NVR (NVR) 10-K risk factor changes: FY2018 vs FY2017

| • | [added: employment levels, consumer confidence and spending and] unexpected changes in customer preferences; and |

In particular, during [removed: 2017,] [added: 2018,] approximately 23% and [removed: 9%] [added: 8%] of our home settlements occurred in the Washington, D.C. and Baltimore, MD metropolitan areas, respectively, which accounted for approximately 30% and [removed: 11%,] [added: 10%,] respectively, of our [removed: 2017] [added: 2018] homebuilding revenues.

In addition, inventory carrying costs can be significant and can result in losses in a poorly performing [removed: project] [added: community] or market.

In the event of adverse changes in economic, market or [removed: project] [added: community] 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.

Our mortgage banking operations may be responsible for losses associated with mortgage loans originated and sold to investors in the event of errors or omissions relating to certain representations and warranties that the loans sold meet certain requirements, including representations as to underwriting standards, the type of collateral, the existence of [removed: primary] [added: private] mortgage insurance, and the validity of certain borrower representations in connection with the loan.

[removed: Because of the uncertainties inherent in] estimating these matters, there can be no assurance that any amounts reserved will be adequate or that any potential inadequacies will not have a material adverse effect on our results of operations.

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

[removed: Tighter] underwriting requirements and fee restrictions and the increasingly complex regulatory environment may negatively impact our mortgage loan origination business in the form of lower demand, decreased revenue and increased operating costs.

Because of the uncertainties inherent in

Tighter

The loss of key personnel could adversely impact our business.

We rely on our key personnel to effectively operate and manage our business.

Specifically, our future success depends heavily on the performance of our senior management team.

Our business may be adversely affected if we are unable to retain key personnel or attract qualified personnel to manage our business.

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.

Results of Operations for the Years Ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015][added: 2016]

In [removed: certain] [added: limited] 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.

As of December 31, [removed: 2017,] [added: 2018,] we controlled lots as described below.

We controlled approximately [removed: 84,300] [added: 95,750] lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately [removed: $393,900] [added: $420,900] and [removed: $1,900,] [added: $3,800,] respectively.

Included in the number of controlled lots are approximately [removed: 4,600] [added: 4,250] lots for which we have recorded a contract land deposit impairment reserve of approximately [removed: $30,000] [added: $29,200] as of December 31, [removed: 2017.][added: 2018.]

We had an aggregate investment totaling approximately [removed: $45,500] [added: $29,400] in six JVs, expected to produce approximately [removed: 7,300] [added: 6,800] lots.

Of the lots to be produced by the JVs, approximately [removed: 3,900] [added: 3,450] lots were controlled by us and approximately [removed: 3,400] [added: 3,350] lots were either under contract with unrelated parties or currently not under contract.

We directly owned [removed: four] [added: three] separate raw land parcels, zoned for their intended use, with a current cost basis, including development costs, of approximately [removed: $34,200] [added: $38,900] that we intend to develop into approximately 500 finished lots.

We had additional funding commitments of approximately [removed: $7,900] [added: $7,300] under a joint development agreement related to one parcel, a portion of which we expect will be offset by development credits of approximately [removed: $4,700.][added: $4,600.]

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: 10,700] [added: 7,500] lots.

These properties are controlled with cash deposits and letters of credit totaling approximately [removed: $6,600] [added: $4,500] and [removed: $100,] [added: $150,] respectively, as of December 31, [removed: 2017,] [added: 2018,] of which approximately [removed: $5,800] [added: $1,700] is refundable if we do not perform under the contract.

Our consolidated revenues for the year ended December 31, [removed: 2017] [added: 2018] totaled [removed: $6,305,840,] [added: $7,163,674,] an increase of [removed: 8%] [added: 14%] from [removed: $5,822,544] [added: $6,305,840] in [removed: 2016.][added: 2017.]

Our net income for [removed: 2017] [added: 2018] was [removed: $537,521,] [added: $797,197,] or [removed: $126.77] [added: $194.80] per diluted share, increases of [removed: 26%] [added: 48%] and [removed: 22%] [added: 54%] compared to [removed: 2016] [added: 2017] net income and diluted earnings per share, respectively.

Our homebuilding gross profit margin percentage [removed: increased] [added: decreased] to [removed: 19.2%] [added: 18.7%] in [removed: 2017] [added: 2018] from [removed: 17.5%] [added: 19.2%] in [removed: 2016.][added: 2017.]

New orders, net of cancellations (“New Orders”) during [removed: 2017 increased 13%] [added: 2018 were 18,281, an increase of 4%] from [removed: 2016] [added: 2017] while our average New Order sales price decreased [removed: 1%] [added: 2%] to [removed: $383.2] [added: $376.3] in [removed: 2017.][added: 2018.]

Our backlog of homes sold but not yet settled with the customer as of December 31, [removed: 2017 increased] [added: 2018 decreased] on a unit basis by [removed: 24%] [added: 2%] to [removed: 8,531] [added: 8,365] units and [removed: increased] [added: decreased] on a dollar basis by [removed: 21%] [added: 4%] to [removed: $3,277,888] [added: $3,152,873] when compared to December 31, [removed: 2016.][added: 2017.]

We believe that [removed: a continuation of] the [removed: housing market recovery] [added: strength in demand for new homes] is dependent upon sustained economic growth, driven by [added: favorable unemployment levels and] continued improvements in [removed: job and] wage growth and household formation.

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Revenues | | $ | [removed: 6,175,521] [added: 7,004,304] | | | $ | [removed: 5,709,223] [added: 6,175,521] | | | $ | [removed: 5,065,200] [added: 5,709,223] | |

| Cost of sales | | $ | [removed: 4,990,378] [added: 5,692,127] | | | $ | [removed: 4,707,861] [added: 4,990,378] | | | $ | [removed: 4,118,782] [added: 4,707,861] | |

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

| Selling, general and administrative expenses | | $ | [removed: 392,272] [added: 428,874] | | | $ | [removed: 382,459] [added: 392,272] | | | $ | [removed: 371,127] [added: 382,459] | |

| New orders (units) | | [removed: 17,608] [added: 18,281] | | | | [removed: 15,583] [added: 17,608] | | | | [removed: 14,080] [added: 15,583] | | |

| Average new order price | | $ | [removed: 383.2] [added: 376.3] | | | $ | [removed: 386.4] [added: 383.2] | | | $ | [removed: 378.7] [added: 386.4] | |

| Settlements (units) | | [removed: 15,961] [added: 18,447] | | | | [removed: 14,928] [added: 15,961] | | | | [removed: 13,326] [added: 14,928] | | |

| Average settlement price | | $ | [removed: 386.9] [added: 379.7] | | | $ | [removed: 381.2] [added: 386.9] | | | $ | [removed: 379.9] [added: 381.2] | |

| Backlog (units) | | [removed: 8,531] [added: 8,365] | | | | [removed: 6,884] [added: 8,531] | | | | [removed: 6,229] [added: 6,884] | | |

| Average backlog price | | $ | [removed: 384.2] [added: 376.9] | | | $ | [removed: 392.8] [added: 384.2] | | | $ | [removed: 381.3] [added: 392.8] | |

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

[removed: Selling, general and administrative ("SG&A")] [added: 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.

In any period, a portion of the cancellations that we experience are related to [removed: new sales] [added: New Orders] that occurred during the same period, and a portion are related to [removed: sales] [added: New Orders] that occurred in prior periods and therefore appeared in the beginning backlog for the current period.

Expressed as the total of all cancellations during the period as a percentage of gross [removed: sales] [added: New Orders] during the period, our cancellation rate was approximately [added: 15% in 2018, approximately] 14% in [removed: 2017] [added: 2017,] and approximately 15% in [removed: both 2016 and 2015.][added: 2016.]

