NVR (NVR) 10-K risk factor changes: FY2017 vs FY2016

| [removed: |] • | actual and expected direction of interest rates, which affect our costs, the availability of construction financing, and long-term financing for potential purchasers of homes; |

| [removed: |] • | the availability of mortgage financing; |

| [removed: |] • | the availability of adequate land in desirable locations on favorable terms; |

| [removed: |] • | unexpected changes in customer preferences; and |

| [removed: |] • | changes in the national economy and in the local economies of the markets in which we operate. |

These factors and thus, the homebuilding [removed: business,] [added: and mortgage banking businesses,] have at times in the past been cyclical in nature.

In particular, during [removed: 2016,] [added: 2017,] approximately 23% and [removed: 11%] [added: 9%] of our home settlements occurred in the Washington, D.C. and Baltimore, MD metropolitan areas, respectively, which accounted for approximately 30% and [removed: 13%,] [added: 11%,] respectively, of our [removed: 2016] [added: 2017] homebuilding revenues.

The tightening of credit standards and the availability of suitable mortgage financing could prevent customers from buying our homes and could prevent buyers of our customers’ homes from obtaining mortgages they need to complete that purchase, either of which could result in [removed: our] potential customers’ inability to buy a home from us.

If [removed: our] potential customers or the buyers of our customers’ current homes are not able to obtain suitable financing, the result could have a material adverse effect on our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.

If our ability to sell mortgages to investors is impaired, we may be required to fund these commitments ourselves, or [added: we] may not be able to originate loans at all.

In the event of adverse changes in [removed: economic or] [added: economic,] market [added: or project] conditions, we may cease further building activities in certain communities or restructure existing Lot Purchase Agreements, resulting in forfeiture of some or all of any remaining land contract deposit paid to the developer.

[removed: Environmental laws and conditions may result in delays, cause us to incur substantial compliance and other costs, or prohibit or severely restrict] homebuilding activity in certain environmentally sensitive regions or areas, thereby adversely affecting our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.

We are an approved seller/servicer of FNMA [added: and FHLMC] mortgage loans and an approved seller/issuer of GNMA, [removed: FHLMC,] VA and FHA mortgage loans, and are subject to all of those agencies’ rules and regulations.

| [removed: |] • | for suitable and desirable lots at acceptable prices; |

| [removed: |] • | from selling incentives offered by competing builders within and across developments; and |

| [removed: |] • | from the existing home resale market. |

From time to time, we [removed: may become] [added: are] involved in litigation and other legal proceedings relating to claims arising from our operations in the normal course of business.

These events may impact our physical facilities or those of our suppliers or [removed: subcontractors,] [added: subcontractors and our housing inventories,] causing us material increases in costs, or delays in construction of homes, which could have a material adverse effect upon our sales, profitability, stock performance, ability to service our debt obligations and future cash flows.

| | |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

Environmental laws and conditions may result in delays, cause us to incur substantial compliance and other costs, or prohibit or severely restrict

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

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, including through the use of encryption and authentication technologies.

Additionally, we have increased our monitoring capabilities to enhance early detection and rapid response to potential security anomalies.

These security measures may not be sufficient for all possible occurrences and may be vulnerable to hacking, employee error, malfeasance, system error, faulty password management or other irregularities.

Further, development and maintenance of these measures are costly and require ongoing monitoring and updating as technologies change and efforts to overcome security measures become increasingly sophisticated.

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

[removed: | |] (dollars in thousands, except per share data) [removed: |]

Results of Operations for the Years Ended December 31, [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014][added: 2015]

As of December 31, [removed: 2016,] [added: 2017,] we controlled lots as described below.

We controlled approximately [removed: 73,200] [added: 84,300] lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately [removed: $396,200] [added: $393,900] and [removed: $2,400,] [added: $1,900,] respectively.

Included in the number of controlled lots are approximately [removed: 4,000] [added: 4,600] lots for which we have recorded a contract land deposit impairment reserve of approximately [removed: $31,300] [added: $30,000] as of December 31, [removed: 2016.][added: 2017.]

We had an aggregate investment totaling approximately [removed: $49,400] [added: $45,500] in six JVs, expected to produce approximately [removed: 7,400] [added: 7,300] lots.

Of the lots to be produced by the JVs, approximately [removed: 4,200] [added: 3,900] lots were controlled by us and approximately [removed: 3,200] [added: 3,400] lots were either under contract with unrelated parties or currently not under contract.

We directly owned four separate raw land parcels, zoned for their intended use, with a current cost basis, including development costs, of approximately [removed: $47,000] [added: $34,200] that we intend to develop into approximately [removed: 600] [added: 500] finished lots.

We had additional funding commitments of approximately [removed: $12,000] [added: $7,900] under a joint development agreement related to one parcel, a portion of which we expect will be offset by development credits of approximately [removed: $7,100.][added: $4,700.]

In addition to the lots we currently control as discussed above, we have certain properties under contract with land owners that are expected to yield approximately [removed: 9,600] [added: 10,700] lots.

These properties are controlled with cash deposits [added: and letters of credit] totaling approximately [removed: $14,900] [added: $6,600 and $100, respectively,] as of December 31, [removed: 2016,] [added: 2017,] of which approximately [removed: $1,400] [added: $5,800] is refundable if we do not perform under the contract.

Our consolidated revenues for the year ended December 31, [removed: 2016] [added: 2017] totaled [removed: $5,822,544,] [added: $6,305,840,] an increase of [removed: 13%] [added: 8%] from [removed: $5,159,008] [added: $5,822,544] in [removed: 2015.][added: 2016.]

Our net income for [removed: 2016] [added: 2017] was [removed: $425,262,] [added: $537,521,] or [removed: $103.61] [added: $126.77] per diluted share, increases of [removed: 11%] [added: 26%] and [removed: 15%] [added: 22%] compared to [removed: 2015] [added: 2016] net income and diluted earnings per share, respectively.

Our homebuilding gross profit margin percentage [removed: decreased] [added: increased] to [removed: 17.5%] [added: 19.2%] in [removed: 2016] [added: 2017] from [removed: 18.7%] [added: 17.5%] in [removed: 2015.][added: 2016.]

New orders, net of cancellations (“New Orders”) during [removed: 2016] [added: 2017] increased [removed: 11%] [added: 13%] from [removed: 2015] [added: 2016] while our average New Order sales price [removed: increased 2%] [added: decreased 1%] to [removed: $386.4] [added: $383.2] in [removed: 2016.][added: 2017.]

Our backlog of homes sold but not yet settled with the customer as of December 31, [removed: 2016] [added: 2017] increased on a unit basis by [removed: 11%] [added: 24%] to [removed: 6,884] [added: 8,531] units and increased on a dollar basis by [removed: 14%] [added: 21%] to [removed: $2,704,277] [added: $3,277,888] when compared to December 31, [removed: 2015.][added: 2016.]

We believe that a continuation of the housing market recovery is dependent upon [removed: a] sustained [removed: overall] economic [removed: recovery,] [added: growth,] driven by continued [removed: improvement] [added: improvements] in job and wage growth and household formation.

| | | Year Ended December 31, | | | | | | | | [removed: | | |]

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| Revenues | | $ | [removed: 5,709,223] [added: 6,175,521] | | | $ | [removed: 5,065,200] [added: 5,709,223] | | | $ | [removed: 4,375,059] [added: 5,065,200] | |

| Cost of sales | | $ | [removed: 4,707,861] [added: 4,990,378] | | | $ | [removed: 4,118,782] [added: 4,707,861] | | | $ | [removed: 3,568,586] [added: 4,118,782] | |

| Gross profit margin percentage | | [added: 19.2] | [removed: 17.5] | % | | [added: 17.5] | [removed: 18.7] | % | | [added: 18.7] | [removed: 18.4] | % |

| Selling, general and administrative expenses | | $ | [removed: 382,459] [added: 392,272] | | | $ | [removed: 371,127] [added: 382,459] | | | $ | [removed: 358,851] [added: 371,127] | |

| Settlements (units) | | [added: 15,961] | [removed: 14,928] | | | [added: 14,928] | [removed: 13,326] | | | [added: 13,326] | [removed: 11,859] | |

| Average settlement price | | $ | [removed: 381.2] [added: 386.9] | | | $ | [removed: 379.9] [added: 381.2] | | | $ | [removed: 368.5] [added: 379.9] | |

| New orders (units) | | [added: 17,608] | [removed: 15,583] | | | [added: 15,583] | [removed: 14,080] | | | [added: 14,080] | [removed: 12,389] | |

| Average new order price | | $ | [removed: 386.4] [added: 383.2] | | | $ | [removed: 378.7] [added: 386.4] | | | $ | [removed: 373.7] [added: 378.7] | |

| Backlog (units) | | [added: 8,531] | [removed: 6,884] | | | [added: 6,884] | [removed: 6,229] | | | [added: 6,229] | [removed: 5,475] | |

| Average backlog price | | $ | [removed: 392.8] [added: 384.2] | | | $ | [removed: 381.3] [added: 392.8] | | | $ | [removed: 384.6] [added: 381.3] | |

| New order cancellation rate | | [added: 14.0] | [removed: 15.5] | % | | [added: 15.5] | [removed: 14.5] | % | | [added: 14.5] | [removed: 14.6] | % |

New Orders and the average sales price of New Orders increased in each of our market segments due to more favorable [added: market conditions in 2016 compared to 2015, which led to a higher sales absorption rate year over year.]

