Fair value measurements are used for the Company’s mortgage loans held for sale, 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.

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2026 and December 31, 2025, respectively (in thousands):



			June 30,		December 31,
	Balance Sheet Classification	Hierarchy	2026		2025
Mortgage loans held for sale	Mortgage loans held for sale	Level 2	$	233,347	$	299,145
Mortgage servicing rights ⁽¹⁾	Prepaid expenses and other assets	Level 3	$	25,783	$	11,375
Derivative assets	Prepaid expenses and other assets	Level 2	$	4,207	$	2,157
Derivative liabilities	Accrued expenses and other liabilities	Level 2	$	719	$	519

⁽¹⁾The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were a weighted average of 7.5%, 12.0%, and $78 per year per loan, respectively, as of June 30, 2026, and 7.8%, 10.4%, and $80 per year per loan, respectively, as of December 31, 2025. The high and low end of the range of unobservable inputs used in the valuation did not result in a significant change to the fair value measurement.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements, with gains and losses from the changes in fair value reflected in financial services revenue on our condensed consolidated statements of operations (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
Mortgage servicing rights		2026		2025		2026		2025
Beginning of period	$	17,653	$	43,889	$	11,375	$	42,404
Originations		8,422		1,193		14,289		4,928
Settlements		(267)		(802)		(445)		(1,504)
Sales		—		(47,305)		—		(47,305)
Changes in fair value		(25)		4,240		564		2,692
End of period	$	25,783	$	1,215	$	25,783	$	1,215

For the financial assets and liabilities that the Company does not reflect at fair value, the following table presents both their respective carrying value and fair value at June 30, 2026 and December 31, 2025, respectively (in thousands). The fair values of cash and cash equivalents, cash held in escrow, and restricted cash approximate their carrying values and are classified as Level 1 within the fair value hierarchy, and are not presented in the table below.



		June 30, 2026				December 31, 2025
	Hierarchy	Carrying		Fair Value		Carrying		Fair Value
3.875% senior notes ⁽¹⁾⁽²⁾	Level 2	$	497,587	$	475,000	$	497,201	$	473,750
6.625% senior notes ⁽¹⁾⁽²⁾	Level 2	$	493,786	$	502,500	$	493,355	$	503,150
Construction loan agreements⁽³⁾⁽⁴⁾	Level 3	$	118,982	$	118,982	$	90,269	$	90,269
Other financing obligations⁽³⁾⁽⁵⁾	Level 3	$	11,390	$	11,390	$	21,551	$	21,551
Revolving line of credit⁽³⁾	Level 2	$	329,600	$	329,600	$	51,500	$	51,500
Mortgage repurchase facilities⁽³⁾	Level 2	$	232,529	$	232,529	$	289,269	$	289,269

⁽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, 2026, these amounts totaled $2.4 million and $6.2 million for the 3.875% senior notes and 6.625% senior notes, respectively. As of December 31, 2025, these amounts totaled $2.8 million and $6.6 million for the 3.875% senior notes and 6.625% senior notes, respectively.

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

⁽⁴⁾As of June 30, 2026 and December 31, 2025, construction loan agreements related to Century Living bore a weighted average interest rate of 6.0% and 6.1%, respectively.

⁽⁵⁾As of June 30, 2026 and December 31, 2025, other financing obligations related to certain secured borrowings and insurance premium notes, which bore a weighted average interest rate of 6.0% and 5.8%, respectively.

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.

No impairment charges were recorded during the three and six months ended June 30, 2026. During the three months ended June 30, 2025, we recorded impairment charges of $7.4 million related to five communities with a carrying value before impairment of $31.6 million, and during the six months ended June 30, 2025, we recorded impairment charges of $7.8 million related to six communities with a carrying value before impairment of $33.7 million. The estimated fair value of the communities was measured using a discounted cash flow approach with Level 3 inputs, and reflects estimated fair values in the periods the respective impairments were identified. When estimating future discounted cash flows, we utilized weighted-average discount rates of approximately 12% in our valuations during the three and six months ended June 30, 2025. Changes in our cash flow projections in future periods related to these communities may change our conclusions on the recoverability of inventory in the future.