Additionally, [removed: during each of 2017, 2016 and 2015,] approximately [added: 5% in 2018 and] 6% [added: in each 2017 and 2016,] 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: 2017] [added: 2018] backlog during [removed: 2018.][added: 2019.]

Homebuilding revenues increased 13% in [removed: 2016] [added: 2018] compared to [removed: 2015, primarily] [added: 2017,] as a result of a [removed: 12%] [added: 16%] increase in the number of units [removed: settled] [added: settled, offset by a 2% decrease in the average settlement price] year over year.

The increase in the number of units settled was [added: primarily] attributable to a [removed: 14%] [added: 12%] higher backlog unit balance entering [removed: 2016] [added: 2018] compared to [added: the] backlog entering [removed: 2015.][added: 2017, coupled with a higher backlog turnover rate year over year.]

[removed: The number of] [added: Segment] New Orders and the average sales price of New Orders increased [removed: 11%] [added: 10%] and [removed: 2%,] [added: 1%,] respectively, in [removed: 2016] [added: 2018] compared to [removed: 2015.][added: 2017.]

New Orders [removed: and the average sales price of New Orders] increased [removed: in each of our market segments] [added: primarily] due to more favorable market conditions in [removed: 2016] [added: the first half of 2018] compared to [removed: 2015,] [added: the same period in 2017,] which led to [removed: a] higher [removed: sales] [added: community] absorption [removed: rate] [added: rates] year over year.

Additionally, New Orders were favorably impacted by a [removed: 3%] [added: 5%] increase in the average number of active communities [removed: year over year.][added: in 2018 compared to 2017.]

The [removed: 11% increase] [added: 2% decrease] in backlog units [added: and dollars] was primarily attributable to a [removed: 12% increase] [added: 4% decrease] in New Orders [added: and a 2% decrease in the average New Order sales price] for the [removed: six month] [added: six-month] period ended December 31, [removed: 2016] [added: 2018] compared to the same period in [removed: 2015.][added: 2017.]

During 2018, general market conditions were favorably impacted by low unemployment and improved consumer confidence, leading to strong demand for new homes in the first half of 2018.

However, during the second half of the year, demand for new homes softened due to affordability issues in part attributable to rising interest rates and some market uncertainty.

We expect to experience pricing and sales pressure in future quarters due to higher interest rates and a competitive market environment, which includes rising new home inventory levels.

2018 versus 2017

The increase in the number of units settled was primarily attributable to a 24% higher backlog unit balance entering 2018 compared to the backlog unit balance entering 2017, offset partially by a lower backlog turnover rate year over year.

The decrease in the average settlement price was attributable to a 2% lower average

price of units in backlog entering 2018 compared to the same period in 2017 and to a 2% decrease in the average sales price of New Orders in the first six months of 2018 compared to the same period in 2017.

Gross profit margin percentage in 2018 decreased to 18.7% from 19.2% in 2017, due primarily to higher lot and certain material costs.

New home demand began to soften in the second half of 2018 due to affordability issues in part attributable to rising mortgage interest rates, which led to lower sales in each of our reporting segments in the fourth quarter of 2018 compared to the fourth quarter of 2017 and an overall decrease in New Orders of 11% quarter over quarter.

The decrease in the average sales price of New Orders was attributable to a relative shift in New Orders to lower price product and lower price markets.

Selling, general and administrative ("SG&A") expenses in 2018 increased by 9% compared to 2017, primarily due to an approximate $28,600 increase in equity-based compensation due to the equity grants in the second quarter of 2018, as further discussed in Note 12 in the accompanying consolidated financial statements, and an increase in personnel costs.

SG&A expenses as a percentage of revenue decreased to 6.1% in 2018 from 6.4% in 2017, primarily due to the 13% increase in revenues.

Backlog units and dollars were 8,365 units and $3,152,873, respectively, as of December 31, 2018 compared to 8,531 units and $3,277,888, respectively, as of December 31, 2017.

| | | 2018 | | | | 2017 | | |

| | | 2018 | | | | 2017 | | |

| | | 2018 | | | 2017 | |

| | | 2018 | | | | 2017 | | |

2018 versus 2017

The increase in the number of units settled is attributable primarily to a 19% higher backlog unit balance entering 2018 compared to the backlog unit balance entering 2017, partially offset by a lower backlog turnover rate year over year.

The decrease in the average sales price of New Orders is attributable to a shift in New Orders to lower price products and lower price markets.

2018 versus 2017

The increase in the average settlement price was primarily attributable to a 4% higher average sales price of units in backlog entering 2018 compared to the backlog entering 2017.

The North East segment’s gross profit margin percentage decreased to 19.8% in 2018 from 20.2% in 2017, due primarily to higher lot, construction and certain material costs.

The average sales price of New Orders was negatively impacted primarily by a shift in New Orders to lower priced communities within certain markets.

year over year.

2018 versus 2017

The Mid East segment had an approximate $25,500, or 17%, increase in segment profit in 2018 compared to 2017, driven primarily by an increase in segment revenues of approximately $205,700, or 16%, year over year.

Segment revenues increased due to a 17% increase in the number of units settled year over year, due primarily to a 27% higher backlog unit balance entering 2018 compared to the backlog unit balance entering 2017.

The segment’s gross profit margin percentage decreased to 19.2% in 2018 from 19.6% in 2017, primarily due to an increase in lot costs year over year.

New Orders increased as more favorable market conditions in 2018 led to higher community absorption rates within the segment.

2018 versus 2017

The South East segment had an approximate $22,500, or 23%, increase in segment profit in 2018 compared to 2017, driven primarily by an increase in segment revenues of approximately $209,900, or 24%, year over year.

| (2) | The increase in equity-based compensation expense for the year ended December 31, 2018 was primarily attributable to equity grants in the second quarter of 2018. See Note 12 in the accompanying consolidated financial statements for additional discussion of equity-based compensation. |

2018 versus 2017

Loan closing volume in 2018 increased by approximately $599,900, or 14%, from 2017.

specifications of the ultimate investor to whom we sell our originated loans.

The lower effective tax rate in 2018 resulted primarily from the enactment of the Tax Cuts and Jobs Act (the "Act") in December 2017, which had the following impacts on comparability between periods:

| • | reduction in our federal statutory rate from 35% to 21% in 2018, and |

Additionally, our effective tax rates in 2018 and 2017 were favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises of $77,478 and $58,681, respectively.

See Note 1 to the accompanying consolidated financial statements for discussion of recently issued accounting pronouncements applicable to us.

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.

However, new home prices continued to be constrained due to the competitive market environment.

2016 versus 2015

In addition, the number of units settled was favorably impacted by a 10% increase in New Orders for the first six months of 2016 compared to the same period in 2015.

Gross profit margin percentage in 2016 decreased to 17.5% from 18.7% in 2015, due to higher construction and selling related costs year over year.

SG&A expenses in 2016 increased approximately $11,300, or 3% compared to 2015, but as a percentage of revenue decreased to 6.7% from 7.3% year over year.

SG&A expenses increased primarily due to an approximate $10,500 increase in marketing costs attributable to the 3% increase in the number of active communities year over year and higher spending levels.

Backlog units and dollars were 6,884 units and $2,704,277, respectively, as of December 31, 2016 compared to 6,229 units and $2,375,182, respectively, as of December 31, 2015.

The 14% increase in backlog dollars was attributable to the increase in backlog units coupled with a 3% increase in the average New Order sales price for the six month period ended December 31, 2016 compared to the same period in 2015.

The net contract land

2016 versus 2015

The number of units settled was favorably impacted by a 6% higher backlog unit balance entering 2016 compared to 2015.