[added: New Orders increased in each of our] market [added: segments due to more favorable market] conditions in [removed: 2016] [added: 2017] compared to [removed: 2015,] [added: 2016,] which led to [removed: a] higher [removed: sales] [added: community] absorption [removed: rate] [added: rates] year over year.

Expressed as the total of all cancellations during the period as a percentage of gross sales during the period, our cancellation rate was approximately [removed: 16%] [added: 14%] in [removed: 2016] [added: 2017] and [added: approximately] 15% in both [removed: 2015] [added: 2016] and [removed: 2014.][added: 2015.]

Additionally, during each of [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] approximately 6% of a reporting quarter’s opening backlog cancelled during the quarter.

Other than those units that are cancelled, we expect to settle substantially all of our December 31, [removed: 2016] [added: 2017] backlog during [removed: 2017.][added: 2018.]

Homebuilding revenues increased [removed: 16%] [added: 8%] in [removed: 2015] [added: 2017] compared [removed: 2014,] [added: to 2016, primarily] as a result of a [removed: 12%] [added: 7%] increase in the number of units settled [removed: and a 3% increase in the average settlement price] year over year.

[removed: In addition,] [added: The increases in] the [removed: unit] [added: number of units settled] and average settlement price [removed: increases] were [removed: favorably impacted by a 15%] [added: primarily attributable to an 11%] increase in [added: segment] New Orders and a 2% increase in the average sales price of New [removed: Orders, respectively,] [added: Orders] for the first six months of [removed: 2015] [added: 2017] compared to the same period in [removed: 2014.][added: 2016.]

[removed: The number of] [added: Segment] New Orders and the average sales price of New Orders increased 14% and 1%, respectively, in [removed: 2015] [added: 2017] compared to [removed: 2014.][added: 2016.]

New Orders increased [removed: in 2015] despite a [removed: 3%] [added: 5%] decrease in the average number of active communities year over [removed: year, due to] [added: year as] more favorable market conditions in [removed: 2015, which] [added: 2017] led to [removed: a] higher [removed: sales] [added: community] absorption [removed: rate in each of our market segments.][added: rates within the segment.]

[added: |] Gross profit margin [removed: percentage in 2015 increased to 18.7% from 18.4% in 2014.][added: percentage: | | | | | | | | | |]

| | | |

| | | |

During 2017, we continued to experience improving new home demand as a result of favorable market conditions, including low mortgage interest rates, low unemployment and improved consumer confidence.

We expect to continue to face gross profit margin pressure which will be impacted by modest pricing power and our ability to manage land and construction costs.

We also expect to face pressure on mortgage banking profit due to the competitive pricing pressures in the mortgage market.

2017 versus 2016

Gross profit margin percentage in 2017 increased to 19.2% from 17.5% in 2016, due primarily to modest improvement in pricing, moderating construction costs and the increase in the number of units settled, which allowed us to better leverage certain operating costs.

The number of New Orders increased 13% while the average sales price of New Orders decreased 1% in 2017 when compared to 2016.

Selling, general and administrative ("SG&A") expenses in 2017 increased by 3% compared to 2016, but as a percentage of revenue decreased to 6.4% in 2017 from 6.7% in 2016.

SG&A expenses as a percentage of revenue were favorably impacted by the 8% increase in revenues.

Backlog units and dollars were 8,531 units and $3,277,888, respectively, as of December 31, 2017 compared to 6,884 units and $2,704,277, respectively, as of December 31, 2016.

The net contract land

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

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

| | | | | | | | | | |

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

| | | | | | | | | | |

| | | 2017 | | | 2016 | | | 2015 | |

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

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

| | | 2017 | | | | 2016 | | | | 2015 | | |

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

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

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

| | | 2017 | | | | | | | 2016 | | | | | | | 2015 | | | | | |

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

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

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

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

| | | 2017 | | | | | | | 2016 | | | | | | | 2015 | | | | | |

| | | Units | | | Average Price | | | | Units | | | Average Price | | | | Units | | | Average Price | | |

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

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

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

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

| | | 2017 | | | | | | | 2016 | | | | | | | 2015 | | | | | |

| | | Units | | | Average Price | | | | Units | | | Average Price | | | | Units | | | Average Price | | |

| | | | | | | | | | |

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

| | | | | | | | | | |

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

The housing market in 2016 continued the trend experienced in 2015 of steady new home demand.

The housing market also faces challenges from tight mortgage underwriting standards as well as from higher mortgage interest rates, which towards the end of 2016 began to move up from historical lows.

Diluted earnings per share was favorably impacted by our ongoing share repurchase program.

We expect to continue to face gross profit margin and pricing pressures due to higher land and construction costs, as well as increased competition associated with the increase in the number of new home communities in our markets.

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

We expect continued gross margin pressure over the next several quarters due to cost pressures.

Backlog represents homes sold but not yet settled with the customer.

2015 versus 2014

Units settled and the average settlement prices were higher in each of our market segments year over year.

The increases in the number of units settled and the average settlement price were attributable to an 11% higher backlog unit balance entering 2015 and a 3% higher average price of homes in backlog entering 2015 compared to backlog entering 2014.

Gross profit margin was favorably impacted in 2015 by an approximate $11,100, or 22 basis points of revenue, recovery of contract land deposits previously determined to be unrecoverable.

SG&A expenses in 2015 increased approximately $12,300, or 3%, compared to 2014.

SG&A expenses increased primarily due to an approximate $14,900 increase in management incentive compensation attributable to the improved operating results in 2015.

SG&A expenses decreased as a percentage of revenue to 7.3% in 2015 from 8.2% in 2014 due to improved leveraging of SG&A expenses.

Backlog units and dollars increased approximately 14% to 6,229 units and 13% to $2,375,182, respectively, as of December 31, 2015 compared to 5,475 units and $2,105,635, respectively, as of December 31, 2014.

providing the desired rate of return after covering our cost of capital.

| Gross profit margin percentage: | | | | | | | | | | | | |

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

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

| Sold and unsold inventory impairments: | | | | | | | | | | | | |

| Mid Atlantic | | $ | 1,127 | | | $ | 321 | | | $ | 530 | |

| Mid East | | | — | | | | 363 | | | | 649 | |

| Total | | $ | 1,421 | | | $ | 709 | | | $ | 1,200 | |

| North East | | | 6,200 | | | | 6,100 | |

| South East | | | 17,400 | | | | 14,700 | |

| Lots included in impairment reserve: | | | | | | | | |

| Mid Atlantic | | | 1,950 | | | | 2,800 | |

| North East | | | 550 | | | | 500 | |

| Mid East | | | 1,100 | | | | 2,400 | |

| Total | | | 4,000 | | | | 6,100 | |

| South East | | | 70,593 | | | | 53,299 | |

The Mid Atlantic segment had an approximate $50,900, or 19%, increase in segment profit in 2015 compared to 2014, driven by an increase in segment revenues of approximately $405,700, or 16%, year over year.

The number of units settled and the average settlement price were favorably impacted by a 9% higher backlog unit balance and a 3% higher average price of homes in backlog, respectively, entering 2015 compared to 2014.

New Orders increased despite a 5% decrease in the average number of active communities year over year, due to a higher sales absorption rate year over year.

Community sales absorption was impacted by improved market conditions in 2015 compared to 2014.

Segment profit and gross profit margin were negatively impacted primarily by higher construction costs, service costs and contract land deposit impairments year over year.

The North East segment’s gross profit margin percentage decreased to 18.4% in 2015 from 18.7% in 2014 due to higher lot costs.

