NVR (NVR) 10-K risk factor changes: FY2010 vs FY2009

The homebuilding industry [removed: is experiencing] [added: continues to experience] a significant downturn.

The continuation of this [removed: downturn] [added: slowdown] could adversely affect our business and our results of operations.

The homebuilding industry has continued to experience a significant downturn as a result of declining consumer confidence driven by an economic recession, [added: high unemployment levels,] affordability issues and uncertainty as to the stability of home prices.

Our cancellation rate was approximately [removed: 14%, 23%] [added: 14% in both 2010] and [removed: 21% during 2009, 2008] [added: 2009] and [removed: 2007, respectively.][added: was 23% in 2008.]

These ongoing market factors have also resulted in pricing pressures and in turn [removed: lower] gross profit [removed: margins] [added: margin pressure] in [removed: most] [added: all] of our markets.

[removed: The expiration of the first time homebuyer tax credit could] [added: This may] result in a [added: loss which could have a] material adverse effect on our [removed: sales,] profitability, stock performance, ability to service our debt obligations and future cash flows.

In particular, approximately [removed: 38%] [added: 37%] of our home settlements during [removed: 2009] [added: 2010] occurred in the Washington, D.C. and Baltimore, MD metropolitan areas, which accounted for [removed: 48%] [added: 47%] of our homebuilding revenues in [removed: 2009.][added: 2010.]

If we require working capital greater than that provided by our [removed: operations and our credit facility,] [added: operations,] we may be required to seek to [removed: increase the amount available under the facility or to] obtain alternative financing.

No assurance can be given that additional [removed: or replacement] financing will be available on terms that are favorable or acceptable.

If we are required to seek [removed: alternative] financing to fund our working capital requirements, continued volatility in these markets may restrict our flexibility to access financing.

These covenants [removed: include] [added: include, or could include,] limitations on our ability, and the ability of our subsidiaries, to incur additional indebtedness, pay cash dividends and make distributions, make loans and investments, enter into transactions with affiliates, effect certain asset sales, incur certain liens, merge or consolidate with any other person, or transfer all or substantially all of our properties and assets.

Substantial losses by us or other action or inaction by us or our subsidiaries could result in the violation of one or more of these covenants which could result in decreased liquidity or a default on our [added: current or future] indebtedness, thereby having a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.

The cost of insuring against construction defect and product liability [added: related] claims, as well as the claims themselves, can be high.

As described in, but not limited to, Part I, Item 3, “Legal Proceedings” of this [added: Form] 10-K, we are currently subject to certain legal proceedings.

[removed: |] Weather-related and other events beyond our control may adversely impact our operations. [removed: |]

If the underwriting quality of our mortgage originations is found to be deficient, our profit could decrease and we may incur losses.

We originate several different loan products to our customers to finance the purchase of their home.

We sell all of the loans we originate into the secondary mortgage market generally within 30 days from origination.

All of the loans that we originate are underwritten to the standards and specifications of the ultimate investor.

Insofar as we underwrite our originated loans to those standards, we bear no increased concentration of credit risk from the issuance of loans, except in certain limited instances where early payment default occurs.

In the event that a substantial number of the loans that we have originated fall into default and the investors to whom we sold the loan determine that we did not underwrite the loan in accordance with their requirements, we could be required to repurchase the loans from the investor or indemnify the investor for any losses incurred.

In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 21, 2010, contains numerous provisions affecting residential mortgages and mortgage lending practices.

Because these provisions are to be implemented through future rulemaking, the ultimate impact of such provisions on lending institutions, including our mortgage banking subsidiary, will depend on how the implementing rules are written.

##### [Table of Contents](#tocpage)

RISK FACTORS

If the tax credit available to first time homebuyers expires on July 1, 2010 and is not renewed, it may negatively impact our future sales.

As part of the Federal government’s economic stimulus efforts, first time homebuyers may receive an $8,000 tax credit and current homeowners purchasing a replacement primary residence may receive a $6,500 tax credit when filing their Federal income tax return if they purchase the primary residence by April 30, 2010 and settle on the home prior to July 1, 2010, which is the date that the homebuyer tax credit program expires.

It is unclear at this time if the Federal government is going to extend or expand that program past July 1, 2010.

This program and the prior first time homebuyer tax credit program may have stimulated our sales over the recent quarters to levels that would not have been achieved without the program being in effect.

Further, there is a possibility that the availability of the program to homebuyers pulled sales forward from future

quarters which could lead to reduced demand in the immediate future.

In addition, government-sponsored enterprises, principally FNMA and FHLMC, play a significant role in buying home mortgages and creating investment securities that they either sell to investors or hold in their portfolios.

These organizations, as well as the Federal Reserve’s program to purchase mortgage-backed securities, provide liquidity to the secondary mortgage market.

The effects of the government takeover of FNMA and FHLMC are not yet certain and may restrict or curtail their activities and further disrupt the secondary markets.

In addition, the Federal Reserve is expected to discontinue purchasing mortgage-backed securities in 2010.

Moreover, issues involving liquidity and capital adequacy affecting our lenders could in turn affect our ability to fully access our available credit facilities.

Changes in tax laws or the interpretation of tax laws may negatively affect our operating results.

The effects of possible changes in the tax laws or changes in their interpretation could have a material negative impact on our financial results.

Certain of our net deferred tax assets could be substantially limited if we experience an ownership change as defined in the Internal Revenue Code.

Certain of our net deferred tax assets give rise to built-in losses (“BILs”).

Our ability to utilize BILs and to offset our future taxable income and/or to recover previously paid taxes would be limited if we were to undergo an “ownership change” within the meaning of Section 382 of the Internal Revenue Code, which we refer to as the Code.

In general, an “ownership change” occurs whenever the percentage of the stock of a corporation owned by “5-percent shareholders” (within the meaning of Section 382 of the Code) increases by more than 50 percentage points over the lowest percentage of the stock of such corporation owned by such “5-percent shareholders” at any time over the preceding three years.

An ownership change under Section 382 of the Code would establish an annual limitation on the amount of BILs we could utilize to offset our taxable income in any single taxable year to an amount equal to (i) the product of a specified rate, which is published by the U.S. Treasury, and the aggregate value of our outstanding stock plus (ii) the amount of unutilized limitation from prior years.

The application of these limitations might prevent full utilization of the deferred tax assets attributable to our BILs.

We do not believe we have experienced an ownership change as defined by Section 382 and, therefore, we do not believe the BILs are subject to any Section 382 limitation.

However, whether a change in ownership occurs in the future is largely outside of our control, and there can be no assurance that such a change will not occur.

| |

| --- |

(dollars in thousands, except per share data)

Results of Operations for the Years Ended December 31, 2010, 2009 and 2008

Overview

Business

Our primary business is the construction and sale of single-family detached homes, townhomes and condominium buildings, all of which are primarily constructed on a pre-sold basis.

To fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business.

We primarily conduct our operations in mature markets.

Additionally, we generally grow our business through market share gains in our existing markets and by expanding into markets contiguous to our current active markets.

Our four homebuilding reportable segments consist of the following regions:

_Mid Atlantic:_ Maryland, Virginia, West Virginia and Delaware

_North East:_ New Jersey and eastern Pennsylvania

_Mid East:_ Kentucky, New York, Ohio, western Pennsylvania and Indiana

_South East:_ North Carolina, South Carolina, Tennessee and Florida

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

Historically, we have not engaged in land development to obtain finished lots for use in our homebuilding operations.

Instead, we have acquired finished lots at market prices from various third party land developers pursuant to fixed price purchase agreements.

These purchase agreements require deposits, typically ranging up to 10% of the aggregate purchase price of the finished lots, in the form of cash or letters of credit that may be forfeited if we fail to perform under the purchase agreement.

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.

Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build and on our developers’ ability to timely deliver finished lots to meet the sales demands of our customers.

However, current economic conditions and the continued downturn of the homebuilding industry have exerted pressure on our developers’ ability to obtain acquisition and development financing or to raise equity investments to finance land development activity, potentially constraining our supply of finished lots.

This pressure has necessitated that in certain specific strategic circumstances we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development.

Once we acquire control of any raw ground, we will determine whether to sell the raw parcel to a developer and enter into a fixed price purchase agreement with the developer to purchase the finished lots, or whether we will hire a developer to develop the land on our behalf.