In addition, units settled in 2016 were favorably impacted by an 11% increase in New Orders for the first six months of 2016 compared to the same period in 2015.

Segment profit and gross profit margin were negatively impacted primarily by higher construction and selling related costs.

2016 versus 2015

The North East segment’s gross profit margin percentage decreased to 14.9% in 2016 from 18.4% in 2015.

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

New Orders were favorably impacted by a 12% increase in the average number of active communities year over year.

The increase in the average sales price of New Orders is primarily attributable to a shift in New Orders to higher priced markets in 2016 compared to 2015.

2016 versus 2015

The Mid East segment had an approximate $34,800, or 40%, increase in segment profit in 2016 compared to 2015.

The increase in segment profit was driven by an increase in segment revenues of approximately $177,600, or 17%, year over year due to a 17% increase in the number of units settled in 2016.

The number of units settled was favorably impacted by a 30% higher backlog unit balance entering 2016 compared to 2015.

The segment’s gross profit margin percentage increased to 18.1% in 2016 from 17.6% in 2015, due primarily to increased settlement activity, which allowed us to better leverage certain operating costs in 2016.

New Orders were favorably impacted by favorable market conditions in 2016 compared to 2015, which led to a higher sales absorption rate year over year.

2016 versus 2015

The South East segment had an approximate $13,700, or 24%, increase in segment profit in 2016 compared to 2015.

In addition, the settlements and the average settlement price increases were favorably impacted by a 16% increase in New Orders and a 4% increase in the average sales price of New Orders, respectively, for the first six months of 2016 compared to the same period in 2015.

purposes, and are not allocated to our operating segments.

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

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

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

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

2016 versus 2015

Loan closing volume in 2016 increased by approximately $460,200, or 13%, from 2015.

We employ a quality control department to ensure that

The effective tax rate in 2017 was impacted by the following items:

Our effective tax rate in 2018, excluding any excess tax benefit from stock option exercises, will be favorably impacted by the change in the Federal statutory tax rate from 35% in 2017 to 21% in 2018.

In May 2014, FASB issued ASU 2014-9, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.

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

The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately [removed: $7,300] [added: $9,000] outstanding at December 31, [removed: 2017,] [added: 2018,] and a $25,000 sublimit for a swing line commitment.

At December 31, [removed: 2017,] [added: 2018,] there was no debt outstanding under the Facility.

NVRM has available a mortgage Repurchase Agreement, which as of December 31, [removed: 2017] [added: 2018] provided for loan repurchases up to [removed: $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.][added: $150,000.]

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: 2.125%.][added: 1.95%.]

At December 31, [removed: 2017,] [added: 2018,] 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: 2017.][added: 2018.]

| | | [removed: 2018 | | | |] 2019 | | | [added: |] 2020 | | | 2021 | | | 2022 | | | [added: 2023 | | |] Thereafter | | | Total | | | | Fair Value | | |

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

| Forward trades of mortgage-backed securities (a) | | $ | [removed: 325] [added: (10,057] | [added: )] | | — | | | — | | | — | | | — | | | — | | | $ | [removed: 325] [added: (10,057] | [added: )] | | $ | [removed: 325] [added: (10,057] | [added: )] |

| Forward loan commitments (a) | | $ | [removed: 3,568] [added: 13,486] | | | — | | | — | | | — | | | — | | | — | | | $ | [removed: 3,568] [added: 13,486] | | | $ | [removed: 3,568] [added: 13,486] | |

| Interest-bearing deposits | | $ | [removed: 526,093] [added: 571,841] | | | — | | | — | | | — | | | — | | | — | | | $ | [removed: 526,093] [added: 571,841] | | | $ | [removed: 526,093] [added: 571,841] | |

| Average interest rate | | [removed: 1.2] [added: 4.8] | | % | | — | | | — | | | — | | | — | | | — | | | [removed: 1.2] [added: 4.8] | | % | | | | |

| Fixed rate obligations | | $ | — | | | — | | | — | | | [removed: —] [added: 600,000] | | | [removed: 600,000] [added: —] | | | — | | | $ | 600,000 | | | $ | [removed: 630,000] [added: 594,000] | |

| Average interest rate | | [removed: —] [added: 2.4] | | [added: %] | | — | | | — | | | — | | | [removed: 4.0] [added: —] | [removed: %] | | — | | | [removed: 4.0] [added: 2.4] | | % | | | | |

| Mortgage loans held for sale | | $ | 447,444 | | | — | | | — | | | — | | | — | | | — | | | $ | 447,444 | | | $ | 458,324 | |

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

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

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: 2017,] [added: 2018,] approximately 23% and [removed: 9%] [added: 8%] of our home settlements occurred in the Washington, D.C. and Baltimore, MD metropolitan areas, respectively, which accounted for approximately 30% and [removed: 11%,] [added: 10%,] respectively, of our [removed: 2017] [added: 2018] homebuilding revenues.

Ryan Homes operates in [removed: twenty-nine] [added: thirty-two] metropolitan areas located in Maryland, Virginia, Washington, D.C., West Virginia, Pennsylvania, New York, North Carolina, South Carolina, Florida, Ohio, New Jersey, Delaware, Indiana, Illinois and Tennessee.

NVHomes operates in Delaware and the Washington, D.C., Baltimore, [removed: MD,] [added: MD and] Philadelphia, PA [removed: and Raleigh, NC] metropolitan areas.

During [removed: 2017,] [added: 2018,] the prices at which we settled homes ranged from approximately $130,000 to [removed: $2.0] [added: $1.5] million and averaged [removed: approximately $386,900.][added: $379,700.]

During [removed: 2016,] [added: 2017,] our average price of homes settled was [removed: approximately $381,200.][added: $386,900.]

Backlog, which represents homes sold but not yet settled with the customer, totaled [removed: 8,531] [added: 8,365] units and approximately [removed: $3.3] [added: $3.2] billion at December 31, [removed: 2017] [added: 2018] compared to [removed: 6,884] [added: 8,531] units and approximately [removed: $2.7] [added: $3.3] billion at December 31, [removed: 2016.][added: 2017.]

Expressed as the total of all cancellations during the period as a percentage of gross sales during the period, our cancellation rate was approximately [added: 15% in 2018,] 14% in 2017 and 15% in [removed: both 2016 and 2015.][added: 2016.]

Additionally, [removed: during] [added: approximately 5% in 2018 and 6% in] each of [removed: 2017, 2016] [added: 2017] and [removed: 2015, approximately 6%] [added: 2016] 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: 2017] [added: 2018] backlog during [removed: 2018.][added: 2019.]

We use [removed: several] [added: many] independent subcontractors in our various markets and we are not dependent on any single subcontractor or on a small number of subcontractors.

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 [added: other public facilities do not reach minimum standards.]

In [removed: 2017,] [added: 2018,] NVRM closed approximately [removed: 13,100] [added: 15,100] loans with an aggregate principal amount of approximately [removed: $4.2] [added: $4.8] billion as compared to approximately [removed: 12,300] [added: 13,100] loans with an aggregate principal amount of approximately [removed: $4.0] [added: $4.2] billion in [removed: 2016.][added: 2017.]

NVRM’s mortgage loans in process that had not closed [removed: at December 31, 2017 and 2016] had an aggregate principal balance of approximately $2.2 billion [added: as of both December 31, 2018] and [removed: $1.8 billion, respectively.][added: 2017.]

NVRM’s cancellation rate was approximately [removed: 31%, 34%] [added: 32%, 31%] and [removed: 29%] [added: 34%] in [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

At December 31, [removed: 2017,] [added: 2018,] we employed approximately [removed: 5,200] [added: 5,600] full-time persons.

These filings are available to the public over the internet at the SEC’s website at [removed: http://www.sec.gov.][added: www.sec.gov.]