Segment New Orders were negatively impacted by a 12% decrease in the average number of active communities year over year, offset by a higher sales absorption rate.

The number of units settled and the average settlement price were favorably impacted by a 11% higher backlog unit balance and a 5% higher average price of homes in backlog, respectively, entering 2015 compared to 2014.

The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately [removed: $8,300] [added: $7,300] outstanding at December 31, [removed: 2016,] [added: 2017,] and a $25,000 sublimit for a swing line commitment.

At December 31, [removed: 2016,] [added: 2017,] there was no debt outstanding under the Facility.

NVRM has available a mortgage Repurchase Agreement, which as of December 31, [removed: 2016] [added: 2017] provided for loan repurchases up to $150,000 with an incremental commitment pursuant to which NVRM may from time to time request increases in the total commitment available under the agreement by up to $50,000 in the aggregate.

The Repurchase Agreement is used to fund NVRM’s [added: mortgage origination activities.]

Advances under the Repurchase Agreement carry a Pricing Rate based on the LIBOR Rate plus the LIBOR Margin, as determined under the Repurchase Agreement, provided that the Pricing Rate shall not be less than [removed: 2.25%.][added: 2.125%.]

At December 31, [removed: 2016,] [added: 2017,] there was no debt outstanding under the Repurchase Agreement.

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: 2016.][added: 2017.]

| | | Maturities (000's) | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| | | [removed: 2017 | | | |] 2018 | | | | 2019 | | | [removed: |] 2020 | | | [removed: |] 2021 | | | [added: 2022] | [removed: Thereafter] | | [added: Thereafter] | | [added: |] Total | | | | [added: Fair] Value | | |

| Mortgage banking segment | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| Interest rate sensitive assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| Average interest rate | | [added: 4.0] | [removed: 3.9] | % | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [added: 4.0] | [removed: 3.9] | % | | | | |

| Other: | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| Forward trades of mortgage-backed securities (a) | | $ | [removed: 8,064 |] [added: 325] | | | — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | $ | [removed: 8,064] [added: 325] | | | $ | [removed: 8,064] [added: 325] | |

| Forward loan commitments (a) | | $ | [removed: 2,076 |] [added: 3,568] | | | — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | $ | [removed: 2,076] [added: 3,568] | | | $ | [removed: 2,076] [added: 3,568] | |

| Homebuilding segment | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| Interest-bearing deposits | | $ | [removed: 326,873 |] [added: 526,093] | | | — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | $ | [removed: 326,873] [added: 526,093] | | | $ | [removed: 326,873] [added: 526,093] | |

| Average interest rate | | [added: 1.2] | [removed: 0.5] | % | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [added: 1.2] | [removed: 0.5] | % | | | | |

| Interest rate sensitive liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | [removed: | | | | |]

| Fixed rate obligations [removed: (b)] | | $ | — | | | [removed: |] — | | | [removed: |] — | | | [removed: |] — | | | [removed: | — |] [added: 600,000] | | [removed: $] | [removed: 600,00] [added: —] | [removed: 0] | | $ | 600,000 | | | $ | [removed: 612,000] [added: 630,000] | |

| Average interest rate | | [removed: |] — | | | | — | | | [removed: |] — | | | [removed: |] — | | | [removed: | — | | | |] 4.0 | % | | [added: —] | [added: | |] 4.0 | [added: |] % | | | | |

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

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

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

| Mortgage loans held for sale | | $ | 350,558 | | | — | | | — | | | — | | | — | | | — | | | $ | 350,558 | | | $ | 352,489 | |

| Interest rate sensitive assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

mortgage origination activities.

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

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair | | |

| Mortgage loans held for sale | | $ | 357,912 | | | | — | | | | — | | | | — | | | | — | | | | — | | | $ | 357,912 | | | $ | 351,958 | |

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

| (b) | The Senior Notes mature in 2022. |

[added: We operate in multiple locations in fourteen states, which are primarily in the eastern part of the country, and in Washington, D.C.] During [removed: 2016,] [added: 2017,] approximately 23% and [removed: 11%] [added: 9%] of our home settlements occurred in the Washington, D.C. and Baltimore, MD metropolitan areas, respectively, which accounted for approximately 30% and [removed: 13%,] [added: 11%,] respectively, of our [removed: 2016] [added: 2017] homebuilding revenues.

Our NVHomes and Heartland Homes products are marketed primarily to move-up and [removed: upscale] [added: luxury] buyers.

[removed: In] [added: During] 2016, our average price of [removed: a] [added: homes] settled [removed: unit] was approximately $381,200.

The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts and [removed: represent a percentage,] typically [removed: ranging] [added: range] up to [removed: 10%,] [added: 10%] of the aggregate purchase price of the finished lots.

In addition, see Notes 3, 4 and 5 in the accompanying consolidated financial statements included herein for additional information regarding Lot Purchase Agreements, [removed: JVs] [added: joint ventures] and land under development, respectively.

We believe that a continuation of the housing market recovery is dependent upon [removed: a] sustained [removed: overall] economic [removed: recovery,] [added: growth,] driven by continued [removed: improvement] [added: improvements] in job and wage growth and household formation.

Our homes combine traditional, transitional, cottage or urban exterior designs with contemporary interior designs and amenities, generally include two to four bedrooms and range from approximately 1,000 to [removed: 9,000] [added: 9,500] finished square feet.

During [removed: 2016,] [added: 2017,] the prices at which we settled homes ranged from approximately [removed: $140,000] [added: $130,000] to [removed: $1.8] [added: $2.0] million and averaged approximately [removed: $381,200.][added: $386,900.]

[removed: Backlog, which represents homes sold but not yet settled with the customer,] [added: Backlog] may be impacted by customer cancellations for various reasons that are beyond our control, such as the customer’s failure to obtain mortgage financing, inability to sell an existing home, job loss or a variety of other reasons.

Expressed as the total of all cancellations during the period as a percentage of gross sales during the period, our cancellation rate was approximately [removed: 16%] [added: 14%] in [removed: 2016] [added: 2017] and 15% in both [removed: 2015] [added: 2016] and [removed: 2014.][added: 2015.]

Additionally, during each of [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] approximately 6% of a reporting quarter’s opening backlog balance cancelled during the quarter.

Other than those units that are cancelled, we expect to settle substantially all of our December 31, [removed: 2016] [added: 2017] backlog during [removed: 2017.][added: 2018.]

Counties and cities in which we build homes have at times declared moratoriums on the issuance of building permits and imposed other restrictions in the areas in which sewage treatment facilities and [removed: other public facilities do not reach minimum standards.]

In [removed: 2016,] [added: 2017,] NVRM closed approximately [removed: 12,300] [added: 13,100] loans with an aggregate principal amount of approximately [removed: $4.0] [added: $4.2] billion as compared to approximately [removed: 10,900] [added: 12,300] loans with an aggregate principal amount of approximately [removed: $3.5] [added: $4.0] billion in [removed: 2015.][added: 2016.]

NVRM is an approved seller/servicer for Fannie Mae (“FNMA”) [added: and Freddie Mac ("FHLMC")] mortgage loans and an approved seller/issuer of Ginnie Mae (“GNMA”), [removed: Freddie Mac (“FHLMC”),] Department of Veterans Affairs (“VA”) and Federal Housing Administration (“FHA”) mortgage loans.

NVRM’s mortgage loans in process that had not closed at December 31, [removed: 2016] [added: 2017] and [removed: 2015] [added: 2016] had an aggregate principal balance of approximately [removed: $1.8] [added: $2.2] billion and [removed: $1.6] [added: $1.8] billion, respectively.

NVRM’s cancellation rate was approximately [removed: 34%, 29%] [added: 31%, 34%] and [removed: 31%] [added: 29%] in [removed: 2016, 2015] [added: 2017, 2016] and [removed: 2014,] [added: 2015,] respectively.

At December 31, [removed: 2016,] [added: 2017,] we employed approximately [removed: 4,900] [added: 5,200] full-time persons.

Our website also includes a corporate governance section which contains our Corporate Governance Guidelines (which includes our Directors’ Independence Standards), Code of Ethics, [removed: Charters for the Audit, Compensation, Corporate Governance and Nominating Committees of our] Board [removed: of Directors,] [added: Committee Charters,] Policies and Procedures for the Consideration of Board of Director Candidates, and Policies and Procedures Regarding Communications with the NVR, Inc. Board of Directors, the Independent Lead Director and the Non-Management Directors as a Group.