While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so.

We expect, however, to continue to acquire substantially all of our finished lot inventory using fixed price purchase agreements with forfeitable deposits.

As of December 31, 2010, we controlled approximately 50,400 lots under purchase agreements with deposits in cash and letters of credit totaling approximately $174,300 and $6,600, respectively.

In addition, we controlled approximately 1,100 lots through joint ventures.

Included in the number of controlled lots are approximately 10,300 lots for which we have recorded a contract land deposit impairment reserve of approximately $73,500 as of December 31, 2010.

See Note 3 to the consolidated financial statements included herein for additional information regarding contract land deposits.

Further, as of December 31, 2010, we had approximately $78,000 in land under development, that once fully developed will result in approximately 890 lots.

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.

Current Business Environment

The homebuilding environment in 2010 remained challenging as it continued to be impacted by the economic downturn that began several years prior.

The market stabilization we had experienced toward the end of 2009 and into the first quarter of 2010 was negatively impacted by the April 30, 2010 expiration of the federal homebuyer tax credit.

After April 30, 2010, new home sales experienced sharp declines, providing evidence that rather than increasing overall demand, the tax credit may have merely accelerated existing demand.

The current home sales environment continues to be adversely impacted by high inventory levels, low consumer confidence driven by high unemployment rates, and a highly restrictive mortgage lending environment that has made it more difficult for our customers to obtain mortgage financing.

Our new orders for 2010 remained flat with new orders in 2009, however, new housing demand declined in both the third and fourth quarters of 2010 from the higher new order results experienced in the first two quarters of 2010.

In addition, cancellation rates increased to 18% in both the third and fourth quarters of 2010, compared to 14% and 15% in the third and fourth quarters of 2009, respectively, and 12% in the second quarter of 2010.

Consolidated revenues totaled $3,041,892 for 2010, an increase of 11% from $2,743,848 in 2009.

The increase in revenues was driven by increased home settlements primarily resulting from the expiration of the federal homebuyer tax credit in the second quarter of 2010.

NVRM generates operating liquidity primarily through the mortgage Repurchase Agreement, which provides for loan repurchases up to [removed: $100,000.][added: $100,000, subject to certain sub limits.]

Advances under the Repurchase Agreement carry a Pricing Rate based on the [removed: Libor] [added: LIBOR] Rate plus the [removed: Libor] [added: LIBOR] Margin, or [removed: at NVRM’s option,] the [removed: Balance Funded] [added: Default Pricing] Rate, as [removed: these terms are defined in] [added: determined under] the Repurchase [removed: Agreement.][added: Agreement, provided that the Pricing Rate shall not be less than 4.5%.]

The average Pricing Rate [removed: for amounts] [added: on] outstanding [added: balances] at December 31, [removed: 2009] [added: 2010] was 4.1%.

The following table represents the contractual balances of our on-balance sheet financial instruments at the expected maturity dates, as well as the fair values of those on-balance sheet financial instruments at December 31, [removed: 2009.][added: 2010.]

Consequently, [added: advances] outstanding [removed: warehouse borrowings] [added: under the Repurchase Agreement] are also assumed to mature in the first year.

| | | [removed: 2010 | | | |] 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | | [added: 2015 | | | |] Thereafter | | | | Total | | | | Value | | |

| Mortgage loans held for sale | | $ | [removed: 40,492] [added: 181,697] | | | | — | | | | — | | | | — | | | | — | | | | — | | | $ | [removed: 40,492] [added: 181,697] | | | $ | [removed: 40,097] [added: 177,244] | |

| Average interest rate | | | [removed: 4.9] [added: 4.2] | % | | | — | | | | — | | | | — | | | | — | | | | — | | | | [removed: 4.9] [added: 4.2] | % | | | | |

| Variable rate repurchase agreement | | $ | [removed: 12,344] [added: 90,338] | | | | — | | | | — | | | | — | | | | — | | | | — | | | $ | [removed: 12,344] [added: 90,338] | | | $ | [removed: 12,344] [added: 90,338] | |

| Forward trades of mortgage-backed securities (b) | | $ | [removed: 2,445] [added: 4,904] | | | | — | | | | — | | | | — | | | | — | | | | — | | | $ | [removed: 2,445] [added: 4,904] | | | $ | [removed: 2,445] [added: 4,904] | |

| Forward loan commitments (b) | | | [removed: (707] [added: 557] | [removed: )] | | | — | | | | — | | | | — | | | | — | | | | — | | | | [removed: (707] [added: 557] | [removed: )] | | | [removed: (707] [added: 557] | [removed: )] |

| Interest-bearing deposits | | $ | [removed: 1,458,077] [added: 1,163,623] | | | | — | | | | — | | | | — | | | | — | | | | — | | | $ | [removed: 1,458,077] [added: 1,163,623] | | | $ | [removed: 1,458,077] [added: 1,163,623] | |

| Average interest rate | | | [removed: 0.4] [added: 0.3] | % | | | — | | | | — | | | | — | | | | — | | | | — | | | | [removed: 0.4] [added: 0.3] | % | | | | |

| Average interest rate | | | [removed: 5.3 | % | | |] 13.1 | % | | | 13.2 | % | | | 13.3 | % | | | 13.9 | % | | | 14.1 | % | | | [removed: 5.8] | [added: | | | 13.2 |] % | | | | |

Under the Repurchase Agreement, we may enter into separate agreements with the Buyers party to the Repurchase Agreement, adjusting the Pricing Rate in effect.

| Fixed rate obligations | | $ | 346 | | | $ | 644 | | | $ | 644 | | | $ | 669 | | | $ | 56 | | | $ | — | | | $ | 2,359 | | | $ | 2,359 | |

| --- | --- | --- |

Our homebuilding segment generates operating liquidity and acquires capital assets through fixed-rate and variable-rate debt.

The homebuilding segment’s primary debt is a variable-rate working capital revolving credit facility that currently provides for unsecured borrowings up to $300,000, subject to certain borrowing base limitations.

The Facility expires in December 2010 and outstanding amounts bear interest at either (i) the prime rate or (ii) LIBOR plus applicable margin as defined within the Facility.

There were no borrowings under the Facility during 2009.

The weighted-average Pricing Rate for amounts outstanding under the Repurchase Agreement was 2.6% during 2009.

##### [Table of Contents](#tocpage)

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Fixed rate obligations (c) | | $ | 133,486 | | | $ | 402 | | | $ | 456 | | | $ | 520 | | | $ | 617 | | | $ | 55 | | | $ | 135,536 | | | $ | 136,995 | |

| (c) | | The $133,486 maturing in 2010 includes $133,370 for NVR’s 5% Senior Notes due June 2010. |

While we operate in multiple locations in fourteen states, primarily in the eastern part of the United States, approximately [removed: 38%] [added: 37%] of our home settlements in [removed: 2009] [added: 2010] occurred in the Washington, D.C. and Baltimore, MD metropolitan areas, which accounted for [removed: 48%] [added: 47%] of our [removed: 2009] [added: 2010] homebuilding revenues.

The Ryan Homes product is currently sold in [removed: twenty-five] [added: twenty-three] metropolitan areas located in Maryland, Virginia, West Virginia, Pennsylvania, New York, North Carolina, South Carolina, Ohio, New Jersey, Delaware, Kentucky, Indiana and Florida.

[removed: In] [added: During] 2009, our average price [removed: of a settled unit] was approximately [removed: $296,000.][added: $296,400.]

Our sole legal obligation and economic loss for failure to perform under these purchase agreements is limited to the amount of the deposit pursuant to the [removed: liquidating] [added: liquidated] damage provision contained within the purchase agreements.

The [added: current home] sales [removed: of new and existing homes also continue] [added: environment continues] to be adversely impacted by [added: high inventory levels; low consumer confidence driven by high unemployment rates; and] a [removed: tighter] [added: highly restrictive] mortgage lending environment that has made it more difficult for our customers to obtain mortgage financing.

During [removed: 2009,] [added: 2010,] the prices at which we settled homes ranged from approximately [removed: $56,000] [added: $97,000] to [removed: $2,000,000] [added: $1.7 million] and averaged approximately [removed: $296,000.][added: $297,100.]