Our principal internet website can be found at [removed: http://www.nvrinc.com.][added: www.nvrinc.com.]

Current Business Environment

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.

However, new home prices continued to be constrained due to the competitive market environment.

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

For additional information and analysis of recent trends in our operations and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Form 10-K.

other public facilities do not reach minimum standards.

All of the documents we file with the SEC may also be read and copied at the SEC’s Public Reference Room located at 100 F Street, NE, Washington, D.C. 20549.

Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room.

Additionally, amendments to and waivers from a provision of the Code of Ethics that apply to our principal executive officer, principal financial officer, principal accounting officer or persons performing similar functions will be disclosed on our website.

For the fiscal year ended December 31, [removed: 2017][added: 2018]

The aggregate market value of the voting stock held by non-affiliates of NVR, Inc. on June 30, [removed: 2017,] [added: 2018,] the last business day of NVR, Inc.’s most recently completed second fiscal quarter, was approximately [removed: $8,443,210,000.][added: $10,109,057,000.]

As of February [removed: 12, 2018] [added: 11, 2019] there were [removed: 3,683,093] [added: 3,616,917] 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: 2018] [added: 2019] are incorporated by reference into Part III of this report.

| Item 1. | [removed: [Business](#sDAE3EA45BD50B9DE7E34D332E20B0951)] [added: [Business](#s94B37490E3DE5C2EA41B337B1775E4CD)] | [removed: [1](#sDAE3EA45BD50B9DE7E34D332E20B0951)] [added: [1](#s94B37490E3DE5C2EA41B337B1775E4CD)] |

| Item 1A. | [Risk [removed: Factors](#s2BB3B72BB183C1A728DDD332E22C945E)] [added: Factors](#s754FB1612A5E5C379106538E2BB103FB)] | [removed: [4](#s2BB3B72BB183C1A728DDD332E22C945E)] [added: [4](#s754FB1612A5E5C379106538E2BB103FB)] |

| Item 1B. | [Unresolved Staff [removed: Comments](#s0FC30BAAD8E1F5C631B9D332E25E6E0A)] [added: Comments](#sD0D597C852585AC6AFC59B23C8B29D3F)] | [removed: [8](#s0FC30BAAD8E1F5C631B9D332E25E6E0A)] [added: [8](#sD0D597C852585AC6AFC59B23C8B29D3F)] |

| Item 2. | [removed: [Properties](#sD0087ABEDA677823C027D332E27FF2CD)] [added: [Properties](#s01B94672C2275037809EC4BBE8579AC0)] | [removed: [8](#sD0087ABEDA677823C027D332E27FF2CD)] [added: [8](#s01B94672C2275037809EC4BBE8579AC0)] |

| Item 3. | [Legal [removed: Proceedings](#s993B9DD64AB5D2FA0055D332E2B6EDDA)] [added: Proceedings](#s96110FCCEFA557C8806B9981B733E783)] | [removed: [8](#s993B9DD64AB5D2FA0055D332E2B6EDDA)] [added: [8](#s96110FCCEFA557C8806B9981B733E783)] |

| Item 4. | [Mine Safety [removed: Disclosures](#s8DCB6BDFC05C16E9EF82D332E2D54258)] [added: Disclosures](#s3B1E9CEA077351048404AFDFBA9282EE)] | [removed: [8](#s8DCB6BDFC05C16E9EF82D332E2D54258)] [added: [8](#s3B1E9CEA077351048404AFDFBA9282EE)] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s7ACFAF93841C4C83747CD332DA630873)] [added: Securities](#sAE68C7D255065EA4B79C7A20D4932578)] | [removed: [10](#s7ACFAF93841C4C83747CD332DA630873)] [added: [9](#sAE68C7D255065EA4B79C7A20D4932578)] |

| Item 6. | [Selected Financial [removed: Data](#s5CA0ADD8EF6C1EF1F465D332E37FF313)] [added: Data](#sE1BAE7F80F1950ADAF30F7ED02B53532)] | [removed: [12](#s5CA0ADD8EF6C1EF1F465D332E37FF313)] [added: [11](#sE1BAE7F80F1950ADAF30F7ED02B53532)] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sA04052D7A8EA97DDB4B2D332DA3B23D3)] [added: Operations](#s7C645DC614F055FEAB758F6F662D0400)] | [removed: [13](#sA04052D7A8EA97DDB4B2D332DA3B23D3)] [added: [12](#s7C645DC614F055FEAB758F6F662D0400)] |

| Item 7A. | [Quantitative and Qualitative Disclosure About Market [removed: Risk](#s9B68A9159BB0687029F1D332E3DB5C52)] [added: Risk](#s27BDBC1098E055AABE6C883E734F1DCF)] | [removed: [30](#s9B68A9159BB0687029F1D332E3DB5C52)] [added: [28](#s27BDBC1098E055AABE6C883E734F1DCF)] |

| Item 8. | [Financial Statements and Supplementary [removed: Data](#sADC1493536127C398A56D332E3FE83EA)] [added: Data](#sF1F69EA82D275E2AB4311AD9FB3FBB34)] | [removed: [32](#sADC1493536127C398A56D332E3FE83EA)] [added: [30](#sF1F69EA82D275E2AB4311AD9FB3FBB34)] |

| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#s8EA98A13D27E838B7657D332E41F71AB)] [added: Disclosure](#sD3C5B973B29258608EF4474B2B02EC1E)] | [removed: [32](#s8EA98A13D27E838B7657D332E41F71AB)] [added: [30](#sD3C5B973B29258608EF4474B2B02EC1E)] |

| Item 9A. | [Controls and [removed: Procedures](#s6085492E460A64829C22D332E453108E)] [added: Procedures](#sA7DE2897E017512A97A4BC087F9C0092)] | [removed: [32](#s6085492E460A64829C22D332E453108E)] [added: [30](#sA7DE2897E017512A97A4BC087F9C0092)] |

| Item 9B. | [Other [removed: Information](#s1AFA198548E5F0BE3F71D332E4745502)] [added: Information](#sB7F2476858EA54DA807E10E0FFA7167C)] | [removed: [32](#s1AFA198548E5F0BE3F71D332E4745502)] [added: [30](#sB7F2476858EA54DA807E10E0FFA7167C)] |

| Item 10. | [Directors, Executive Officers, and Corporate [removed: Governance](#s876E08A4899192E43595D332E4C7333A)] [added: Governance](#sA2FE06F4698B531084B19556E68E7302)] | [removed: [33](#s876E08A4899192E43595D332E4C7333A)] [added: [30](#sA2FE06F4698B531084B19556E68E7302)] |

| Item 11. | [Executive [removed: Compensation](#s647C5D5D87937E19B7C0D332E4F929DC)] [added: Compensation](#sB7A76FF1C3435741905D18A074474070)] | [removed: [33](#s647C5D5D87937E19B7C0D332E4F929DC)] [added: [31](#sB7A76FF1C3435741905D18A074474070)] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sE66ABE57B5DE56AA20C0D332E5190DB6)] [added: Matters](#s6924498B410857AB97DBEDC756110378)] | [removed: [33](#sE66ABE57B5DE56AA20C0D332E5190DB6)] [added: [31](#s6924498B410857AB97DBEDC756110378)] |

| Item 13. | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s1CF45401C1FE61236266D332E54BF440)] [added: Independence](#sBCB78F81386D5EADB5FB5C5A84AEE051)] | [removed: [33](#s1CF45401C1FE61236266D332E54BF440)] [added: [31](#sBCB78F81386D5EADB5FB5C5A84AEE051)] |

| Item 14. | [Principal Accountant Fees and [removed: Services](#s41B661D4178EFF377F26D332E56E6C41)] [added: Services](#sBE1B3C54A51758E6B524348F22791330)] | [removed: [33](#s41B661D4178EFF377F26D332E56E6C41)] [added: [32](#sBE1B3C54A51758E6B524348F22791330)] |

| Item 15. | [Exhibits and Financial Statement [removed: Schedules](#sE2EEAB8D2774629B2023D332E5BFF34D)] [added: Schedules](#s4AF6199E60015ABDBB6BB4B016AE3E5D)] | [removed: [34](#sE2EEAB8D2774629B2023D332E5BFF34D)] [added: [33](#s4AF6199E60015ABDBB6BB4B016AE3E5D)] |

10-K 1 nvr201810-k.htm 10-K

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

| | [Executive Officers of the Registrant](#sBAEC29416339434FE263D332E305DEEB) | [9](#sBAEC29416339434FE263D332E305DEEB) |

Our plant utilization was [removed: 47%] [added: 52%] and [removed: 43%] [added: 47%] of total capacity in [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

During 2018 we entered into a lease agreement for a new production facility in Richmond, Virginia of approximately 130,000 square feet.