During 2017, we continued to experience improving new home demand as a result of favorable market conditions, including low mortgage interest rates, low unemployment and improved consumer confidence.

| | | |

| | | |

Backlog, which represents homes sold but not yet settled with the customer, totaled 8,531 units and approximately $3.3 billion at December 31, 2017 compared to 6,884 units and approximately $2.7 billion at December 31, 2016.

other public facilities do not reach minimum standards.

| --- | --- |

We operate in multiple locations in fourteen states and Washington, D.C., primarily in the eastern part of the United States.

The housing market in 2016 continued the trend experienced in 2015 of steady new home demand.

The housing market also continues to face challenges from tight mortgage underwriting standards as well as from higher mortgage interest rates, which towards the end of 2016 began to move up from historical lows.

During 2015, our average price of homes settled was approximately $379,900.

Backlog totaled 6,884 units and approximately $2.7 billion at December 31, 2016 compared to backlog of 6,229 units and approximately $2.4 billion at December 31, 2015.

We are [removed: also] involved in various [removed: other] litigation matters arising in the ordinary course of business.

| --- | --- |

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

The request sought information about storm water discharge practices in connection with homebuilding projects completed or underway by us in New York and New Jersey.

We cooperated with this request, and provided information to the EPA.

We were subsequently informed by the United States Department of Justice (“DOJ”) that the EPA forwarded the information on the matter to the DOJ, and the DOJ requested that we meet with the government to discuss the status of the case.

Meetings took place in January 2012, August 2012 and November 2014 with representatives from both the EPA and DOJ.

We have continued discussions with the EPA and DOJ and are presently engaged in settlement discussions with them.

Any settlement is expected to include injunctive relief and payment of a civil penalty.

Although there can be no assurance that a settlement will be reached, in 2015 we recorded a liability and corresponding expense associated with an estimated civil penalty amount.

For the fiscal year ended December 31, [removed: 2016][added: 2017]

| 11700 Plaza America Drive, Suite 500 [added: Reston, Virginia] | | [added: 20190] |

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or a] smaller reporting [added: company, or an emerging growth] company.

See the definitions of “large accelerated filer,” “accelerated [removed: filer” and] [added: filer,”] “smaller reporting [added: company,” and “emerging growth] company” in Rule 12b-2 of the Exchange Act.

| Large accelerated filer | [removed: |] ☒ | | Accelerated filer | [removed: |] ☐ |

| Non-accelerated filer | [removed: |] ☐ [added: |] (Do not check if a [removed: Smaller Reporting Company) |] [added: smaller reporting company)] | Smaller [removed: Reporting Company |] [added: reporting company] | ☐ |

The aggregate market value of the voting stock held by non-affiliates of NVR, Inc. on June 30, [removed: 2016,] [added: 2017,] the last business day of NVR, Inc.’s most recently completed second fiscal quarter, was approximately [removed: $6,489,296,000.][added: $8,443,210,000.]

As of February [removed: 10, 2017] [added: 12, 2018] there were [removed: 3,704,206] [added: 3,683,093] 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: 2017] [added: 2018] are incorporated by reference into Part III of this report.

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

| PART I | | | [removed: | | |]

| Item 1. | [removed: | [Business](#Business) | | 1] [added: [Business](#sDAE3EA45BD50B9DE7E34D332E20B0951)] | [added: [1](#sDAE3EA45BD50B9DE7E34D332E20B0951)] |

| Item 1A. | [removed: |] [Risk [removed: Factors](#Risk_Factors) | | 4] [added: Factors](#s2BB3B72BB183C1A728DDD332E22C945E)] | [added: [4](#s2BB3B72BB183C1A728DDD332E22C945E)] |

| Item 1B. | [removed: |] [Unresolved Staff [removed: Comments](#Item_1B_Unresolved_Staff_Comments) | | 8] [added: Comments](#s0FC30BAAD8E1F5C631B9D332E25E6E0A)] | [added: [8](#s0FC30BAAD8E1F5C631B9D332E25E6E0A)] |

| Item 2. | [removed: | [Properties](#Properties) | | 8] [added: [Properties](#sD0087ABEDA677823C027D332E27FF2CD)] | [added: [8](#sD0087ABEDA677823C027D332E27FF2CD)] |

| Item 3. | [removed: |] [Legal [removed: Proceedings](#Legal_Proceedings) | | 9] [added: Proceedings](#s993B9DD64AB5D2FA0055D332E2B6EDDA)] | [added: [8](#s993B9DD64AB5D2FA0055D332E2B6EDDA)] |

| Item 4. | [removed: |] [Mine Safety [removed: Disclosures](#Mine_Safety_Disclosures) | | 9] [added: Disclosures](#s8DCB6BDFC05C16E9EF82D332E2D54258)] | [added: [8](#s8DCB6BDFC05C16E9EF82D332E2D54258)] |

| | [removed: |] [Executive Officers of the [removed: Registrant](#Executive_Officers_of_the_Registrant) | | 9] [added: Registrant](#sBAEC29416339434FE263D332E305DEEB)] | [added: [9](#sBAEC29416339434FE263D332E305DEEB)] |

| PART II | | | [removed: | | |]

| Item 5. | [removed: |] [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#Item_5) | | 11] [added: Securities](#s7ACFAF93841C4C83747CD332DA630873)] | [added: [10](#s7ACFAF93841C4C83747CD332DA630873)] |

| Item 6. | [removed: |] [Selected Financial [removed: Data](#Selected_Financial_Data) | | 13] [added: Data](#s5CA0ADD8EF6C1EF1F465D332E37FF313)] | [added: [12](#s5CA0ADD8EF6C1EF1F465D332E37FF313)] |

| Item 7. | [removed: |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#Managements_Discussion_and_Analysis) | | 14] [added: Operations](#sA04052D7A8EA97DDB4B2D332DA3B23D3)] | [added: [13](#sA04052D7A8EA97DDB4B2D332DA3B23D3)] |

| Item 7A. | [removed: |] [Quantitative and Qualitative Disclosure About Market [removed: Risk](#Quantitative_and_Qualitative_Disclosure) | | 31] [added: Risk](#s9B68A9159BB0687029F1D332E3DB5C52)] | [added: [30](#s9B68A9159BB0687029F1D332E3DB5C52)] |

| Item 8. | [removed: |] [Financial Statements and Supplementary [removed: Data](#Financial_Statements_and_Supplementary) | | 33] [added: Data](#sADC1493536127C398A56D332E3FE83EA)] | [added: [32](#sADC1493536127C398A56D332E3FE83EA)] |

| Item 9. | [removed: |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#Changes_in_and_Disagreement) | | 33] [added: Disclosure](#s8EA98A13D27E838B7657D332E41F71AB)] | [added: [32](#s8EA98A13D27E838B7657D332E41F71AB)] |

| Item 9A. | [removed: |] [Controls and [removed: Procedures](#Controls_and_Procedures) | | 33] [added: Procedures](#s6085492E460A64829C22D332E453108E)] | [added: [32](#s6085492E460A64829C22D332E453108E)] |

| Item 9B. | [removed: |] [Other [removed: Information](#Other_Information) | | 33] [added: Information](#s1AFA198548E5F0BE3F71D332E4745502)] | [added: [32](#s1AFA198548E5F0BE3F71D332E4745502)] |

| PART III | | | [removed: | | |]

| Item 10. | [removed: |] [Directors, Executive Officers, and Corporate [removed: Governance](#Directors_Executive) | | 33] [added: Governance](#s876E08A4899192E43595D332E4C7333A)] | [added: [33](#s876E08A4899192E43595D332E4C7333A)] |

| Item 11. | [removed: |] [Executive [removed: Compensation](#Executive_Compensation) | | 33] [added: Compensation](#s647C5D5D87937E19B7C0D332E4F929DC)] | [added: [33](#s647C5D5D87937E19B7C0D332E4F929DC)] |

| Item 12. | [removed: |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#Security_Ownership) | | 34] [added: Matters](#sE66ABE57B5DE56AA20C0D332E5190DB6)] | [added: [33](#sE66ABE57B5DE56AA20C0D332E5190DB6)] |

| Item 13. | [removed: |] [Certain Relationships and Related Transactions, and Director [removed: Independence](#Certain_Relationships) | | 34] [added: Independence](#s1CF45401C1FE61236266D332E54BF440)] | [added: [33](#s1CF45401C1FE61236266D332E54BF440)] |

| Item 14. | [removed: |] [Principal Accountant Fees and [removed: Services](#Principal_Accountant) | | 34] [added: Services](#s41B661D4178EFF377F26D332E56E6C41)] | [added: [33](#s41B661D4178EFF377F26D332E56E6C41)] |

| PART IV | | | [removed: | | |]

| Item 15. | [removed: |] [Exhibits and Financial Statement [removed: Schedules](#Exhibits_and_Financial) | | 35] [added: Schedules](#sE2EEAB8D2774629B2023D332E5BFF34D)] | [added: [34](#sE2EEAB8D2774629B2023D332E5BFF34D)] |

10-K 1 a201710-k.htm 10-K

_____________________________________________________________

_____________________________________________________________

| | |

| | |

| | |

| | |

_________________________________________________

_____________________________________________________________

| | | |

| | | |

| | | |

| | | |

| | | |

_____________________________________________________________

| | | | | |

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

| | | | | |

| | | | Emerging growth company | ☐ |

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

| | | |

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

| | | |

| | | |

| | | |

| | | |

10-K 1 nvr-10k_20161231.htm NVR-10K-20161231-FY

| Reston, Virginia | | 20190 |

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

| | | | | | | |

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

| --- | --- |

In addition, we own a production facility [removed: with] [added: of] approximately 100,000 square feet in Dayton, Ohio.