Backlog totaled [removed: 3,531] [added: 2,916] units and approximately [removed: $1.1] [added: $1.0] billion at December 31, [removed: 2009] [added: 2010] compared to backlog of [removed: 3,164] [added: 3,531] units and approximately [removed: $1.0] [added: $1.1] billion at December 31, [removed: 2008.][added: 2009.]

Expressed as the total of all cancellations during the period as a percentage of gross sales during the period, our cancellation rate was approximately 14%, [removed: 23%] [added: 14%] and [removed: 21%] [added: 23%] in [removed: 2009, 2008] [added: 2010, 2009] and [removed: 2007,] [added: 2008,] respectively.

During [added: 2010,] 2009 and 2008, approximately [added: 6%,] 7% and 10% of a reporting quarter’s opening backlog cancelled during the fiscal quarter, respectively.

We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur in [removed: 2010.][added: future periods.]

See “Risk Factors” in Item [removed: 1A.][added: 1A of this Form 10-K.]

[added: We] also face competition from the home resale market.

In [removed: 2009,] [added: 2010,] NVRM closed approximately [removed: 8,000] [added: 8,600] loans with an aggregate principal amount of approximately [removed: $2.1] [added: $2.2] billion as compared to [removed: 8,600] [added: approximately 8,000] loans with an aggregate principal amount of approximately [removed: $2.4] [added: $2.1] billion in [removed: 2008.][added: 2009.]

NVRM’s mortgage loans in process that have not closed (“Pipeline”) at December 31, [removed: 2009] [added: 2010] and [removed: 2008,] [added: 2009,] had an aggregate principal balance of [removed: $770] [added: approximately $670] million and [removed: $730] [added: $770] million, respectively.

[removed: Our] [added: NVRM’s] cancellation rate was approximately [removed: 35%] [added: 29%] in [removed: 2009.][added: 2010.]

During [removed: 2008] [added: 2009] and [removed: 2007,] [added: 2008,] NVRM’s loan cancellation rates were approximately [removed: 49%] [added: 35%] and [removed: 45%,] [added: 49%,] respectively.

We can provide no assurance that our historical loan cancellation rates are indicative of the actual loan cancellation rate that may occur in [removed: 2010.][added: future periods.]

At December 31, [removed: 2009,] [added: 2010,] we employed [removed: 2,688] [added: 2,822] full-time persons, of whom [removed: 981] [added: 1,076] were officers and management personnel, [removed: 170] [added: 174] were technical and construction personnel, [removed: 556] [added: 580] were sales personnel, [removed: 462] [added: 490] were administrative personnel and [removed: 519] [added: 502] were engaged in various other service and labor activities.

Our website also includes a corporate governance section which contains our Corporate Governance Guidelines (which includes our Directors’ Independence Standards), Code of Ethics, Board of Directors’ Committee Charters for the Audit, Compensation, Corporate Governance, Nominating and Qualified Legal Compliance Committees, Policies and Procedures for the Consideration of Board of Director Candidates, Policies and Procedures [removed: on Security Holder] [added: Regarding] Communications with the [added: NVR, Inc.] Board of [removed: Directors and] [added: Directors,] the [removed: method by which interested parties may contact our independent lead director or] [added: Independent Lead Director and] the [removed: non-management or independent directors] [added: Non-Management Directors] as a group.

In 2010, our average price of a settled unit was approximately $297,100.

Historically, we generally have not engaged in land development (see discussion below on our recent limited land development activities).

None of the creditors of any of the development entities with which we have entered these purchase agreements have recourse to our general credit.

Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build and on our developers’ ability to timely deliver finished lots to meet the sales demands of our customers.

However, current economic conditions and the continued downturn of the homebuilding industry have exerted pressure on our developers’ ability to obtain acquisition and development financing or to raise equity investments to finance land development activity, potentially constraining our supply of finished lots.

This pressure has necessitated that in certain specific strategic circumstances we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development.

Once we acquire control of any raw ground, we will determine whether to sell the raw parcel to a developer and enter into a fixed price purchase agreement with the

developer to purchase the finished lots, or whether we will hire a developer to develop the land on our behalf.

While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so.

We expect, however, to continue to acquire substantially all of our finished lot inventory using fixed price purchase agreements with forfeitable deposits.

As of December 31, 2010, we controlled approximately 50,400 lots under purchase agreements with deposits in cash and letters of credit totaling approximately $174.3 million and $6.6 million respectively.

Included in the number of controlled lots are approximately 10,300 lots for which we have recorded a contract land deposit impairment reserve of approximately $73.5 million as of December 31, 2010.

In addition, we had an aggregate investment totaling approximately $37 million in three separate joint venture limited liability corporations (“JVs”), through which we controlled approximately 1,100 lots.

Further, as of December 31, 2010, we directly acquired four separate raw parcels of land, zoned for their intended use, with a current cost basis, including development costs, of approximately $78 million that we intend to develop into approximately 890 finished lots for use in our homebuilding operations.

See Note 3 to the consolidated financial statements included herein for additional information regarding JVs and land under development.

During 2010 the homebuilding environment continued to be negatively impacted by economic uncertainty.

The market stabilization we experienced toward the end of 2009 and into the first quarter of 2010 was negatively impacted by the April 30, 2010 expiration of the federal homebuyer tax credit.

After April 30, 2010, new home sales experienced sharp declines, providing evidence that rather than increasing overall demand, the tax credit may have merely accelerated existing demand.

See “Risk Factors” in Item 1A of this Form 10-K.

See “Risk Factors” in Item 1A in this Form 10-K.

We do not engage in land development.

The deposits required under the purchase agreements are in the form of cash or letters of credit in varying amounts and represent a percentage, typically ranging up to 10%, of the aggregate purchase price of the finished lots.

On a limited basis, we also obtain finished lots using joint venture limited liability corporations (“LLCs”).

All LLCs are typically structured such that we are a non-controlling member and are at risk only for the amount we have invested.

We are not a borrower, guarantor or obligor on any of the LLCs debt.

We enter into a standard fixed price purchase agreement to purchase lots from these LLCs.

At December 31, 2009, we had an aggregate investment totaling approximately $25 million in ten separate LLCs.

As of December 31, 2009, eight of these LLCs were non-performing and as a result, we had recorded an impairment reserve equal to our total investment of approximately $3 million in these LLCs due to our determination that our investment was not recoverable.

We do not expect to obtain any lots from these eight LLCs in future periods.

In the two performing LLCs, our aggregate investment totaled $22 million and we controlled approximately 760 lots.

At December 31, 2009, we had additional funding commitments totaling $4 million to one of the two performing LLCs.

##### [Table of Contents](#tocpage)

During 2009, the homebuilding environment in certain markets began to exhibit some stabilization after several years of declining sales and selling prices.

Despite this stabilization, the homebuilding market remains challenging and many market uncertainties remain due to the continuing economic recession.

Homebuyer confidence continues to be negatively impacted by concerns regarding job stability driven by historically high unemployment rates.

Slowed demand and high foreclosure rates have contributed to high levels of existing and new homes available for sale.

In addition, significant future uncertainties remain as to certain of the government’s stimulus programs, which we believe helped to stabilize home prices, as the federal tax credit for first time and move-up buyers and the Federal Reserve’s purchases of mortgage-backed securities are expected to end in 2010.

The termination of those programs may lead to a decline in demand and higher mortgage interest rates.

During 2008, our average price was approximately $338,000.

_Land Development_

Instead, we typically purchase finished lots from various land developers under fixed price purchase agreements that require deposits that may be forfeited if we fail to perform under the agreement.

We are not dependent on any single developer or on a small number of developers.

We

On July 18, 2007, former and current employees filed lawsuits against the Company in the Court of Common Pleas in Allegheny County, Pennsylvania and Hamilton County, Ohio, in Superior Court in Durham County, North Carolina, and in the Circuit Court in Montgomery County, Maryland, and on July 19, 2007 in the Superior Court in New Jersey, alleging that [removed: the Company] [added: we] incorrectly classified [removed: its] [added: our] sales and marketing representatives as being exempt from overtime wages.

[added: However, while a number of individuals have filed consents to join and assert] federal claims in the New York action, none of the groups of employees that the lawsuits purport to represent have been certified as a class.

[removed: The Company believes] [added: We believe] that [removed: its] [added: our] compensation practices in regard to sales and marketing representatives are entirely lawful and in compliance with two letter rulings from the United States Department of Labor (“DOL”) issued in January 2007.

