Fair value measurements are used for the Company’s mortgage loans held for sale, certain mortgage loans held for investment, mortgage servicing rights, interest rate lock commitments and other derivative instruments on a recurring basis. We also utilize fair value measurements on a non-recurring basis for inventories and intangible assets when events and circumstances indicate that the carrying value is not recoverable. The fair value hierarchy and its application to the Company’s assets and liabilities is as follows:

Level 1 – Quoted prices for identical instruments in active markets.

Level 2 – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are inactive; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at the measurement date.

Mortgage loans held for sale – Fair value is based on quoted market prices for committed and uncommitted mortgage loans.

Derivative assets and liabilities – Derivative assets are associated with interest rate lock commitments and investor commitments on loans and may also be associated with forward mortgage-backed securities contracts. Derivative liabilities are associated with forward mortgage-backed securities contracts. Fair value is based on market prices for similar instruments.

Level 3 – Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at the measurement date.

Mortgage servicing rights - The fair value of the mortgage servicing rights is calculated using third-party valuations. The key assumptions, which are generally unobservable inputs, used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service.

Mortgage loans held for investment at fair value – A portion of our mortgage loans held for investment included in prepaid expenses and other assets, which were those determined to be unsaleable and transferred from mortgage loans held for sale, are recorded at fair value and are calculated based on Level 3 analysis which incorporates information including the value of underlying collateral, from markets where there is little observable trading activity.

For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying value and fair value at June 30, 2025 and December 31, 2024, respectively (in thousands).

⁽¹⁾Estimated fair value of the senior notes is based on recent trading activity in inactive markets.

⁽²⁾Carrying amounts include any associated unamortized deferred financing costs, premiums and discounts. As of June 30, 2025, these amounts totaled $1.6 million and $3.2 million for the 6.750% senior notes and 3.875% senior notes, respectively. As of December 31, 2024, these amounts totaled $2.0 million and $3.6 million for the 6.750% senior notes and 3.875% senior notes, respectively.

⁽³⁾Carrying amount approximates fair value due to short-term nature and/or interest rate terms.

⁽⁴⁾As of June 30, 2025, other financing obligations included $12.3 million related to certain secured borrowings that bore a weighted average interest rate of 5.0%, and $127.7 million related to outstanding borrowings on the construction loan agreements related to Century Living that bore a weighted average interest rate of 6.6%. As of December 31, 2024, other financing obligations included $11.0 million related to insurance premium notes and certain secured borrowings that bore a weighted average interest rate of 6.7%, and $102.4 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 6.5%.

Non-financial assets and liabilities include items such as inventory and property and equipment that are measured at fair value when acquired and as a result of impairments, if deemed necessary.

During the three months ended June 30, 2025, we determined that inventory with a carrying value before impairment of $31.6 million for five communities in our Century Complete and Southeast segments was not recoverable. During the six months ended June 30, 2025, we determined that inventory with a carrying value before impairment of $33.7 million for six communities in our Century Complete and Southeast segments was not recoverable. Accordingly, during the three and six months ended June 30, 2025, we recognized impairment charges of an aggregate $7.4 million and $7.8 million, respectively, in order to record the communities at fair value. During the three and six months ended June 30, 2024, we recognized impairment charges of $0.6 million related to two communities with a carrying value before impairment of $4.5 million. The estimated fair values of the communities were determined through a discounted cash flow approach utilizing Level 3 inputs. When estimating future discounted cash flows, we utilized a weighted-average discount rate of approximately 12% in each of our valuations during the three months and six months ended June 30, 2025 and 2024, respectively. Changes in our cash flow projections in future periods related to our communities may change our conclusions on the recoverability of inventory in the future.