Our plant utilization was [removed: 43%] [added: 47%] and [removed: 40%] [added: 43%] of total capacity in [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] respectively.

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

These leases currently expire between 2019 and 2025.

| --- | --- |

The Portland, Thurmont and Farmington leases expire in 2019, the Kings Mountain lease expires in 2022, the Burlington County lease expires in 2024 and the Darlington lease expires in 2025.

| Name | | Age | | [removed: | |] Positions |

| Paul C. Saville | | [removed: | 61 |] [added: 62] | | President and Chief Executive Officer of NVR |

| Daniel D. Malzahn | | [removed: | 47 |] [added: 48] | | Senior Vice President, Chief Financial Officer and Treasurer of NVR |

| Jeffrey D. Martchek | | [removed: | 51 |] [added: 52] | | President of Homebuilding Operations of NVR |

| Robert W. Henley | | [removed: | 50 |] [added: 51] | | President of NVRM |

| Eugene J. Bredow | | [removed: | 47 |] [added: 48] | | Vice President, Chief Accounting Officer and Controller of NVR |

Not applicable.

| | | | | |

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

| | | | | |

| --- | --- |

None.

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

| | | | | | | |

Mr. Martchek was Area President of NVR’s Mid East homebuilding operations from October 2008 until January 2011.

From July 1, 2005 through June 1, 2012, Mr. Henley served as Vice President and Controller of NVR.

From January 2008 through June 1, 2012, Mr. Bredow was the Vice President of Internal Audit and Corporate Governance of NVR.

Our shares of common stock are listed and principally traded on the New York Stock Exchange under the ticker symbol “NVR.” The following table sets forth the high and low prices per share for our common stock for each quarter during the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015:][added: 2016:]

As of the close of business on February [removed: 10, 2017,] [added: 12, 2018,] there were [removed: 278] [added: 241] shareholders of record.

We had two share repurchase authorizations outstanding during the quarter ended December 31, [removed: 2016.][added: 2017.]

On [removed: November 4, 2015] [added: February 15, 2017] and [removed: November 2, 2016,] [added: December 12, 2017,] we publicly announced the Board of Directors’ approval [removed: for us] to repurchase our outstanding common stock in one or more open market and/or privately negotiated transactions, up to an aggregate of $300 million per authorization.

The following table provides information regarding common stock repurchases during the quarter ended December 31, [removed: 2016:][added: 2017:]

| Period | | Total Number of Shares Purchased | | | [removed: |] Average Price Paid per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | [removed: |] Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs | | |

On February [removed: 15, 2017,] [added: 14, 2018,] the Board of Directors approved a repurchase authorization providing us authorization 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 following graph compares the cumulative total return to holders of our common stock since December 31, [removed: 2011] [added: 2012] with the Dow Jones US Home Construction Index and the S&P 500 Index for that same period, assuming that $100 was invested in NVR stock and the indices on December 31, [removed: 2011.][added: 2012.]

[removed: ][added: ]

| Comparison of 5 Year Cumulative Total Return | | [removed: 2011 | | | |] 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | [added: | 2017 | | |]

| | | | | | | | | |

| | | | | | | | | |

| 2017 | | | | | | | | |

| Fourth Quarter | | $ | 3,536.97 | | | $ | 2,828.00 | |

| Third Quarter | | $ | 2,891.43 | | | $ | 2,393.82 | |

| Second Quarter | | $ | 2,510.76 | | | $ | 2,028.99 | |

| First Quarter | | $ | 2,115.00 | | | $ | 1,631.78 | |

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

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

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

| October 1 - 31, 2017 | | — | | | $ | — | | | — | | | $ | 253,660 | |

| November 1 - 30, 2017 | | 6,000 | | | $ | 3,333.05 | | | 6,000 | | | $ | 233,662 | |

| December 1 - 31, 2017 | | 50,128 | | | $ | 3,430.60 | | | 50,128 | | | $ | 361,693 | |

| Total | | 56,128 | | | $ | 3,420.17 | | | 56,128 | | | | | |

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

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

| NVR, Inc. | | $ | 100 | | | $ | 112 | | | $ | 139 | | | $ | 179 | | | $ | 181 | | | $ | 381 | |

| S&P 500 | | $ | 100 | | | $ | 132 | | | $ | 151 | | | $ | 153 | | | $ | 171 | | | $ | 208 | |

| Dow Jones US Home Construction | | $ | 100 | | | $ | 110 | | | $ | 119 | | | $ | 131 | | | $ | 122 | | | $ | 215 | |

| --- | --- |

| 2015 | | | | | | | | |

| Fourth Quarter | | $ | 1,721.95 | | | $ | 1,500.23 | |

| Third Quarter | | $ | 1,610.00 | | | $ | 1,317.23 | |

| Second Quarter | | $ | 1,387.40 | | | $ | 1,292.11 | |

| First Quarter | | $ | 1,377.76 | | | $ | 1,187.84 | |

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

| October 1 - 31, 2016 | | | 26,284 | | | $ | 1,608.69 | | | | 26,284 | | | $ | 5,187 | |

| November 1 - 30, 2016 (1) | | | 29,930 | | | $ | 1,565.04 | | | | 29,930 | | | $ | 258,344 | |

| December 1 - 31, 2016 | | | 45,768 | | | $ | 1,627.41 | | | | 45,768 | | | $ | 183,861 | |

| Total | | | 101,982 | | | $ | 1,604.28 | | | | 101,982 | | | | | |

| | (1) | 3,405 outstanding shares were repurchased under the November 4, 2015 share repurchase authorization, which fully utilized the authorization. The remaining 26,525 outstanding shares were repurchased under the November 2, 2016 share repurchase authorization. |

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

| NVR, Inc. | | $ | 100 | | | $ | 134 | | | $ | 150 | | | $ | 186 | | | $ | 240 | | | $ | 243 | |

| S&P 500 | | $ | 100 | | | $ | 116 | | | $ | 154 | | | $ | 175 | | | $ | 177 | | | $ | 198 | |

| Dow Jones US Home Construction | | $ | 100 | | | $ | 183 | | | $ | 202 | | | $ | 218 | | | $ | 240 | | | $ | 224 | |