Accordingly, [removed: the Company has] [added: we have] vigorously defended and [removed: intends] [added: intend] to continue to vigorously defend these lawsuits.

Because [removed: the Company is] [added: we are] unable to determine the likelihood of an unfavorable outcome of this case, or the amount of damages, if any, [removed: the Company has] [added: we have] not recorded any associated liabilities in the accompanying [added: condensed,] consolidated balance sheets.

[removed: NVR and its subsidiaries] [added: We] are also involved in various other litigation arising in the ordinary course of business.

In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on [removed: the] [added: our] financial position or results of [removed: operations of NVR.][added: operations.]

In June 2010, we received a Request for Information from the United States Environmental Protection Agency (the “EPA”) pursuant to Section 308 of the Clean Water Act.

The request seeks information about storm water discharge practices in connection with homebuilding projects completed or underway by us.

We have been cooperating with this request, have provided information to the EPA and intend to continue cooperating with the EPA’s inquiries.

At this time, we cannot predict the outcome of this inquiry, nor can we reasonably estimate the potential costs that may be associated with its eventual resolution.

In April 2010, NVRM received a Report of Examination (“ROE”) from the Office of the Commissioner of Banks of the State of North Carolina (the “NCCOB”) reporting certain findings that resulted from the NCCOB’s examination of selected files relating to loans originated by us in North Carolina between August 1, 2006 and August 31, 2009.

The ROE alleged that certain of the loan files reflected violations of North Carolina and/or U.S. lending or consumer protection laws.

The ROE requested that we correct or otherwise address the alleged violations and in some instances requested that we undertake an examination of all of our other loans in North Carolina to determine whether similar alleged violations may have occurred, and if so, to take corrective action.

We responded to the ROE by letter dated June 10, 2010, contesting the findings and allegations, providing factual information to correct certain of the findings, and refuting the NCCOB’s interpretation of applicable law.

On November 15, 2010, the NCCOB provided a written response to our June 10, 2010 letter

closing certain alleged violations while reasserting certain others.

On January 12, 2011, we responded to the NCCOB’s November 15, 2010 letter providing additional factual information to address the remaining findings and refuting the NCCOB’s interpretation of applicable law.

Accordingly, while the outcome of the matter is currently not determinable, we do not expect resolution of the matter to have a material adverse effect on our financial position.

However, while a number of individuals have filed consents to join and assert

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For the fiscal year ended December 31, [removed: 2009][added: 2010]

| [added: o] | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934 (NO FEE REQUIRED)] [added: 1934] |

For the transition period from [removed: to][added: ____ to _______________]

| Common stock, par value $0.01 per share [removed: 5% Senior Notes due 2010] | | New York Stock Exchange [removed: New York Stock Exchange] |

Yes [removed: o] [added: þ] No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K [added: (§229.405)] is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| Large accelerated filer þ | [removed: |] Accelerated filer o | [removed: |] Non-accelerated filer o (Do not check if a Smaller Reporting Company) | [removed: |] Smaller Reporting Company o |

The aggregate market value of the voting stock held by non-affiliates of NVR, Inc. on June 30, [removed: 2009,] [added: 2010,] the last business day of NVR, Inc.’s most recently completed second fiscal quarter, was approximately [removed: $2,752,200,000.][added: $3,693,820,000.]

As of February [removed: 24, 2010] [added: 21, 2011] there were [removed: 6,115,348] [added: 5,893,203] total shares of common stock outstanding.

Portions of the Proxy Statement of NVR, Inc. to be filed with the Securities and Exchange Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 on or prior to April 30, [removed: 2010] [added: 2011] are incorporated by reference into Part III of this report.

| | | | | Page | [removed: | | | |]

| [removed: [PART I](#101) | | | |] [added: PART I] | | | | |

[removed: | [Item 1A.](#103) | | Risk Factors | | | 6 | | | |][added: Item 1A.]

[removed: | [Item 1B.](#104) | |] Unresolved Staff Comments [removed: | | | 12 | | | |][added: 11]

[removed: | [Item 3.](#106) | |] Legal Proceedings [removed: | | | 12 | | | |][added: 12]

| | | Executive Officers of the Registrant | | [removed: |] 13 | [removed: | | |]

| [removed: [PART II](#108) | | | |] [added: PART II] | | | | |

[removed: | [Item 5.](#109) | |] Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [removed: | | | 14 | | | |][added: 14]

[removed: | [Item 6.](#110) | |] Selected Financial Data [removed: | | | 15 | | | |][added: 15]

[removed: | [Item 7.](#111) | |] Management’s Discussion and Analysis of Financial Condition and Results of Operations [removed: | | | 16 | | | |][added: 16]

[removed: | [Item 7A.](#112) | |] Quantitative and Qualitative Disclosure About Market Risk [removed: | | | 39 | | | |][added: 39]

[removed: | [Item 8.](#113) | |] Financial Statements and Supplementary Data [removed: | | | 41 | | | |][added: 42]

[removed: | [Item 9.](#114) | |] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure [removed: | | | 41 | | | |][added: 42]

[removed: | [Item 9A.](#115) | |] Controls and Procedures [removed: | | | 41 | | | |][added: 42]

[removed: | [Item 9B.](#116) | | Other Information | | | 41 | | | |][added: Item 9B.]

| [removed: [PART III](#117) | | | |] [added: PART III] | | | | |

[removed: | [Item 10.](#118) | |] Directors, Executive Officers, and Corporate Governance [removed: | | | 42 | | | |][added: 43]

[removed: | [Item 11.](#119) | | Executive Compensation | | | 42 | | | |][added: Item 11.]

[removed: | [Item 12.](#120) | |] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters [removed: | | | 42 | | | |][added: 43]

[removed: | [Item 13.](#121) | |] Certain Relationships and Related Transactions, and Director Independence [removed: | | | 43 | | | |][added: 44]

[removed: | [Item 14.](#122) | |] Principal Accountant Fees and Services [removed: | | | 43 | | | |][added: 44]

| [removed: [PART IV](#123) | | | |] [added: PART IV] | | | | |

[removed: | [Item 15.](#124) | |] Exhibits and Financial Statement Schedules [removed: | | | 43 | | | |][added: 44]

10-K 1 w79861e10vk.htm 10-K

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Item 1.

Business 2

Risk Factors 6

Item 1B.

Item 2.

Properties 11

Item 3.

Item 4.

\[Removed and Reserved\] 13

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Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Other Information 42

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Item 10.

Executive Compensation 43

Item 12.

Item 13.

Item 14.

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Item 15.

10-K 1 w77487e10vk.htm FORM 10-K

##### [Table of Contents](#tocpage)

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| [Item 1.](#102) | | Business | | | 2 | | | |

| [Item 2.](#105) | | Properties | | | 12 | | | |

| [Item 4.](#107) | | Submission of Matters to a Vote of Security Holders | | | 13 | | | |

| [EX-10.28](https://www.sec.gov/Archives/edgar/data/906163/000095012310018033/w77487exv10w28.htm) | | | | | | | | |

| [EX-21](https://www.sec.gov/Archives/edgar/data/906163/000095012310018033/w77487exv21.htm) | | | | | | | | |

| [EX-23](https://www.sec.gov/Archives/edgar/data/906163/000095012310018033/w77487exv23.htm) | | | | | | | | |

| [EX-31.1](https://www.sec.gov/Archives/edgar/data/906163/000095012310018033/w77487exv31w1.htm) | | | | | | | | |

| [EX-31.2](https://www.sec.gov/Archives/edgar/data/906163/000095012310018033/w77487exv31w2.htm) | | | | | | | | |

| [EX-32](https://www.sec.gov/Archives/edgar/data/906163/000095012310018033/w77487exv32.htm) | | | | | | | | |

Our corporate offices are located in Reston, Virginia, where we currently lease approximately 61,000 square feet of office [removed: space, of which approximately 9,800 square feet we have subleased to a third party.][added: space.]

These facilities range in size from approximately 40,000 square feet to 400,000 square feet and combined total approximately [removed: 1,000,000] [added: 1 million] square feet of manufacturing space.

Each of these leases contains various options for extensions of the lease and [removed: for the purchase of the facility.]

The Portland, Thurmont and Farmington leases expire in 2014, and the Kings Mountain and Burlington County leases expire in [removed: 2023] [added: 2022] and [removed: 2024,] [added: 2023,] respectively.