The lease has a term of 20 years from the commencement date which is expected to be in the second quarter of 2019.

The lease contains an option for extension and for the purchase of the facility.

Executive Officers of the Registrant

| | | | | |

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

| | | | | |

| Name | | Age | | Positions |

| Paul C. Saville | | 62 | | President and Chief Executive Officer of NVR |

| Daniel D. Malzahn | | 48 | | Senior Vice President, Chief Financial Officer and Treasurer of NVR |

| Jeffrey D. Martchek | | 52 | | President of Homebuilding Operations of NVR |

| Robert W. Henley | | 51 | | President of NVRM |

| Eugene J. Bredow | | 48 | | Vice President, Chief Accounting Officer and Controller of NVR |

Paul C.

Saville was named President and Chief Executive Officer of NVR effective July 1, 2005.

Mr. Saville has been employed by NVR since 1981.

Daniel D.

Malzahn was named Senior Vice President in February 2016, and continues to serve as Chief Financial Officer and Treasurer of NVR, roles he has occupied since February 20, 2013.

From February 1, 2004 through February 20, 2013, Mr. Malzahn was Vice President of Planning and Investor Relations of NVR.

Mr. Malzahn has been employed by NVR since 1994.

Jeffrey D.

Martchek was named President of Homebuilding Operations of NVR effective January 1, 2016.

From February 2011 through January 1, 2016, Mr. Martchek was Area President for the Maryland and Virginia homebuilding operations.

Mr. Martchek has been employed by NVR since 1988.

Robert W.

Henley was named President of NVRM effective October 1, 2012.

Mr. Henley served as interim acting President of NVRM from June 1, 2012 until October 1, 2012.

Mr. Henley has been employed by NVR since 1994.

Eugene J.

Bredow was named Chief Accounting Officer in February 2016, and continues to serve as Vice President and Controller of NVR, roles he has occupied since June 1, 2012.

Mr. Bredow has been employed by NVR since 2004.

We had [removed: two] [added: three] share repurchase authorizations outstanding during the quarter ended December 31, [removed: 2017.][added: 2018.]

On February [removed: 15, 2017] [added: 14, 2018, August 1, 2018] and December 12, [removed: 2017,] [added: 2018,] we publicly announced the Board of Directors’ approval to repurchase our outstanding common stock in one or more open market and/or privately negotiated transactions, up to an aggregate of [removed: $300 million] [added: $300,000] per authorization.

The following table provides information regarding common stock repurchases during the quarter ended December 31, [removed: 2017:][added: 2018:]

The following graph compares the cumulative total return to holders of our common stock since December 31, [removed: 2012] [added: 2013] 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: 2012.][added: 2013.]

[removed: ][added: ]

| Comparison of 5 Year Cumulative Total Return | | [removed: 2012 | | | |] 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | [added: | 2018 | | |]

| Dow Jones US Home Construction | | $ | 100 | | | $ | [removed: 110] [added: 108] | | | $ | 119 | | | $ | [removed: 131] [added: 111] | | | $ | [removed: 122] [added: 196] | | | $ | [removed: 215] [added: 134] | |

(dollars in thousands, except per share data)

Our shares of common stock are listed and principally traded on the New York Stock Exchange under the trading symbol “NVR.” As of the close of business on February 11, 2019, there were 218 shareholders of record of our common stock.

| October 1 - 31, 2018 (1) | | 8,500 | | | $ | 2,382.65 | | | 8,500 | | | $ | 284,070 | |

| November 1 - 30, 2018 | | 32,909 | | | $ | 2,361.91 | | | 32,909 | | | $ | 206,342 | |

| December 1 - 31, 2018 | | 37,182 | | | $ | 2,441.61 | | | 37,182 | | | $ | 415,558 | |

| Total | | 78,591 | | | $ | 2,401.86 | | | 78,591 | | | | | |

| | |

| --- | --- |

| (1) | 1,707 outstanding shares were repurchased under the February 14, 2018 share repurchase authorization, which fully utilized the authorization. The remaining 6,793 outstanding shares were repurchased under the August 1, 2018 share repurchase authorization. |

The information required by this item in respect to securities authorized for issuance under equity compensation plans is provided under Item 12 of this annual report on Form 10-K.

| NVR, Inc. | | $ | 100 | | | $ | 124 | | | $ | 160 | | | $ | 163 | | | $ | 342 | | | $ | 238 | |

| S&P 500 | | $ | 100 | | | $ | 114 | | | $ | 115 | | | $ | 129 | | | $ | 157 | | | $ | 150 | |

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, 2017 and 2016:

| | | | | | | | | |

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

| | | | | | | | | |

| | | High | | | | Low | | |

| Prices per share: | | | | | | | | |

| 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 | |

| 2016 | | | | | | | | |

| Fourth Quarter | | $ | 1,695.41 | | | $ | 1,478.04 | |

| Third Quarter | | $ | 1,845.37 | | | $ | 1,633.00 | |

| Second Quarter | | $ | 1,801.94 | | | $ | 1,606.75 | |

| First Quarter | | $ | 1,820.00 | | | $ | 1,462.02 | |

As of the close of business on February 12, 2018, there were 241 shareholders of record.

| 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 | | | | | |

On February 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.

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

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

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Revenues | | $ | [removed: 6,175,521] [added: 7,004,304] | | | $ | [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] | |

| Gross profit | | $ | [removed: 1,185,143] [added: 1,312,177] | | | $ | [removed: 1,001,362] [added: 1,185,143] | | | $ | [removed: 946,418] [added: 1,001,362] | | | $ | [removed: 806,473] [added: 946,418] | | | $ | [removed: 710,277] [added: 806,473] | |

| Homebuilding income | | $ | [removed: 776,370] [added: 871,106] | | | $ | [removed: 601,102] [added: 776,370] | | | $ | [removed: 555,329] [added: 601,102] | | | $ | [removed: 427,884] [added: 555,329] | | | $ | [removed: 379,370] [added: 427,884] | |

| Mortgage banking fees | | $ | [removed: 130,319] [added: 159,370] | | | $ | [removed: 113,321] [added: 130,319] | | | $ | [removed: 93,808] [added: 113,321] | | | $ | [removed: 69,509] [added: 93,808] | | | $ | [removed: 76,786] [added: 69,509] | |

| Mortgage banking income | | $ | [removed: 70,541] [added: 88,626] | | | $ | [removed: 60,595] [added: 70,541] | | | $ | [removed: 47,883] [added: 60,595] | | | $ | [removed: 25,662] [added: 47,883] | | | $ | [removed: 39,326] [added: 25,662] | |