[removed: | |] (in thousands, except per share amounts) [removed: |]

| | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | |

| Revenues | | $ | [removed: 5,709,223] [added: 6,175,521] | | | $ | [removed: 5,065,200] [added: 5,709,223] | | | $ | [removed: 4,375,059] [added: 5,065,200] | | | $ | [removed: 4,134,481] [added: 4,375,059] | | | $ | [removed: 3,121,244] [added: 4,134,481] | |

| Gross profit | | [added: $] | [removed: 1,001,362] [added: 1,185,143] | | | [added: $] | [removed: 946,418] [added: 1,001,362] | | | [added: $] | [removed: 806,473] [added: 946,418] | | | [added: $] | [removed: 710,277] [added: 806,473] | | | [added: $] | [removed: 545,605] [added: 710,277] | |

| Mortgage banking fees | | [added: $] | [removed: 113,321] [added: 130,319] | | | [added: $] | [removed: 93,808] [added: 113,321] | | | [added: $] | [removed: 69,509] [added: 93,808] | | | [added: $] | [removed: 76,786] [added: 69,509] | | | [added: $] | [removed: 63,406] [added: 76,786] | |

| Net income | | [added: $] | [removed: 425,262] [added: 537,521] | | | [added: $] | [removed: 382,927] [added: 425,262] | | | [added: $] | [removed: 281,630] [added: 382,927] | | | [added: $] | [removed: 266,477] [added: 281,630] | | | [added: $] | [removed: 180,588] [added: 266,477] | |

| Basic | | $ | [removed: 110.53] [added: 144.00] | | | $ | [removed: 95.21] [added: 110.53] | | | $ | [removed: 65.83] [added: 95.21] | | | $ | [removed: 56.25] [added: 65.83] | | | $ | [removed: 36.04] [added: 56.25] | |

| Diluted | | $ | [removed: 103.61] [added: 126.77] | | | $ | [removed: 89.99] [added: 103.61] | | | $ | [removed: 63.50] [added: 89.99] | | | $ | [removed: 54.81] [added: 63.50] | | | $ | [removed: 35.12] [added: 54.81] | |

| Basic | | [added: 3,733] | [added: | | |] 3,847 | | | | 4,022 | | | | 4,278 | | | | 4,737 | | | [removed: | 5,011 | |]

| Diluted | | [added: 4,240] | [added: | | |] 4,104 | | | | 4,255 | | | | 4,435 | | | | 4,862 | | | [removed: | 5,142 | |]

| Homebuilding inventory | | $ | [removed: 1,092,100] [added: 1,246,199] | | | $ | [removed: 1,006,526] [added: 1,092,100] | | | $ | [removed: 869,486] [added: 1,006,526] | | | $ | [removed: 738,565] [added: 869,486] | | | $ | [removed: 678,131] [added: 738,565] | |

| Contract land deposits, net | | [added: $] | [removed: 379,844] [added: 370,429] | | | [added: $] | [removed: 343,295] [added: 379,844] | | | [added: $] | [removed: 294,676] [added: 343,295] | | | [added: $] | [removed: 236,885] [added: 294,676] | | | [added: $] | [removed: 191,538] [added: 236,885] | |

| Total assets [removed: (1)] | | [added: $] | [removed: 2,643,943] [added: 2,989,279] | | | [added: $] | [removed: 2,511,718] [added: 2,643,943] | | | [added: $] | [removed: 2,347,413] [added: 2,511,718] | | | [added: $] | [removed: 2,481,718] [added: 2,347,413] | | | [added: $] | [removed: 2,599,903] [added: 2,481,718] | |

| Notes and loans payable (1) [removed: (2)] | | [added: $] | [removed: 596,455] [added: 597,066] | | | [added: $] | [removed: 595,847] [added: 596,455] | | | [added: $] | [removed: 595,244] [added: 595,847] | | | [added: $] | [removed: 594,760] [added: 595,244] | | | [added: $] | [removed: 594,806] [added: 594,760] | |

| Shareholders’ equity | | [added: $] | [removed: 1,304,441] [added: 1,605,492] | | | [added: $] | [removed: 1,239,165] [added: 1,304,441] | | | [added: $] | [removed: 1,124,255] [added: 1,239,165] | | | [added: $] | [removed: 1,261,352] [added: 1,124,255] | | | [added: $] | [removed: 1,480,477] [added: 1,261,352] | |

| Cash dividends per share | | [added: $] | — | | | [added: $] | — | | | [added: $] | — | | | [added: $] | — | | | [added: $] | — | |

| [removed: (2)] [added: (1)] | Balance does not include non-recourse debt related to the consolidated variable interest entity. |

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

| Homebuilding income | | $ | 776,370 | | | $ | 601,102 | | | $ | 555,329 | | | $ | 427,884 | | | $ | 379,370 | |

| Mortgage banking income | | $ | 70,541 | | | $ | 60,595 | | | $ | 47,883 | | | $ | 25,662 | | | $ | 39,326 | |

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

| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |

____________________________

| | |

| --- | --- |

| Interest income | | | 7,569 | | | | 6,485 | | | | 4,940 | | | | 4,983 | | | | 4,504 | |

| Interest expense | | | 1,086 | | | | 641 | | | | 549 | | | | 545 | | | | 546 | |

| (1) | In 2016, we adopted Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest, which requires that debt issuance costs be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability. The balances as of December 31, 2016 reflect the amounts shown on the accompanying consolidated balance sheets following the adoption of the standard. For comparative purposes, the balances as of December 31, 2015, 2014, 2013 and 2012 have been adjusted and present the Notes net of unamortized debt issuance costs of $3,413, $3,922, $4,430 and $4,939, respectively. |

| --- | --- |

| --- | --- |

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: 2016] [added: 2017] were effective to provide reasonable assurance that information required to be disclosed in our reports under the Exchange Act, 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 (2013), our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2016.][added: 2017.]

Our internal control over financial reporting as of December 31, [removed: 2016] [added: 2017] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report which is included herein.

| --- | --- |

Eugene J.

Bredow, age 48, has been named as Senior Vice President and Chief Administrative Officer of NVR effective March 1, 2018.

Mr. Bredow has served as our Vice President and Controller since June 2012 and as our Chief Accounting Officer since February 2016.

Mr. Bredow will continue to serve as an executive officer in his new position.

Mr. Bredow will be paid a base salary of $425,000 annually effective March 1, 2018 and will continue to participate in the 2018 Executive Officer Annual Incentive Compensation Plan as described in Exhibit 10.36, attached to this Form 10-K and incorporated herein by reference.

Mr. Bredow’s employment agreement will be amended effective March 1, 2018 to reflect his new base salary and title.

In connection with Mr. Bredow’s promotion, Matthew B.

Kelpy, age 44, has been named as Vice President, Chief Accounting Officer and Controller of NVR effective March 1, 2018.

Mr. Kelpy will serve as NVR’s principal accounting officer and an executive officer effective March 1, 2018.

Mr. Kelpy joined NVR in January 2017 as Vice President and Controller.

Prior to joining NVR, Mr. Kelpy was most recently Chief Accounting Officer for GoDaddy, Inc. during November 2014-December 2016.

Prior to that position, Mr. Kelpy was employed by AOL, Inc. in various accounting management positions during June 2005-November 2014, culminating in Chief Accounting Officer during August 2011-November 2014.

Mr. Kelpy will be paid a base salary of $307,500 annually effective March 1, 2018.

Mr. Kelpy will participate in the 2018 Executive Officer Annual Incentive Compensation Plan, effective March 1, 2018, as described in Exhibit 10.36, attached to this Form 10-K and incorporated herein by reference.

Mr. Kelpy’s maximum potential payout under the 2018 Executive Officer Annual Incentive Compensation Plan is equal to 100% of his base salary.

Mr. Kelpy will also receive a grant of 1,500 non-qualified fixed-priced stock options from the NVR, Inc. 2014 Equity Incentive Plan, which was filed as Exhibit 10.1 to NVR’s Form S-8 (No. 333-195756) filed on May 7, 2014 and is incorporated herein by reference.

The grant consists of two options, each covering half of the total number of shares granted.

One of the options is a time-based option which will vest in 25% increments on each of December 31, 2020, 2021, 2022 and 2023, based on continued employment with the Company on the relevant vesting date.

The other option is performance-based and will vest on the same terms as the time-based options, subject to an additional requirement that vesting of the options is based on the Company’s return on capital performance during 2018 to 2020.

The equity grants to Mr. Kelpy will be issued

pursuant to the Form of Non-Qualified Stock Option Agreement (Management time-based grants) filed as Exhibit 10.15 herein and the Form of Non-Qualified Stock Option Agreement (Management performance-based grants) filed as Exhibit 10.17 herein.

| --- | --- |

None.

Item 10 is incorporated herein by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2017.][added: 2018.]

| --- | --- |

Item 11 is incorporated herein by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2017.][added: 2018.]

| --- | --- |

Item 12 is incorporated herein by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2017.][added: 2018.]