We also, in connection with both our homebuilding and mortgage banking businesses, lease office space in multiple locations for homebuilding divisional offices and mortgage banking and title services branches under leases expiring at various times through [removed: 2017,] [added: 2018,] none of which are individually material to our business.

We anticipate that, upon expiration of existing leases, we will be able to renew them or obtain comparable facilities on [added: terms] acceptable [removed: terms.][added: to us.]

for the purchase of the facility.

We expect to purchase a new manufacturing facility in the first quarter of 2011 in Dayton, OH.

The new facility will contain approximately 100,000 square feet of manufacturing space and production from the Dayton facility is expected to begin by the end of 2011.

| Name | | Age | | [added: | |] Positions |

| Paul C. Saville | | [removed: 54] | [added: 55] | [added: | |] President and Chief Executive Officer of NVR |

| Dennis M. Seremet | | [removed: 54] | [added: 56] | [added: | |] Senior Vice President, Chief Financial Officer and Treasurer of NVR |

| Robert W. Henley | | [removed: 43] | [added: 44] | [added: | |] Vice President and Controller of NVR |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| Robert A. Goethe | | | 56 | | | President of NVRM |

_Robert A.

Goethe_ was named President of NVRM effective January 25, 2010.

From 2008 until January, 2010, Mr. Goethe served as a Senior Principal of Mortgage Connect Corp. From 2006 to 2008, Mr. Goethe served as the Senior Executive Vice President of Regions Mortgage Corporation, and from 1996 until 2006, he served as the Chief Executive Officer of Regions Financial Corporation.

No matters were submitted to a vote of security holders during the quarter ended December 31, 2009.

| | | | | |

| --- | --- | --- | --- | --- |

| Dwight C. Schar | | 68 | | Chairman of the Board of NVR |

| William J. Inman | | 62 | | President of NVRM |

_Dwight C.

Schar_ relinquished the title of Executive Officer effective February 4, 2009, but will continue to serve as Chairman of the Board.

Mr. Schar’s revised role continues the leadership transition that separated the roles of Chairman and CEO to strengthen the operating and governance structure of the Company.

Mr. Schar has been Chairman of the Board since September 30, 1993.

Mr. Schar also served as our President and Chief Executive Officer from September 30, 1993 through June 30, 2005.

_William J.

Inman_ has been President of NVRM since January 1992.

In January 2010, Mr. Inman has announced his intention to retire after a period of transition to a successor.

This transition should be completed in the first quarter of 2010.

##### [Table of Contents](#tocpage)

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| --- | --- | --- |

| Item 5. | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |

Our shares of common stock are listed and principally traded on the New York Stock Exchange.

The following table sets forth the high and low prices per share for our common stock for each fiscal quarter during the years ended December 31, 2009 and 2008:

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | HIGH | | | | LOW | | |

| Prices per Share: | | | | | | | | |

| _2009_ | | | | | | | | |

| Fourth Quarter | | $ | 742.00 | | | $ | 607.00 | |

| Third Quarter | | $ | 698.28 | | | $ | 477.41 | |

| Second Quarter | | $ | 533.89 | | | $ | 416.24 | |

| First Quarter | | $ | 500.05 | | | $ | 310.69 | |

| _2008_ | | | | | | | | |

| Fourth Quarter | | $ | 600.00 | | | $ | 316.82 | |

| Third Quarter | | $ | 639.80 | | | $ | 452.00 | |

| Second Quarter | | $ | 679.37 | | | $ | 498.00 | |

| First Quarter | | $ | 661.00 | | | $ | 436.20 | |

As of the close of business on February 24, 2010, there were 383 shareholders of record.

We have never paid a cash dividend on our shares of common stock.

Our bank indebtedness contains certain restrictive covenants, which limit our ability to pay cash dividends on our common stock.

For additional information, see the discussion of the restrictive covenants in the Liquidity and Capital Resources discussion of Management’s Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 7 of the Form 10-K.

We had one repurchase authorization outstanding during the quarter ended December 31, 2009.

On July 31, 2007 (“July Authorization”), we publicly announced the Board of Directors’ approval for us to repurchase up to an aggregate of $300 million of our common stock in one or more open market and/or privately negotiated transactions.

Our shares of common stock are listed and principally traded on the New York Stock Exchange.

The following table sets forth the high and low prices per share for our common stock for each fiscal quarter during the years ended December 31, 2010 and 2009:

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | HIGH | | | | LOW | | |

| | | | | | | | | |

| Prices per Share: | | | | | | | | |

| _2010_ | | | | | | | | |

| Fourth Quarter | | $ | 699.28 | | | $ | 611.50 | |

| Third Quarter | | $ | 680.05 | | | $ | 595.00 | |

| Second Quarter | | $ | 769.50 | | | $ | 627.43 | |

| First Quarter | | $ | 759.27 | | | $ | 655.00 | |

| | | | | | | | | |

| _2009_ | | | | | | | | |

| Fourth Quarter | | $ | 742.00 | | | $ | 607.00 | |

| Third Quarter | | $ | 698.28 | | | $ | 477.41 | |

| Second Quarter | | $ | 533.89 | | | $ | 416.24 | |

| First Quarter | | $ | 500.05 | | | $ | 310.69 | |

As of the close of business on February 21, 2011, there were 364 shareholders of record.

We have never paid a cash dividend on our shares of common stock.

We had one repurchase authorization outstanding during the quarter ended December 31, 2010.

On July 29, 2010 (“July Authorization”), we publicly announced the Board of Directors’ approval for us to repurchase up to an aggregate of $300 million of our common stock in one or more open market and/or privately negotiated transactions.

The July Authorization does not have an expiration date.

The following table provides information regarding common stock repurchases for the quarter ended December 31, 2010:

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | Maximum Number (or | | | | | |

| | | | | | | | | | | Total Number of | | | | Approximate Dollar | | | | | |

| | | | | | | | | | | Shares Purchased as | | | | Value) of Shares | | | | | |

| | | | | | | Average Price | | | | Part of Publicly | | | that May Yet Be | | | | | | |

| | | Total Number of | | | | Paid | | | | Announced Plans or | | | | Purchased Under the | | | | | |

| Period | | Shares Purchased | | | | per Share | | | | Programs | | | | Plans or Programs | | | | | |

| October 1 - 31, 2010 | | | — | | | | — | | | | — | | | $ | 148,986,000 | | | | |

| November 1 - 30, 2010 | | | 52,216 | | | $ | 627.94 | | | | 52,216 | | | $ | 116,198,000 | | | | |

| December 1 - 31, 2010 | | | 11,300 | | | $ | 619.33 | | | | 11,300 | | | $ | 109,200,000 | | | | |

| | | | | | | | | | | | | | | | | | | | |

| Total | | | 63,516 | | | $ | 626.41 | | | | 63,516 | | | | | | | | |

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Stock Performance Graph

_COMPARISON OF CUMULATIVE TOTAL EQUITYHOLDER RETURN ON EQUITY_

(dollars in thousands, except per share amounts)

The following tables set forth selected consolidated financial data.

The selected income statement and balance sheet data have been derived from our consolidated financial statements for each of the periods presented and is not necessarily indicative of results of future operations.

The selected financial data should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and related notes included elsewhere in this report.