| Net income | | $ | [removed: 537,521] [added: 797,197] | | | $ | [removed: 425,262] [added: 537,521] | | | $ | [removed: 382,927] [added: 425,262] | | | $ | [removed: 281,630] [added: 382,927] | | | $ | [removed: 266,477] [added: 281,630] | |

| Basic | | $ | [removed: 144.00] [added: 219.58] | | | $ | [removed: 110.53] [added: 144.00] | | | $ | [removed: 95.21] [added: 110.53] | | | $ | [removed: 65.83] [added: 95.21] | | | $ | [removed: 56.25] [added: 65.83] | |

| Diluted | | $ | [removed: 126.77] [added: 194.80] | | | $ | [removed: 103.61] [added: 126.77] | | | $ | [removed: 89.99] [added: 103.61] | | | $ | [removed: 63.50] [added: 89.99] | | | $ | [removed: 54.81] [added: 63.50] | |

| Basic | | [removed: 3,733] [added: 3,631] | | | | [removed: 3,847] [added: 3,733] | | | | [removed: 4,022] [added: 3,847] | | | | [removed: 4,278] [added: 4,022] | | | | [removed: 4,737] [added: 4,278] | | |

| Diluted | | [removed: 4,240] [added: 4,092] | | | | [removed: 4,104] [added: 4,240] | | | | [removed: 4,255] [added: 4,104] | | | | [removed: 4,435] [added: 4,255] | | | | [removed: 4,862] [added: 4,435] | | |

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Homebuilding inventory | | $ | [removed: 1,246,199] [added: 1,253,110] | | | $ | [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] | |

| Contract land deposits, net | | $ | [removed: 370,429] [added: 396,177] | | | $ | [removed: 379,844] [added: 370,429] | | | $ | [removed: 343,295] [added: 379,844] | | | $ | [removed: 294,676] [added: 343,295] | | | $ | [removed: 236,885] [added: 294,676] | |

| Total assets | | $ | [removed: 2,989,279] [added: 3,165,933] | | | $ | [removed: 2,643,943] [added: 2,989,279] | | | $ | [removed: 2,511,718] [added: 2,643,943] | | | $ | [removed: 2,347,413] [added: 2,511,718] | | | $ | [removed: 2,481,718] [added: 2,347,413] | |

| Notes and loans payable (1) | | $ | [removed: 597,066] [added: 597,681] | | | $ | [removed: 596,455] [added: 597,066] | | | $ | [removed: 595,847] [added: 596,455] | | | $ | [removed: 595,244] [added: 595,847] | | | $ | [removed: 594,760] [added: 595,244] | |

| Shareholders’ equity | | $ | [removed: 1,605,492] [added: 1,808,562] | | | $ | [removed: 1,304,441] [added: 1,605,492] | | | $ | [removed: 1,239,165] [added: 1,304,441] | | | $ | [removed: 1,124,255] [added: 1,239,165] | | | $ | [removed: 1,261,352] [added: 1,124,255] | |

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: 2017] [added: 2018] 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: 2017.][added: 2018.]

Our internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their attestation report which is included herein.

None.

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.

[added: The other information required by] 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: 2018.][added: 2019.]

Executive Officers of the Registrant

| | | | | |

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

| | | | | |

| Name | | Age | | Positions |

| Paul C. Saville | | 63 | | President and Chief Executive Officer of NVR |

| Daniel D. Malzahn | | 49 | | Senior Vice President, Chief Financial Officer and Treasurer of NVR |

| Jeffrey D. Martchek | | 53 | | President of Homebuilding Operations of NVR |

| Paul W. Praylo | | 47 | | Senior Vice President and Chief Operating Officer |

| Robert W. Henley | | 52 | | President of NVRM |

| Eugene J. Bredow | | 49 | | Senior Vice President and Chief Administrative Officer |

Paul C.

Saville was named President and Chief Executive Officer of NVR effective July 1, 2005.

Mr. Saville has been employed by NVR since 1981.

Daniel D.

Malzahn was named Senior Vice President in February 2016, and continues to serve as Chief Financial Officer and Treasurer of NVR, roles he has occupied since February 20, 2013.

From February 1, 2004 through February 20, 2013, Mr. Malzahn was Vice President of Planning and Investor Relations of NVR.

Mr. Malzahn has been employed by NVR since 1994.

Jeffrey D.

Martchek was named President of Homebuilding Operations of NVR effective January 1, 2016.

From February 2011 through January 1, 2016, Mr. Martchek was Area President for the Maryland and Virginia homebuilding operations.

Mr. Martchek has been employed by NVR since 1988.

Paul W.

Praylo was hired as Senior Vice President and Chief Operating Officer effective January 28, 2019.

Prior to joining NVR, Mr. Praylo was employed by AECOM as Chief Operating Officer of the Construction Services Group from January 2017 to January 2019 and Chief Financial Officer of the Construction Services Group from July 2010 to December 2016.

Robert W.

Henley was named President of NVRM effective October 1, 2012.

Mr. Henley served as interim acting President of NVRM from June 1, 2012 until October 1, 2012.

Mr. Henley is retiring from NVR effective March 31, 2019 and will be succeeded by Eugene J.

Bredow.

Eugene J.

Bredow has been named President of NVRM effective April 1, 2019, to succeed Mr. Henley.

Mr. Bredow has served as Senior Vice President and Chief Administrative Officer since March 1, 2018.

Mr. Bredow served as Vice President and Controller from June 1, 2012 and Chief Accounting Officer from February 2016 until March 1, 2018.

Mr. Bredow has been employed by NVR since 2004.

Reference is also made regarding our executive officers to “Executive Officers of the Registrant” following Item 4 of this Form 10-K.

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: 2018.][added: 2019.]

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: 2018.][added: 2019.]

The table below sets forth information as of December 31, [removed: 2017] [added: 2018] for (i) all equity compensation plans approved by our shareholders and (ii) all equity compensation plans not approved by our shareholders:

| Equity compensation plans [added: not] approved by security holders [removed: (1)] | | [removed: 836,474] [added: 62,634] | | | $ | [removed: 1,151.14] [added: 703.00] | | | [removed: 314,281] [added: —] | |

| Equity compensation plans [removed: not] approved by security holders [added: (1)] | | [removed: 89,382] [added: 1,007,378] | | | $ | [removed: 703.00] [added: 1,796.52] | | | [removed: —] [added: 257,485] | |

| (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: 2017,] [added: 2018,] there are [removed: 9,961] [added: 20,812] RSUs outstanding. Of the total [removed: 314,281] [added: 257,485] shares remaining available for future issuance under the shareholder approved plans, up to [removed: 37,774] [added: a total of 61,694] may be issued as RSUs. The weighted-average exercise price of outstanding options under security holder approved plans, excluding outstanding RSUs, was [removed: $1,165.01.] [added: $1,834.42.] |

Equity compensation plans approved by our shareholders include: the [removed: 1998 Management Long-Term Stock Option] [added: 2010 Equity Incentive] Plan, the [removed: 2010] [added: 2014] Equity Incentive Plan, and the [removed: 2014] [added: 2018] Equity Incentive Plan.

| Total | | 1,070,012 | | | $ | 1,732.51 | | | 257,485 | |

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

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: 2018.][added: 2019.]