The table below sets forth information as of December 31, [removed: 2016] [added: 2017] for (i) all equity compensation plans approved by our shareholders and (ii) all equity compensation plans not approved by our shareholders:

| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights | | | [removed: |] Weighted-average exercise price of outstanding options, warrants and rights | | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | | [removed: |]

| Equity compensation plans [added: not] approved by security holders [removed: (1)] | | [removed: | 974,221] [added: 89,382] | | | $ | [removed: 1,075.45 |] [added: 703.00] | | | [removed: 312,471] [added: —] | |

| Equity compensation plans [removed: not] approved by security holders [removed: |] [added: (1)] | | [removed: 117,968] [added: 836,474] | | | $ | [removed: 683.04 |] [added: 1,151.14] | | | [removed: —] [added: 314,281] | |

| (1) | This category includes the restricted share units (“RSUs”) authorized to be issued under the 2010 Equity Incentive Plan, which was approved by our shareholders at our May 4, 2010 Annual Meeting. At December 31, [removed: 2016,] [added: 2017,] there are [removed: 15,951] [added: 9,961] RSUs [removed: outstanding, issued at a $0 exercise price.] [added: outstanding.] Of the total [removed: 312,471] [added: 314,281] shares remaining available for future issuance under the shareholder approved plans, up to 37,774 may be issued as RSUs. The weighted-average exercise price of outstanding options under security holder approved plans, excluding outstanding RSUs, was [removed: $1,093.35.] [added: $1,165.01.] |

Equity compensation plans approved by our shareholders include: the 1998 Management Long-Term Stock Option Plan, the [removed: 1998 Directors’ Long-Term Stock Option Plan, the] 2010 Equity Incentive Plan, and the 2014 Equity Incentive Plan.

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

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

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

| Total | | 925,856 | | | $ | 1,107.87 | | | 314,281 | |

| | |

| --- | --- |

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

| Total | | | 1,092,189 | | | $ | 1,033.07 | | | | 312,471 | |

Item 13 is incorporated herein by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2017.][added: 2018.]

| --- | --- |

Item 14 is incorporated herein by reference to our Proxy Statement expected to be filed with the Securities and Exchange Commission on or prior to April 30, [removed: 2017.][added: 2018.]

| --- | --- |

[removed: | 1. |] Financial Statements [removed: |]

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

| 3.1 | | [removed: Restated] [added: [Restated] Articles of Incorporation of NVR, [removed: Inc.] [added: Inc.](http://www.sec.gov/Archives/edgar/data/906163/000095012311018386/w79861exv3w1.htm)] | | 10-K | | | | 3.1 | | 2/25/2011 |

| 3.2 | | [removed: Bylaws,] [added: [Bylaws,] as amended, of NVR, [removed: Inc.] [added: Inc.](http://www.sec.gov/Archives/edgar/data/906163/000119312516508404/d161848dex31.htm)] | | 8-K | | | | 3.1 | | 3/17/2016 |

| 4.1 | | [removed: Indenture] [added: [Indenture] dated as of April 14, 1998 between NVR, Inc., as issuer and the Bank of New York as [removed: trustee.] [added: trustee.](http://www.sec.gov/Archives/edgar/data/906163/0000928385-98-000803.txt)] | | 8-K | | | | 4.3 | | 4/23/1998 |

| 4.2 | | [removed: Form] [added: [Form] of Note (included in [removed: Indenture).] [added: Indenture).](http://www.sec.gov/Archives/edgar/data/906163/0000928385-98-000803.txt)] | | 8-K | | | | 4.5 | | 4/23/1998 |

| 4.3 | | [removed: Fifth] [added: [Fifth] Supplemental Indenture dated September 10, 2012 among NVR, Inc. and U.S. Bank Trust National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312512386359/d408355dex41.htm)] | | 8-K | | | | 4.1 | | 9/10/2012 |

| 4.4 | | [removed: Form] [added: [Form] of Global [removed: Note.] [added: Note.](http://www.sec.gov/Archives/edgar/data/906163/000119312512386359/d408355dex42.htm)] | | 8-K | | | | 4.2 | | 9/10/2012 |

| 10.1* | | [removed: Amended] [added: [Amended] and Restated Employment Agreement between NVR, Inc. and Paul C. Saville dated November 4, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/906163/000156459015009895/nvr-ex101_323.htm)] | | 10-Q | | | | 10.1 | | 11/6/2015 |

| 10.2* | | [removed: Amended] [added: [Amended] and Restated Employment Agreement between NVR, Inc. and Daniel D. Malzahn dated November 4, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/906163/000156459015009895/nvr-ex102_324.htm)] | | 10-Q | | | | 10.2 | | 11/6/2015 |

| 10.3* | | [removed: Amended] [added: [Amended] and Restated Employment Agreement between NVR, Inc. and Robert W. Henley dated November 4, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/906163/000156459015009895/nvr-ex103_325.htm)] | | 10-Q | | | | 10.3 | | 11/6/2015 |

| 10.4* | | [removed: Amended] [added: [Amended] and Restated Employment Agreement between NVR, Inc. and Eugene J. Bredow dated November 4, [removed: 2015.] [added: 2015.](http://www.sec.gov/Archives/edgar/data/906163/000156459015009895/nvr-ex104_326.htm)] | | 10-Q | | | | 10.4 | | 11/6/2015 |

| 10.5* | | [removed: Employment] [added: [Employment] Agreement between NVR, Inc. and Jeffrey D. Martchek dated January 1, [removed: 2016.] [added: 2016.](http://www.sec.gov/Archives/edgar/data/906163/000156459016012809/nvr-ex105_390.htm)] | | 10-K | | | | 10.5 | | 2/17/2016 |

| [removed: 10.6*] [added: 10.7*] | | [removed: Profit] [added: [Profit] Sharing Plan of NVR, Inc. and Affiliated [removed: Companies.] [added: Companies.](http://www.sec.gov/Archives/edgar/data/906163/0000928385-97-001029.txt)] | | S-8 | | 333-29241 | | 4.1 | | 6/13/1997 |

| [removed: 10.7*] [added: 10.8*] | | Employee Stock Ownership Plan of NVR, Inc. | | 10-K/A | | | | | | 12/31/1994 |

| [removed: 10.8*] [added: 10.9*] | | [removed: NVR,] [added: [NVR,] Inc. 1998 Management Long-Term Stock Option [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000092838599001970/0000928385-99-001970.txt)] | | S-8 | | 333-79951 | | 4 | | 6/4/1999 |

| 10.10* | | [removed: NVR,] [added: [NVR,] Inc. 2000 Broadly-Based Stock Option [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000092838501000739/0000928385-01-000739-0004.txt)] | | S-8 | | 333-56732 | | 99.1 | | 3/8/2001 |

| 10.11* | | [removed: Amended] [added: [Amended] and Restated NVR, Inc. Nonqualified Deferred Compensation [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000156459015009895/nvr-ex105_283.htm)] | | 10-Q | | | | 10.5 | | 11/6/2015 |

| [removed: 10.12*] [added: 10.13*] | | [removed: Description] [added: [Description] of the Board of Directors’ compensation [removed: arrangement.] [added: arrangement.](http://www.sec.gov/Archives/edgar/data/906163/000119312505038619/dex1027.htm)] | | 10-K | | | | 10.27 | | 2/28/2005 |

| [removed: 10.13*] [added: 10.14*] | | [removed: NVR,] [added: [NVR,] Inc. 2014 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312514186839/d722339dex101.htm)] | | S-8 | | 333-195756 | | 10.1 | | 5/7/2014 |

| [removed: 10.14*] [added: 10.15*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2014 Equity Incentive Plan. [added: Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1015.htm)] | | [removed: 8-K] | | | | [removed: 10.1] | | [removed: 5/7/2014] |

| [removed: 10.15*] [added: 10.16*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement (Director time-based grants) under the NVR, Inc. 2014 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312514187250/d722365dex101.htm)] | | 8-K | | | | 10.2 | | 5/7/2014 |

| [removed: 10.16*] [added: 10.17*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2014 Equity Incentive Plan. [added: Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1017.htm)] | | [removed: 8-K] | | | | [removed: 10.3] | | [removed: 5/7/2014] |

| [removed: 10.17*] [added: 10.18*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2014 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312514187250/d722365dex104.htm)] | | 8-K | | | | 10.4 | | 5/7/2014 |

| [removed: 10.18*] [added: 10.19*] | | [removed: NVR,] [added: [NVR,] Inc. 2010 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310043500/w78342exv10w1.htm)] | | S-8 | | 333-166512 | | 10.1 | | 5/4/2010 |

| [removed: 10.19*] [added: 10.20*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312513310039/d540338dex101.htm)] | | 10-Q | | | | 10.1 | | 7/30/2013 |

| [removed: 10.20*] [added: 10.21*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310045375/w78392exv10w2.htm)] | | 8-K | | | | 10.2 | | 5/6/2010 |

| [removed: 10.21*] [added: 10.22*] | | [removed: The] [added: [The] Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312513310039/d540338dex102.htm)] | | 10-Q | | | | 10.2 | | 7/30/2013 |

