We establish warranty and product liability reserves (“Warranty Reserve”) to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to our homebuilding business. Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the estimated current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with our general counsel and outside counsel retained to handle specific product liability cases. The warranty reserve for the respective periods is reported in the homebuilding “Accrued expenses and other liabilities” line item on the accompanying condensed consolidated balance sheets.

The following table reflects the changes in our Warranty Reserve during the three and six months ended June 30, 2026 and 2025:


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Warranty reserve, beginning of period	$	110,662	$	129,792	$	116,561	$	133,095
Provision	18,561		20,665		28,829		37,899
Payments	(19,131)		(23,017)		(35,298)		(43,554)
Warranty reserve, end of period	$	110,092	$	127,440	$	110,092	$	127,440