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| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | |

| | | 2010 | | | | 2009 | | | | 2008 | | | | 2007 | | | | 2006 | | |

| Consolidated Income Statement Data: | | | | | | | | | | | | | | | | | | | | |

| _Homebuilding data:_ | | | | | | | | | | | | | | | | | | | | |

| Revenues | | $ | 2,980,758 | | | $ | 2,683,467 | | | $ | 3,638,702 | | | $ | 5,048,187 | | | $ | 6,036,236 | |

| Gross profit | | | 542,466 | | | | 497,734 | | | | 457,692 | | | | 821,128 | | | | 1,334,971 | |

| | | | | | | | | | | | | | | | | | | | | |

| _Mortgage Banking data__:_ | | | | | | | | | | | | | | | | | | | | |

| Mortgage banking fees | | | 61,134 | | | | 60,381 | | | | 54,337 | | | | 81,155 | | | | 97,888 | |

| Interest income | | | 5,411 | | | | 2,979 | | | | 3,955 | | | | 4,900 | | | | 7,704 | |

| Interest expense | | | 1,126 | | | | 1,184 | | | | 754 | | | | 681 | | | | 2,805 | |

| | | | | | | | | | | | | | | | | | | | | |

| _Consolidated data:_ | | | | | | | | | | | | | | | | | | | | |

| Income from continuing operations | | $ | 206,005 | | | $ | 192,180 | | | $ | 100,892 | | | $ | 333,955 | | | $ | 587,412 | |

| Income from continuing operations per diluted share (1) | | $ | 33.42 | | | $ | 31.26 | | | $ | 17.04 | | | $ | 54.14 | | | $ | 88.05 | |

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| | | December 31, | | | | | | | | | | | | | | | | | | |

| | | 2010 | | | | 2009 | | | | 2008 | | | | 2007 | | | | 2006 | | |

| Consolidated Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | |

| Homebuilding inventory | | $ | 431,329 | | | $ | 418,718 | | | $ | 400,570 | | | $ | 688,854 | | | $ | 733,616 | |

| Contract land deposits, net | | | 100,786 | | | | 49,906 | | | | 29,073 | | | | 188,528 | | | | 402,170 | |

| Total assets | | | 2,260,061 | | | | 2,395,770 | | | | 2,103,236 | | | | 2,194,416 | | | | 2,473,808 | |

| Notes and loans payable | | | 92,089 | | | | 147,880 | | | | 210,389 | | | | 286,283 | | | | 356,632 | |

| Shareholders’ equity | | | 1,740,374 | | | | 1,757,262 | | | | 1,373,789 | | | | 1,129,375 | | | | 1,152,074 | |

| Cash dividends per share | | | — | | | | — | | | | — | | | | — | | | | — | |

| | | |

| --- | --- | --- |

| (1) | | For the years ended December 31, 2010, 2009, 2008, 2007 and 2006, income from continuing operations per diluted share was computed based on 6,164,617; 6,148,769; 5,920,285; 6,167,795 and 6,671,571 shares, respectively, which represents the weighted average number of shares and share equivalents outstanding for each year. |

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Based on that evaluation, the principal executive officer and principal financial officer concluded that the design and operation of these disclosure controls and procedures as of December 31, [removed: 2009] [added: 2010] were effective to provide reasonable assurance that information required to be disclosed in our reports under the Securities and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Based on our evaluation under the framework in _Internal Control — Integrated Framework_, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2009.][added: 2010.]

Our internal control over financial reporting as of December 31, [removed: 2009] [added: 2010] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report which is included herein.

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[added: | | |] None. [added: |]

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##### [Table of Contents](#tocpage)

Item 10 is hereby incorporated by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2010.][added: 2011.]

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Item 11 is hereby incorporated by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2010.][added: 2011.]

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| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. | |

Security ownership of certain beneficial owners and management is hereby incorporated by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2010.

Equity Compensation Plan Information

The table below sets forth information as of the end of our 2009 fiscal year for (i) all equity compensation plans approved by our shareholders and (ii) all equity compensation plans not approved by our shareholders:

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | Number of securities | | |

| | | | | | | | | | | remaining available for | | |

| | | Number of securities | | | | | | | | future issuance under | | |

| | | to be issued upon | | | | Weighted-average | | | | equity compensation | | |

| | | exercise of | | | | exercise price of | | | | plans (excluding | | |

| | | outstanding options, | | | | outstanding options, | | | | securities reflected in | | |

| Plan category | | warrants and rights | | | | warrants and rights | | | | the first column) | | |

| Equity compensation plans approved by security holders | | | 119,913 | | | $ | 490.92 | | | | — | |

| Equity compensation plans not approved by security holders | | | 879,229 | | | $ | 321.78 | | | | 134,022 | |

| Total | | | 999,142 | | | $ | 342.08 | | | | 134,022 | |

Equity compensation plans approved by our shareholders include the NVR, Inc. Management Long-Term Stock Option Plan; the NVR, Inc. 1998 Management Long-Term Stock Option Plan; and the 1998 Directors’ Long-Term Stock Option Plan.

The only equity compensation plan that was not approved by our shareholders is the NVR, Inc. 2000 Broadly-Based Stock Option Plan.

See Note 9 in the accompanying consolidated financial statements for a description of each of our equity compensation plans.

##### [Table of Contents](#tocpage)

Security ownership of certain beneficial owners and management is hereby incorporated by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, 2011.

Equity Compensation Plan Information

The table below sets forth information as of the end of our 2010 fiscal year for (i) all equity compensation plans approved by our shareholders and (ii) all equity compensation plans not approved by our shareholders:

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | Number of | | |

| | | | | | | | | | | securities | | |

| | | | | | | | | | | remaining available | | |

| | | Number of | | | | | | | | for future issuance | | |

| | | securities to be | | | | | | | | under equity | | |

| | | issued upon | | | | Weighted-average | | | | compensation plans | | |

| | | exercise of | | | | exercise price of | | | | (excluding | | |

| | | outstanding | | | | outstanding | | | | securities | | |

| | | options, warrants | | | | options, warrants | | | | reflected in the | | |

| Plan category | | and rights | | | | and rights | | | | first column) | | |

| Equity compensation plans approved by security holders (1) | | | 533,638 | | | $ | 469.99 | | | | 270,247 | |

| | | | | | | | | | | | | |

| Equity compensation plans not approved by security holders | | | 669,514 | | | $ | 458.02 | | | | — | |

| | | | | | | | | | | | | |

| Total | | | 1,203,152 | | | $ | 463.33 | | | | 270,247 | |

| (1) | | This category includes the restricted share units (“RSUs”) authorized by the 2010 Equity Incentive Plan, which was approved by our shareholders at the May 4, 2010 Annual Meeting. At December 31, 2010, there are 149,727 RSUs outstanding, issued at a $0 exercise price. Of the total 270,247 shares remaining available for future issuance, up to 90,273 may be issued as RSUs. |

| --- | --- | --- |

Equity compensation plans approved by our shareholders include the NVR, Inc. Management Long-Term Stock Option Plan; the NVR, Inc. 1998 Management Long-Term Stock Option Plan; the 1998 Directors’ Long-Term Stock Option Plan; and the 2010 Equity Incentive Plan.

The only equity compensation plan that

was not approved by our shareholders is the NVR, Inc. 2000 Broadly-Based Stock Option Plan.

See Note 9 in the accompanying consolidated financial statements for a description of each of our equity compensation plans.

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Item 13 is hereby incorporated by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2010.][added: 2011.]

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Item 14 is hereby incorporated by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2010.][added: 2011.]

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[removed: Exhibits][added: | 2. | | Exhibits |]

| _Exhibit_ | | | [removed: |]

| _Number_ | | [removed: |] _Description_ |

| [removed: | 3.1] [added: 10.13*] | | [removed: Restated Articles of Incorporation of] [added: The] NVR, Inc. [removed: (“NVR”).] [added: 2010 Equity Incentive Plan.] Filed as [removed: Exhibit 99.1] [added: exhibit 10.1] to NVR’s Form [removed: 8-K] [added: S-8] filed [added: on] May 4, [removed: 2007] [added: 2010] and incorporated herein by reference. |

| [removed: |] 4.1 | | Indenture dated as of April 14, 1998 between NVR, as issuer and the Bank of New York as trustee. Filed as Exhibit 4.3 to NVR’s Current Report on Form 8-K filed April 23, 1998 and incorporated herein by reference. |

| [removed: |] 4.2 | | Form of Note (included in Indenture filed as Exhibit 4.1). |

| [removed: |] 10.1* | | Employment Agreement between NVR, Inc. and [removed: Dwight] [added: Paul] C. [removed: Schar] [added: Saville] dated [removed: July 1, 2005.] [added: December 21, 2010.] Filed as Exhibit 10.1 to NVR’s Form 8-K filed on [removed: June 29, 2005] [added: December 21, 2010] and incorporated herein by reference. |

| [removed: |] 10.2* | | Employment Agreement between NVR, Inc. and [removed: Paul C. Saville] [added: Dennis M. Seremet] dated [removed: July 1, 2005.] [added: December 21, 2010.] Filed as Exhibit 10.2 to NVR’s Form 8-K filed on [removed: June 29, 2005] [added: December 21, 2010] and incorporated herein by reference. |