| [removed: 10.22*] [added: 10.23*] | | [removed: The] [added: [The] Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310045375/w78392exv10w4.htm)] | | 8-K | | | | 10.4 | | 5/6/2010 |

| [removed: 10.23*] [added: 10.24*] | | [removed: The] [added: [The] Form of Non-Qualified Stock Option Agreement under the NVR, Inc. 2000 Broadly-Based Stock Option [removed: Plan.] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000129993308000111/exhibit1.htm)] | | 8-K | | | | 10.1 | | [removed: 1/3/2008] [added: 1/7/2008] |

| 10.25 | | [removed: Amended] [added: [Amended] and Restated Master Repurchase Agreement dated as of August 2, 2011, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex101.htm)] | | 8-K | | | | 10.1 | | 1/21/2016 |

| 10.26 | | [removed: First] [added: [First] Amendment to Amended and Restated Master Repurchase Agreement dated as of August 1, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex102.htm)] | | 8-K | | | | 10.2 | | 1/21/2016 |

| 10.27 | | [removed: Second] [added: [Second] Amendment to Amended and Restated Master Repurchase Agreement dated as of November 13, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex103.htm)] | | 8-K | | | | 10.3 | | 1/21/2016 |

| 10.28 | | [removed: Third] [added: [Third] Amendment to Amended and Restated Master Repurchase Agreement dated as of November 29, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex104.htm)] | | 8-K | | | | 10.4 | | 1/21/2016 |

| 10.29 | | [removed: Fourth] [added: [Fourth] Amendment to Amended and Restated Master Repurchase Agreement dated as of July 31, 2013, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex105.htm)] | | 8-K | | | | 10.5 | | 1/21/2016 |

| 10.30 | | [removed: Fifth] [added: [Fifth] Amendment to Amended and Restated Master Repurchase Agreement dated as of July 30, 2014, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex106.htm)] | | 8-K | | | | 10.6 | | 1/21/2016 |

| 10.31 | | [removed: Sixth] [added: [Sixth] Amendment to Amended and Restated Master Repurchase Agreement dated as of July 29, 2015, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex107.htm)] | | 8-K | | | | 10.7 | | 1/21/2016 |

| 10.32 | | [removed: Seventh] [added: [Seventh] Amendment to Amended and Restated Master Repurchase Agreement dated as of January 18, 2016, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex108.htm)] | | 8-K | | | | 10.8 | | 1/21/2016 |

| 10.33 | | [removed: Eighth] [added: [Eighth] Amendment to Amended and Restated Master Repurchase Agreement dated as of July 27, 2016, between NVR Mortgage Finance, Inc. and U.S. Bank National [removed: Association.] [added: Association.](http://www.sec.gov/Archives/edgar/data/906163/000156459016021704/nvr-ex102_299.htm)] | | 10-Q | | | | 10.2 | | 7/28/2016 |

| [removed: 10.34] [added: 10.35] | | [removed: Credit] [added: [Credit] Agreement dated as of July 15, 2016 among NVR, Inc. and the lenders party hereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arranger and Sole Book [removed: Runner.] [added: Runner.](http://www.sec.gov/Archives/edgar/data/906163/000119312516650024/d186192dex101.htm)] | | 8-K | | | | 10.1 | | 7/18/2016 |

1.

2.

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

| 10.6* | | [Amendment No. 1 to Employment Agreement between NVR, Inc. and Jeffrey D. Martchek dated April 18, 2017.](http://www.sec.gov/Archives/edgar/data/906163/000156459017006662/nvr-ex101_6.htm) | | 8-K | | | | 10.1 | | 4/18/2017 |

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

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

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

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

| 10.34 | | [Ninth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 26, 2017, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.](http://www.sec.gov/Archives/edgar/data/906163/000156459017014370/nvr-ex101_168.htm) | | 10-Q | | | | 10.1 | | 7/28/2017 |

| 21 | | [NVR, Inc. Subsidiaries. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex21.htm) | | | | | | | | |

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

| | | | |

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

| | | | |

| | | | | |

| | | | | |

Opinion on the Consolidated Financial Statements

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for the excess tax benefit from stock option exercises prospectively beginning January 1, 2017 in accordance with the adoption of Accounting Standards Update (“ASU”) 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting.

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We have served as the Company's auditor since 1987.

February 14, 2018

To the Board of Directors and Shareholders

Opinion on Internal Control Over Financial Reporting

Basis for Opinion

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

Definition and Limitations of Internal Control Over Financial Reporting

February 14, 2018

| | | | | | | | |

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

| | | | | | | | |

| | 1,246,199 | | | | 1,092,100 | | |

| | | | | | | | |

| | 2,584,880 | | | | 2,233,346 | | |

| | 404,399 | | | | 410,597 | | |

| | | | | | | | |

| Accrued expenses and other liabilities | 341,891 | | | | 337,200 | | |

| | 1,350,963 | | | | 1,307,103 | | |

| --- | --- |

| 10.9* | | NVR, Inc. 1998 Directors’ Long-Term Stock Option Plan. | | S-8 | | 333-79949 | | 4 | | 6/4/1999 |

| 10.24* | | The Form of Non-Qualified Stock Option Agreement under the 1998 Directors’ Long-Term Stock Option Plan. | | 10-K | | | | 10.34 | | 2/22/2008 |

| NVR, Inc. | | |

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

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

February 15, 2017

| | | | 1,092,100 | | | | 1,006,526 | |

| Assets related to consolidated variable interest entity | | | 1,251 | | | | 1,749 | |

| Goodwill and finite-lived intangible assets, net | | | 2,599 | | | | 3,982 | |

| | | | 2,233,346 | | | | 2,132,168 | |

| | | | 410,597 | | | | 379,550 | |

| Accrued expenses and other liabilities | | | 336,318 | | | | 304,922 | |

| Liabilities related to consolidated variable interest entity | | | 882 | | | | 1,091 | |

| | | | 1,307,103 | | | | 1,240,262 | |

| | | | 32,399 | | | | 32,291 | |

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

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

| Balance, December 31, 2013 | | $ | 206 | | | $ | 1,212,050 | | | $ | 4,605,557 | | | $ | (4,556,461 | ) | | $ | (17,741 | ) | | $ | 17,741 | | | $ | 1,261,352 | |

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

| Net income | | | — | | | | — | | | | 281,630 | | | | — | | | | — | | | | — | | | | 281,630 | |

| Tax benefit from equity benefit plan activity | | | — | | | | 13,661 | | | | — | | | | — | | | | — | | | | — | | | | 13,661 | |

| Net cash provided by operating activities | | | 384,465 | | | | 203,391 | | | | 184,549 | |

| Net repayments under note payable and credit lines | | | — | | | | — | | | | (115 | ) |

| Excess income tax benefit from equity-based compensation | | | 13,661 | | | | 23,311 | | | | 9,437 | |

| Net cash used in financing activities | | | (403,734 | ) | | | (322,472 | ) | | | (486,301 | ) |

The homebuilding segment had restricted cash of $17,561 and $23,440 at December 31, 2016 and 2015, respectively.

Restricted cash in 2015 was attributable to holding requirements related to outstanding letters of credit issued under the Company’s letter of credit agreement and to customer deposits for certain home sales.

The assumed amount credited to additional paid-in capital equals the tax benefit from assumed exercise of stock options or the assumed vesting of restricted share units after consideration of the intrinsic value upon assumed exercise or vesting less the actual stock-based compensation expense to be recognized in the income statement.

In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-03, Interest – Imputation of Interest (Subtopic 835-30) – Simplifying the Presentation of Debt Issuance Costs.

The standard requires that debt issuance costs related to a recognized debt liability be presented on the balance sheet as a direct deduction from the debt liability, rather than as an asset.

On January 1, 2016, the Company adopted the standard which on a retrospective basis resulted in the reclassification of the unamortized debt issuance costs related to the Company’s 3.95% Senior Notes due 2022 from the homebuilding “Other assets” line item to the homebuilding “Senior notes” line item in the accompanying condensed consolidated balance sheets.

The standard will replace most existing revenue recognition guidance in GAAP when it becomes effective.

In July 2015, the FASB delayed the standard’s effective date for one year.

In February 2015, FASB issued ASU 2015-02, Consolidation (Topic 810) – Amendments to the Consolidation Analysis.

The standard changes the manner in which reporting entities evaluate consolidation requirements of certain legal entities.

The adoption of this standard did not have any effect on the Company’s consolidated financial statements and related disclosures.

In July 2015, FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory.

The amendments in the standard do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method.

The amendments in the standard are to be applied prospectively.