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: 2018.][added: 2019.]

| [removed: 10.7*] [added: 10.9*] | | [Profit Sharing Plan of NVR, Inc. and Affiliated Companies.](http://www.sec.gov/Archives/edgar/data/906163/0000928385-97-001029.txt) | | S-8 | | 333-29241 | | 4.1 | | 6/13/1997 |

| [removed: 10.8*] [added: 10.10*] | | Employee Stock Ownership Plan of NVR, Inc. | | 10-K/A | | | | | | 12/31/1994 |

| [removed: 10.9*] [added: 10.11*] | | [NVR, Inc. 1998 Management Long-Term Stock Option Plan.](http://www.sec.gov/Archives/edgar/data/906163/000092838599001970/0000928385-99-001970.txt) | | S-8 | | 333-79951 | | 4 | | 6/4/1999 |

| [removed: 10.10*] [added: 10.12*] | | [NVR, Inc. 2000 Broadly-Based Stock Option Plan.](http://www.sec.gov/Archives/edgar/data/906163/000092838501000739/0000928385-01-000739-0004.txt) | | S-8 | | 333-56732 | | 99.1 | | 3/8/2001 |

| [removed: 10.11*] [added: 10.13*] | | [Amended and Restated NVR, Inc. Nonqualified Deferred Compensation 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: 10.14*] | | [First Amendment to NVR, Inc. Nonqualified Deferred Compensation Plan.](http://www.sec.gov/Archives/edgar/data/906163/000156459017001623/nvr-ex1036_559.htm) | | 10-K | | | | 10.36 | | 2/15/2017 |

| [removed: 10.13*] [added: 10.15*] | | [Description of the Board of Directors’ compensation [removed: arrangement.](http://www.sec.gov/Archives/edgar/data/906163/000119312505038619/dex1027.htm)] [added: arrangement. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex_1015.htm)] | | [removed: 10-K] | | | | [removed: 10.27] | | [removed: 2/28/2005] |

| [removed: 10.14*] [added: 10.23*] | | [NVR, Inc. 2014 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312514186839/d722339dex101.htm) | | S-8 | | 333-195756 | | 10.1 | | 5/7/2014 |

| [removed: 10.15*] [added: 10.24*] | | [The Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2014 Equity Incentive [removed: Plan. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1015.htm)] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1015.htm)] | | [added: 10-K] | | | | [added: 10.2] | | [added: 2/14/2018] |

| [removed: 10.16*] [added: 10.25*] | | [The Form of Non-Qualified Stock Option Agreement (Director time-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312514187250/d722365dex101.htm) | | 8-K | | | | 10.2 | | 5/7/2014 |

| [removed: 10.17*] [added: 10.26*] | | [The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2014 Equity Incentive [removed: Plan. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1017.htm)] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1017.htm)] | | [added: 10-K] | | | | [added: 10.17] | | [added: 2/14/2018] |

| [removed: 10.18*] [added: 10.27*] | | [The Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312514187250/d722365dex104.htm) | | 8-K | | | | 10.4 | | 5/7/2014 |

| [removed: 10.19*] [added: 10.28*] | | [NVR, Inc. 2010 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310043500/w78342exv10w1.htm) | | S-8 | | 333-166512 | | 10.1 | | 5/4/2010 |

| [removed: 10.20*] [added: 10.31*] | | [The Form of Non-Qualified Stock Option Agreement [removed: (Management] [added: (Director] grants) under the NVR, Inc. 2010 Equity Incentive [removed: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312513310039/d540338dex101.htm)] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310045375/w78392exv10w2.htm)] | | [removed: 10-Q] [added: 8-K] | | | | [removed: 10.1] [added: 10.2] | | [removed: 7/30/2013] [added: 5/6/2010] |

| [removed: 10.21*] [added: 10.18*] | | [The Form of Non-Qualified Stock Option Agreement (Director [added: time-based] grants) under the NVR, Inc. [removed: 2010] [added: 2018] Equity Incentive [removed: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310045375/w78392exv10w2.htm)] [added: Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000065/exhibit10_2.htm)] | | 8-K | | | | 10.2 | | [removed: 5/6/2010] [added: 5/14/2018] |

| [removed: 10.22*] [added: 10.32*] | | [The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000119312513310039/d540338dex102.htm) | | 10-Q | | | | 10.2 | | 7/30/2013 |

| [removed: 10.23*] [added: 10.33*] | | [The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000095012310045375/w78392exv10w4.htm) | | 8-K | | | | 10.4 | | 5/6/2010 |

| [removed: 10.24*] [added: 10.34*] | | [The Form of Non-Qualified Stock Option Agreement under the NVR, Inc. 2000 Broadly-Based Stock Option Plan.](http://www.sec.gov/Archives/edgar/data/906163/000129993308000111/exhibit1.htm) | | 8-K | | | | 10.1 | | 1/7/2008 |

| [removed: 10.25] [added: 10.35*] | | [Amended and Restated Master Repurchase Agreement dated as of August 2, 2011, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex101.htm) | | 8-K | | | | 10.1 | | 1/21/2016 |

| [removed: 10.26] [added: 10.36*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex102.htm) | | 8-K | | | | 10.2 | | 1/21/2016 |

| [removed: 10.27] [added: 10.37*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex103.htm) | | 8-K | | | | 10.3 | | 1/21/2016 |

| [removed: 10.28] [added: 10.38*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex104.htm) | | 8-K | | | | 10.4 | | 1/21/2016 |

| [removed: 10.29] [added: 10.39*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex105.htm) | | 8-K | | | | 10.5 | | 1/21/2016 |

| [removed: 10.30] [added: 10.40*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex106.htm) | | 8-K | | | | 10.6 | | 1/21/2016 |

| [removed: 10.31] [added: 10.41*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex107.htm) | | 8-K | | | | 10.7 | | 1/21/2016 |

| [removed: 10.32] [added: 10.42*] | | [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 Association.](http://www.sec.gov/Archives/edgar/data/906163/000119312516434657/d126970dex108.htm) | | 8-K | | | | 10.8 | | 1/21/2016 |

| [removed: 10.33] [added: 10.43*] | | [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 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: 10.44*] | | [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 |

| [removed: 10.35] [added: 10.46*] | | [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 Runner.](http://www.sec.gov/Archives/edgar/data/906163/000119312516650024/d186192dex101.htm) | | 8-K | | | | 10.1 | | 7/18/2016 |

| [removed: 10.36*] [added: 10.47*] | | [Summary of [removed: 2018] [added: 2019] Executive Officer annual incentive compensation plan. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex1036.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex1047.htm)] | | | | | | | | |

| 21 | | [NVR, Inc. Subsidiaries. Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex21.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex21.htm)] | | | | | | | | |

| 23 | | [Consent of KPMG LLP (Independent Registered Public Accounting Firm). Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex23.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex23.htm)] | | | | | | | | |

| 31.1 | | [Certification of NVR’s Chief Executive Officer pursuant to Rule 13a-14(a). Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex311.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex311.htm)] | | | | | | | | |

| 31.2 | | [Certification of NVR’s Chief Financial Officer pursuant to Rule 13a-14(a). Filed [removed: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex312.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex312.htm)] | | | | | | | | |

| 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 [removed: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616318000007/ex32.htm)] [added: herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex32.htm)] | | | | | | | | |

| /s/ Dwight C. Schar | | Chairman | | February [removed: 14, 2018] [added: 13, 2019] |

| /s/ C. E. Andrews | | Director | | February [removed: 14, 2018] [added: 13, 2019] |

| /s/ Timothy M. Donahue | | Director | | February [removed: 14, 2018] [added: 13, 2019] |

| /s/ Thomas D. Eckert | | Director | | February [removed: 14, 2018] [added: 13, 2019] |

| /s/ Alfred E. Festa | | Director | | February [removed: 14, 2018] [added: 13, 2019] |

| 10.7* | | [Amendment No. 1 to Employment Agreement between NVR, Inc. and Eugene J. Bredow dated March 1, 2018.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000026/exhibit10_1.htm) | | 10-Q | | | | 10.1 | | 5/1/2018 |

| 10.8* | | [Employment Agreement between NVR, Inc. and Paul W. Praylo dated January 28, 2019. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex108.htm) | | | | | | | | |