| [removed: |] 10.3* | | Employment Agreement between NVR, Inc. and [removed: Dennis M. Seremet] [added: Robert A. Goethe] dated [removed: July 1, 2005.] [added: December 21, 2010.] Filed as Exhibit 10.3 to NVR’s Form 8-K filed on [removed: June 29, 2005] [added: December 21, 2010] and incorporated herein by reference. |

| [removed: |] 10.4* | | Employment Agreement between NVR, Inc. and [removed: William J. Inman] [added: Robert W. Henley] dated [removed: July 1, 2005.] [added: December 21, 2010.] Filed as Exhibit 10.4 to NVR’s Form 8-K filed on [removed: June 29, 2005] [added: December 21, 2010] and incorporated herein by reference. |

| [removed: |] 10.5* | | Profit Sharing Plan of NVR, Inc. and Affiliated Companies. Filed as Exhibit 4.1 to NVR’s Registration Statement on Form S-8 (No. 333-29241) filed June 13, 1997 and incorporated herein by reference. |

| [removed: |] 10.6* | | Employee Stock Ownership Plan of NVR, Inc. Incorporated by reference to NVR’s Annual Report on Form 10-K/A for the year ended December 31, 1994. |

| [removed: |] 10.7* | | NVR, Inc. 1998 Management Long-Term Stock Option Plan. Filed as Exhibit 4 to NVR’s Registration Statement on Form S-8 (No. 333-79951) filed June 4, 1999 and incorporated herein by reference. |

| [removed: |] 10.8* | | NVR, Inc. 1998 Directors’ Long-Term Stock Option Plan. Filed as Exhibit 4 to NVR’s Registration Statement on Form S-8 (No. 333-79949) filed June 4, 1999 and incorporated herein by reference. |

| [removed: |] 10.09* | | NVR, Inc. Management Long-Term Stock Option Plan. Filed as Exhibit 99.3 to NVR’s Registration Statement on Form S-8 (No. 333-04975) filed May 31, 1996 and incorporated herein by reference. |

| [removed: |] 10.10* | | NVR, Inc. 2000 Broadly-Based Stock Option Plan. Filed as Exhibit 99.1 to NVR’s Registration Statement on Form S-8 (No. 333-56732) filed March 8, 2001 and incorporated herein by reference. |

| [removed: |] 10.11* | | NVR, Inc. Nonqualified Deferred Compensation Plan. Filed as Exhibit 10.1 to NVR’s Form 8-K filed on December 16, 2005 and incorporated herein by reference. |

| [removed: | 10.13*] [added: 10.12*] | | Description of the Board of Directors’ compensation arrangement. Filed as Exhibit 10.27 to NVR’s Annual Report on Form 10-K for the period ended December 31, 2004 and incorporated herein by reference. |

| [removed: | 10.15] [added: 10.23] | | [removed: Fifteenth] [added: First] Amendment to [removed: Loan] [added: Repurchase] Agreement dated [removed: as of] August [removed: 24, 2006 between] [added: 5, 2008 among] NVR [removed: Mortgage Finance, Inc.] [added: Finance] and U.S. Bank National Association, [removed: JPMorgan Chase Bank, Guaranty Bank, Comerica Bank, National City Bank] [added: as agent] and [removed: Washington Mutual Bank, F.A.] [added: a Buyer, and the other Buyers.] Filed as Exhibit 10.1 to NVR’s Form 8-K filed August [removed: 24, 2006] [added: 7, 2009] and incorporated herein by reference. |

| [removed: |] 10.19* | | The Form of Non-Qualified Stock Option Agreement under the NVR, Inc. 2000 Broadly Based Stock Option Plan. Filed as Exhibit 10.1 to NVR’s Form 8-K filed January 3, 2008 and incorporated herein by reference. |

| [removed: |] 10.20* | | The Form of Non-Qualified Stock Option Agreement under the 1998 Directors’ Long-Term Stock Option Plan. Filed as Exhibit 10.34 to NVR’s Annual Report on Form 10-K for the period ended December 31, 2007 and incorporated herein by reference. |

| [removed: |] 10.21 | | Repurchase Agreement dated August 5, 2008 among NVR Finance and U.S. Bank National Association, as Agent, and other lenders party thereto. Filed as Exhibit 10.1 to NVR’s Form 8-K filed on August 8, 2008 and incorporated herein by reference. |

| [removed: | 10.28*] [added: 10.22*] | | Summary of [removed: 2010] [added: 2011] Named Executive Officer annual incentive compensation plan. Filed herewith. |

| [removed: | 10.29] [added: 10.24] | | [removed: First] [added: Second] Amendment to [added: Master] Repurchase Agreement dated [removed: August 5, 2008] [added: July 30, 2010] among [removed: NVR Finance and] U.S. Bank National Association, as [removed: agent] [added: Agent] and a Buyer, [removed: and] the other [removed: Buyers.] [added: Buyers party hereto and NVR Mortgage Finance, Inc., as Seller.] Filed as Exhibit [removed: 10.1] [added: 10.6] to NVR’s [added: Quarterly report on] Form [removed: 8-K filed August 7, 2009] [added: 10-Q for the Quarter ended June 30, 2010] and incorporated herein by reference. |

| [removed: |] 21 | | NVR, Inc. Subsidiaries. Filed herewith. |

| [removed: |] 23 | | Consent of KPMG LLP (Independent Registered Public Accounting Firm). Filed herewith. |

| [removed: |] 31.1 | | Certification of NVR’s Chief Executive Officer pursuant to Rule 13a-14(a). Filed herewith. |

| [removed: |] 31.2 | | Certification of NVR’s Chief Financial Officer pursuant to Rule 13a-14(a). Filed herewith. |

| [removed: |] 32 | | Certification of NVR’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith. |

| /s/ Dwight C. Schar [added: Dwight C. Schar] | | Chairman | | [added: February 25, 2011] |

| /s/ C. E. Andrews [added: C. E. Andrews] | | Director | | [added: February 25, 2011] |

| /s/ Robert C. Butler [added: Robert C. Butler] | | Director | | [added: February 25, 2011] |

| /s/ Timothy M. Donahue [added: Timothy M. Donahue] | | Director | | [added: February 25, 2011] |

| /s/ Alfred E. Festa [added: Alfred E. Festa] | | Director | | [added: February 25, 2011] |

| /s/ Manuel H. Johnson [added: Manuel H. Johnson] | | Director | | [added: February 25, 2011] |

| /s/ William A. Moran [added: William A. Moran] | | Director | | [added: February 25, 2011] |

| /s/ David A. Preiser [added: David A. Preiser] | | Director | | [added: February 25, 2011] |

| /s/ W. Grady Rosier [added: W. Grady Rosier] | | Director | | [added: February 25, 2011] |

| /s/ John M. Toups [added: John M. Toups] | | Director | | [added: February 25, 2011] |

| /s/ Paul W. Whetsell [added: Paul W. Whetsell] | | Director | | [added: February 25, 2011] |

| 3.1 | | Restated Articles of Incorporation of NVR, Inc. (“NVR”). Filed herewith. |

| 3.2 | | Bylaws, as amended, of NVR, Inc. Filed herewith. |

| _Exhibit_ | | |

| _Number_ | | _Description_ |

| 10.14* | | The Form of Non-Qualified Stock Option Agreement (Management grants) under the NVR, Inc. 2010 Equity incentive Plan. Filed as exhibit 10.1 to NVR’s Form 8-K filed on May 6, 2010 and incorporated herein by reference. |

| 10.15* | | The Form of Non-Qualified Stock Option Agreement (Director grants) under the NVR, Inc. 2010 Equity incentive Plan. Filed as exhibit 10.2 to NVR’s Form 8-K filed on May 6, 2010 and incorporated herein by reference. |

| 10.16* | | The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2010 Equity incentive Plan. Filed as exhibit 10.3 to NVR’s Form 8-K filed on May 6, 2010 and incorporated herein by reference. |

| 10.17* | | The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2010 Equity incentive Plan. Filed as exhibit 10.4 to NVR’s Form 8-K filed on May 6, 2010 and incorporated herein by reference. |

| 10.18 | | Director Resignation Agreement with all Class II director nominees and current Class I directors, dated February 22, 2010. Filed as Exhibit 10.1 to NVR’s Form 8-K filed February 23, 2010 and incorporated herein by reference. |

