resilient employment trends, and the influx of jobs and high-wage earners in M.D.C.’s operating markets provide tailwinds for future growth for the home builder.
“We continue to see several favorable fundamental and demographic trends in our markets driving new-home demand,” Mandarich said. “These industry positives, coupled with our more affordable product focus and strong balance sheet, give me confidence in the long-term outlook for M.D.C.”
M.D.C. closed 1,851 homes during the three-month period of the first quarter, “well ahead” of the builder’s stated guidance, according to Mizel. The average selling price for deliveries decreased $5,000 to $551,000 in the quarter, and M.D.C. reported a monthly absorption pace of 2.56. The builder’s units in backlog decreased 66% on a year-over-year basis to 2,890 homes in the first quarter.
“Our teams did an excellent job overcoming supply chain obstacles and municipal delays to close homes in backlog in a timely manner,” Mizel said. “We also benefited from having more specs available for sale during the quarter, which led to an increase in quick move-in closings.”
At the end of the first quarter, M.D.C. Holdings had 22,942 lots owned or optioned, down 39% compared with the first quarter of 2022. Approximately 87% of M.D.C.’s lots were owned at the end of the quarter, compared with 70% in the prior-year period.