| 10.16* | | [NVR, Inc. 2018 Equity Incentive Plan](http://www.sec.gov/Archives/edgar/data/906163/000119312518149765/d578284ds8.htm) | | S-8 | | 333-224629 | | 10.1 | | 5/3/2018 |

| 10.17* | | [The Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000065/exhibit10_1.htm) | | 8-K | | | | 10.1 | | 5/14/2018 |

| 10.19* | | [The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000065/exhibit10_3.htm) | | 8-K | | | | 10.3 | | 5/14/2018 |

| 10.20* | | [The Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000065/exhibit10_4.htm) | | 8-K | | | | 10.4 | | 5/14/2018 |

| 10.21* | | [The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2018 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000065/exhibit10_5.htm) | | 8-K | | | | 10.5 | | 5/14/2018 |

| 10.22* | | [The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2018 Equity Incentive Plan.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000065/exhibit10_6.htm) | | 8-K | | | | 10.6 | | 5/14/2018 |

| 10.29* | | [The Amended Form of Non-Qualified Stock Option Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive Plan. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex1029.htm) | | | | | | | | |

| 10.30* | | [The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2010 Equity Incentive Plan. Filed herewith.](https://www.sec.gov/Archives/edgar/data/906163/000090616319000029/ex1030.htm) | | | | | | | | |

| 10.45* | | [Tenth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 25, 2018 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.](http://www.sec.gov/Archives/edgar/data/906163/000090616318000106/exhibit10_1mra.htm) | | 10-Q | | | | 10.1 | | 7/30/2018 |

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

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

| | | | | Incorporated by Reference | | | | | | |

| Exhibit Number | | Exhibit Description | | Form | | File Number | | Exhibit Number | | Filing Date |

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

| /s/ Alexandra A. Jung | | Director | | February 13, 2019 |

| Alexandra A. Jung | | | | |

| Matthew B. Kelpy | | | | |

February 13, 2019

February 13, 2019

| | 1,253,110 | | | | 1,246,199 | | |

| | 2,641,511 | | | | 2,584,880 | | |

| | 524,422 | | | | 404,399 | | |

| | 1,313,294 | | | | 1,350,963 | | |

| | 44,077 | | | | 32,824 | | |

| Cumulative-effect adjustment from adoption of ASU 2014-09, net of tax | — | | | | — | | | | 2,196 | | | | — | | | | — | | | | — | | | | 2,196 | | |

| Net income | — | | | | — | | | | 797,197 | | | | — | | | | — | | | | — | | | | 797,197 | | |

| Deferred compensation activity, net | — | | | | — | | | | — | | | | — | | | | 446 | | | | (446 | | ) | | — | | |

| Balance, December 31, 2018 | $ | 206 | | | $ | 1,820,223 | | | $ | 7,031,333 | | | $ | (7,043,200 | ) | | $ | (16,937 | ) | | $ | 16,937 | | | $ | 1,808,562 | |

| Increase in receivables | (1,008 | | ) | | (348 | | ) | | (8,779 | | ) |

| Other, net | (557 | | ) | | 256 | | | | (1,860 | | ) |

| Net cash provided by operating activities | 723,126 | | | | 570,354 | | | | 392,988 | | |

| Net increase (decrease) in cash, restricted cash, and cash equivalents | 42,691 | | | | 273,520 | | | | (34,757 | | ) |

| Cash, restricted cash, and cash equivalents, beginning of the year | 689,557 | | | | 416,037 | | | | 450,794 | | |

| Cash, restricted cash, and cash equivalents, end of the year | $ | 732,248 | | | $ | 689,557 | | | $ | 416,037 | |

See Notes 4 and 5 for further discussion of land under development and joint venture investments, respectively.

Revenue is recognized on the settlement date at the contract sales price,when control is transferred to our customers.

See Note 11 herein for

The reversal of compensation expense previously recognized for grants forfeited is recorded in the period in which the forfeiture occurs.

Notes to Consolidated Financial Statements

| /s/ Paul W. Whetsell | | Director | | February 14, 2018 |

| Paul W. Whetsell | | | | |

| Eugene J. Bredow | | | | |

February 14, 2018

February 14, 2018

NVR, Inc.

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

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

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

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

| | 32,824 | | | | 32,399 | | |

| Balance, December 31, 2014 | $ | 206 | | | $ | 1,325,495 | | | $ | 4,887,187 | | | $ | (5,088,633 | ) | | $ | (17,333 | ) | | $ | 17,333 | | | $ | 1,124,255 | |

| Net income | — | | | | — | | | | 382,927 | | | | — | | | | — | | | | — | | | | 382,927 | | |

| Tax benefit from equity benefit plan activity | — | | | | 23,311 | | | | — | | | | — | | | | — | | | | — | | | | 23,311 | | |

| Increase in receivables | (502 | | ) | | (9,083 | | ) | | (1,527 | | ) |

| Other, net | (1,866 | | ) | | 4,504 | | | | (4,513 | | ) |

| Net cash provided by operating activities | 568,904 | | | | 398,126 | | | | 226,702 | | |

| Repayments under non-recourse debt related to consolidated variable interest entity | — | | | | — | | | | (64 | | ) |

| Net increase (decrease) in cash and cash equivalents | 271,244 | | | | (28,697 | | ) | | (120,103 | | ) |

| Cash and cash equivalents, beginning of the year | 396,619 | | | | 425,316 | | | | 545,419 | | |

| Cash and cash equivalents, end of the year | $ | 667,863 | | | $ | 396,619 | | | $ | 425,316 | |

(dollars and shares in thousands, except per share data)

The Company also assesses

For those assets deemed to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

NVR does not believe that any of the land under development is impaired as of December 31, 2017.

Revenues are recognized at the time the unit is settled and title passes to the customer, adequate cash payment has been received and there is no continuing involvement.

In situations where the buyer’s financing is originated by NVRM and the buyer has not made an adequate initial or continuing investment as prescribed by GAAP, the profit on such settlement is deferred until the sale of the related loan to a third-party investor has been completed.

The Company accounts for its equity-based compensation in accordance with ASC 718, Compensation – Stock Compensation.

The Company adopted Accounting Standards Update (“ASU”) 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting, effective January 1, 2017.

In connection with the adoption of ASU 2016-09, the Company:

| | |

| --- | --- |

| • | Recorded the excess tax benefit from stock option exercises as a reduction to income tax expense prospectively beginning January 1, 2017. In 2016 and 2015, the excess tax benefit was recorded to additional paid-in capital within shareholders’ equity. The excess tax benefit recognized during 2017, 2016 and 2015 was $58,681, $13,661 and $23,311, respectively. |

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| • | Presented the aforementioned excess tax benefit recognized as an operating activity on the statement of cash flows and retrospectively adjusted the prior year Statement of Cash Flows accordingly. In the prior years, the excess tax benefit was recognized as a cash inflow from financing activities and a corresponding cash outflow from operating activities. The retrospective adjustment to the prior year Statement of Cash Flows resulted in increases of $13,661 and $23,311 to net cash provided by operating activities in 2016 and 2015, respectively, and increases of $13,661 and $23,311 to net cash used in financing activities in 2016 and 2015, respectively. |

| • | Made the election to recognize forfeitures of equity-based awards in the period in which they occur. This election was applied using the modified retrospective transition method, which resulted in the Company recording a cumulative-effect adjustment, net of tax, to reduce beginning retained earnings as of January 1, 2017 by $957. In prior years, the Company estimated forfeitures based on its historical forfeiture rate. |

The Company also adopted ASU 2015-11, Inventory – Simplifying the Measurement of Inventory effective January 1, 2017.

The standard requires inventory to be measured at the lower of cost or net realizable value.