| _Exhibit_ | | |

| _Number_ | | _Description_ |

| 101.INS | | XBRL Instance Document |

| 101.SCH | | XBRL Taxonomy Extension Schema Document |

| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document |

| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document |

| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document |

| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document |

February 25, 2011

February 25, 2011

| | | 2010 | | | | 2009 | | |

| Land under development | | | 78,058 | | | | — | |

| | | | 431,329 | | | | 418,718 | |

| Assets related to consolidated variable interest entities | | | 22,371 | | | | 70,430 | |

| | | | 2,056,273 | | | | 2,335,727 | |

| | | | 203,788 | | | | 60,043 | |

| | | 2010 | | | | 2009 | | |

| Liabilities related to consolidated variable interest entities | | | 500 | | | | 65,915 | |

| Non-recourse debt related to consolidated variable interest entities | | | 7,592 | | | | — | |

| | | | 416,178 | | | | 606,858 | |

| Note payable | | | 90,338 | | | | 12,344 | |

| | | | 103,509 | | | | 31,650 | |

| Proceeds from stock options exercised | | | — | | | | 52,078 | | | | — | | | | — | | | | — | | | | — | | | | 52,078 | |

| Proceeds from stock options exercised | | | — | | | | 78,543 | | | | — | | | | — | | | | — | | | | — | | | | 78,543 | |

| Net income | | | — | | | | — | | | | 206,005 | | | | — | | | | — | | | | — | | | | 206,005 | |

| Proceeds from stock options exercised | | | — | | | | 77,492 | | | | — | | | | — | | | | — | | | | — | | | | 77,492 | |

| _Balance, December 31, 2010_ | | $ | 206 | | | $ | 951,234 | | | $ | 4,029,072 | | | $ | (3,240,138 | ) | | $ | (27,582 | ) | | $ | 27,582 | | | $ | 1,740,374 | |

| Distribution of earnings from unconsolidated joint ventures | | | 1,307 | | | | — | | | | — | |

| Investments in unconsolidated joint ventures | | | (2,000 | ) | | | — | | | | — | |

| Distribution of capital from unconsolidated joint ventures | | | 1,193 | | | | — | | | | — | |

| Net borrowings under non-recourse debt related to consolidated variable interest entity | | | 7,592 | | | | — | | | | — | |

| --- | --- | --- |

| | | | |

| --- | --- | --- | --- |

| | 3.2 | | Bylaws, as amended, of NVR, Inc. Filed as Exhibit 99.2 to Form 8-K filed on May 4, 2007 and incorporated herein by reference. |

| | 4.3 | | Fourth Supplemental Indenture, dated June 17, 2003, between NVR and U.S. Bank Trust National Association, as successor to The Bank of New York, as trustee. Filed as Exhibit 4.1 to NVR’s Current Report on Form 8-K filed June 17, 2003 and incorporated herein by reference. |

| | 4.4 | | Form of Note (included in Indenture filed as Exhibit 4.3). |

##### [Table of Contents](#tocpage)

| | 10.12 | | Credit Agreement dated as of December 7, 2005 among NVR, Inc. and the lenders party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, U.S. Bank, National Association, as Syndication Agent, SunTrust Bank and Wachovia Bank, National Association, as Documentation Agents, AmSouth Bank, Comerica Bank, Calyon New York Branch and Mizuho Corporate Bank, Ltd., as Managing Agents, and J.P. Morgan Securities Inc., as Lead Arranger and Sole Book Runner. Filed as Exhibit 10.1 to NVR’s Form 8-K filed December 12, 2005 and incorporated herein by reference. |

| | 10.14* | | Amendment No. 1 to Employment Agreement between NVR, Inc. and Dwight C. Schar dated December 21, 2006. Filed as Exhibit 10.1 to NVR’s Form 8-K filed December 22, 2006 and incorporated herein by reference. |

| | 10.16 | | Commitment and Acceptance dated March 27, 2006 increasing the commitment under NVR, Inc.’s existing revolving credit agreement with JPMorgan Chase Bank, as Administrative Agent, and the Lenders that are parties thereto, dated December 7, 2005 by $45 million to an aggregate commitment of $445 million. Filed as Exhibit 10.1 to NVR’s Form 8-K filed March 30, 2006 and incorporated herein by reference. |

| | 10.17 | | Commitment and Acceptance dated August 16, 2006 increasing the commitment under NVR, Inc.’s existing revolving credit agreement with JPMorgan Chase Bank, as Administrative Agent, and the Lenders that are parties thereto, dated December 7, 2005 by $155 million to an aggregate commitment of $600 million. Filed as Exhibit 10.1 to NVR’s Form 8-K filed August 17, 2006 and incorporated herein by reference. |

| | 10.18* | | Amendment No. 2 to Employment Agreement between NVR, Inc. and Dwight C. Schar dated November 6, 2007. Filed as Exhibit 10.1 to NVR’s Form 8-K filed November 7, 2007 and incorporated herein by reference. |

| | 10.22* | | Amendment No. 3 to Employment Agreement between NVR, Inc. and Dwight C. Schar dated November 6, 2008. Filed as Exhibit 10.1 to NVR’s Form 8-K filed November 6, 2008 and incorporated herein by reference. |

| | 10.23* | | Amendment No. 4 to Employment Agreement between NVR, Inc. and Dwight C. Schar dated January 1, 2009. Filed as Exhibit 10.24 to NVR’s Annual Report on form 10-K for the period ended December 31, 2008 and incorporated herein by reference. |

| | 10.24* | | Amendment No. 1 to Employment Agreement between NVR, Inc. and Paul C. Saville dated January 1, 2009. Filed as Exhibit 10.25 to NVR’s Annual Report on form 10-K for the period ended December 31, 2008 and incorporated herein by reference. |

| | 10.25* | | Amendment No. 1 to Employment Agreement between NVR, Inc. and William J. Inman dated January 1, 2009. Filed as Exhibit 10.26 to NVR’s Annual Report on form 10-K for the period ended December 31, 2008 and incorporated herein by reference. |

| | 10.26* | | Amendment No. 1 to Employment Agreement between NVR, Inc. and Dennis M. Seremet dated July 30, 2008. Filed as Exhibit 10.27 to NVR’s Annual Report on form 10-K for the period ended December 31, 2008 and incorporated herein by reference. |

| | 10.27* | | Amendment No. 2 to Employment Agreement between NVR, Inc. and Dennis M. Seremet dated January 1, 2009. Filed as Exhibit 10.28 to NVR’s Annual Report on form 10-K for the period ended December 31, 2008 and incorporated herein by reference. |

| | 10.30 | | First Amendment to Credit Agreement dated as of December 7, 2005 among NVR, Inc. and the lenders party hereto, JPMorgan Chase Bank, N.A., as Administrative Agent, U.S. Bank, National Association, as Syndication Agent, SunTrust Bank and Wachovia Bank, National Association, as Documentation Agents, AmSouth Bank, Comerica Bank, Calyon New York Branch and Mizuho Corporate Bank, Ltd., as Managing Agents, and J.P. Morgan Securities Inc., as Lead Arranger and Sole Book Runner. Filed as Exhibit 10.2 to NVR’s Form 8-K filed August 7, 2009 and incorporated herein by reference. |

| | | |

| Dwight C. Schar | | | | February 26, 2010 |

| C. E. Andrews | | | | February 26, 2010 |

| Robert C. Butler | | | | February 26, 2010 |

| Timothy M. Donahue | | | | February 26, 2010 |

| Alfred E. Festa | | | | February 26, 2010 |

| Manuel H. Johnson | | | | February 26, 2010 |

| William A. Moran | | | | February 26, 2010 |

| David A. Preiser | | | | February 26, 2010 |

| W. Grady Rosier | | | | February 26, 2010 |

| John M. Toups | | | | February 26, 2010 |

| Paul W. Whetsell | | | | February 26, 2010 |

| Paul C. Saville | | | | February 26, 2010 |

| Dennis M. Seremet | | | | February 26, 2010 |

| Robert W. Henley | | | | February 26, 2010 |

February 26, 2010

| | | | | | | | | |

| | | | 418,718 | | | | 400,570 | |

| Consolidated assets not owned | | | 70,430 | | | | 114,930 | |

| | | | 2,335,727 | | | | 2,012,457 | |

| | | | 60,043 | | | | 90,779 | |