10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019 or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______to ______

Commission File Number 001-36283

 

The New Home Company Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	27-0560089
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

85 Enterprise, Suite 450

Aliso Viejo, California 92656

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (949) 382-7800

	Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NWHM	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ☒ Non-accelerated filer ¨
Smaller reporting company ☒ 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. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐   No  ☒

Registrant’s shares of common stock outstanding as of July 26, 2019: 20,096,969

THE NEW HOME COMPANY INC.

FORM 10-Q

INDEX

		Page Number
PART I  Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2019 (Unaudited) and December 31, 2018	3
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2019 and 2018	4
	Unaudited Condensed Consolidated Statements of Equity for the Three and Six Months Ended June 30, 2019 and 2018	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 4.	Controls and Procedures	61
Part II   Other Information
Item 1.	Legal Proceedings	62
Item 1A.	Risk Factors	62
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 3.	Defaults Upon Senior Securities	63
Item 4.	Mine Safety Disclosures	63
Item 5.	Other Information	63
Item 6.	Exhibits	64
	Signatures	65

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

THE NEW HOME COMPANY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value amounts)

	June 30,		December 31,
	2019		2018
	(Unaudited)
Assets
Cash and cash equivalents	$	48,224	$	42,273
Restricted cash	124		269
Contracts and accounts receivable	16,113		18,265
Due from affiliates	218		1,218
Real estate inventories	541,954		566,290
Investment in and advances to unconsolidated joint ventures	33,637		34,330
Other assets	32,987		33,452
Total assets	$	673,257	$	696,097
Liabilities and equity
Accounts payable	$	26,629	$	39,391
Accrued expenses and other liabilities	32,375		29,028
Unsecured revolving credit facility	66,000		67,500
Senior notes, net	309,060		320,148
Total liabilities	434,064		456,067
Commitments and contingencies (Note 11)
Equity:
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares outstanding	—		—
Common stock, $0.01 par value, 500,000,000 shares authorized, 20,096,969 and 20,058,904, shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively	201		201
Additional paid-in capital	192,691		193,132
Retained earnings	46,206		46,621
Total stockholders' equity	239,098		239,954
Non-controlling interest in subsidiary	95		76
Total equity	239,193		240,030
Total liabilities and equity	$	673,257	$	696,097

See accompanying notes to the unaudited condensed consolidated financial statements.

3

THE NEW HOME COMPANY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Revenues:
Home sales	$	140,464		$	117,460		$	239,650		$	196,897
Fee building, including management fees from unconsolidated joint ventures of $619, $672, $1,162 and $1,652, respectively	22,285			38,095			41,947			81,889
	162,749			155,555			281,597			278,786
Cost of Sales:
Home sales	123,525			102,678			210,094			172,372
Fee building	21,770			37,038			41,038			79,737
	145,295			139,716			251,132			252,109
Gross Margin:
Home sales	16,939			14,782			29,556			24,525
Fee building	515			1,057			909			2,152
	17,454			15,839			30,465			26,677
Selling and marketing expenses	(9,683		)	(9,466		)	(18,362		)	(16,105		)
General and administrative expenses	(5,841		)	(5,979		)	(13,232		)	(11,998		)
Equity in net income (loss) of unconsolidated joint ventures	185			(120		)	369			215
Gain on early extinguishment of debt	552			—			969			—
Other income (expense), net	(102		)	(92		)	(295		)	(118		)
Pretax income (loss)	2,565			182			(86		)	(1,329		)
(Provision) benefit for income taxes	(974		)	(67		)	(310		)	793
Net income (loss)	1,591			115			(396		)	(536		)
Net (income) loss attributable to non-controlling interest	(19		)	—			(19		)	11
Net income (loss) attributable to The New Home Company Inc.	$	1,572		$	115		$	(415	)	$	(525	)
Earnings (loss) per share attributable to The New Home Company Inc.:
Basic	$	0.08		$	0.01		$	(0.02	)	$	(0.03	)
Diluted	$	0.08		$	0.01		$	(0.02	)	$	(0.03	)
Weighted average shares outstanding:
Basic	20,070,914			20,958,991			20,028,600			20,942,601
Diluted	20,095,533			21,024,769			20,028,600			20,942,601

See accompanying notes to the unaudited condensed consolidated financial statements.

4

THE NEW HOME COMPANY INC.

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Dollars in thousands)

(Unaudited)

	Stockholders’ Equity Three Months Ended June 30														Non-controlling Interest in Subsidiary			Total Equity
	Number of Shares of Common Stock		Common Stock			Additional Paid-in Capital			Retained Earnings			Total Stockholders’ Equity
Balance at March 31, 2018	21,007,902		$	210		$	199,361		$	60,302		$	259,873		$	79		$	259,952
Adoption of ASU 2018-07 (see Note 1)	—		—			(18		)	18			—			—			—
Net income	—		—			—			115			115			—			115
Stock-based compensation expense	—		—			862			—			862			—			862
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans	(2,366	)	—			(23		)	—			(23		)	—			(23		)
Shares issued through stock plans	55,482		1			(1		)	—			—			—			—
Repurchase of common stock	(205,240	)	(2		)	(1,947		)	(123		)	(2,072		)	—			(2,072		)
Balance at June 30, 2018	20,855,778		$	209		$	198,234		$	60,312		$	258,755		$	79		$	258,834
Balance at March 31, 2019	20,049,113		$	200		$	192,169		$	44,634		$	237,003		$	76		$	237,079
Net income	—		—			—			1,572			1,572			19			1,591
Stock-based compensation expense	—		—			523			—			523			—			523
Shares issued through stock plans	47,856		1			(1		)	—			—			—			—
Balance at June 30, 2019	20,096,969		$	201		$	192,691		$	46,206		$	239,098		$	95		$	239,193
	Stockholders’ Equity Six Months Ended June 30														Non-controlling Interest in Subsidiary			Total Equity
	Number of Shares of Common Stock		Common Stock			Additional Paid-in Capital			Retained Earnings			Total Stockholders’ Equity
Balance at December 31, 2017	20,876,837		$	209		$	199,474		$	64,307		$	263,990		$	90		$	264,080
Adoption of ASC 606 and ASU 2018-07 (see Note 1)	—		—			(18		)	(3,347		)	(3,365		)	—			(3,365		)
Net loss	—		—			—			(525		)	(525		)	(11		)	(536		)
Stock-based compensation expense	—		—			1,704			—			1,704			—			1,704
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans	(86,182	)	—			(977		)	—			(977		)	—			(977		)
Repurchase of common stock	(205,240	)	(2		)	(1,947		)	(123		)	(2,072		)	—			(2,072		)
Shares issued through stock plans	270,363		2			(2		)	—			—			—			—
Balance at June 30, 2018	20,855,778		$	209		$	198,234		$	60,312		$	258,755		$	79		$	258,834
Balance at December 31, 2018	20,058,904		$	201		$	193,132		$	46,621		$	239,954		$	76		$	240,030
Net income (loss)	—		—			—			(415		)	(415		)	19			(396		)
Stock-based compensation expense	—		—			1,089			—			1,089			—			1,089
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans	(85,420	)	—			(488		)	—			(488		)	—			(488		)
Shares issued through stock plans	277,401		2			(2		)	—			—			—			—
Repurchase of common stock	(153,916	)	(2		)	(1,040		)	—			(1,042		)	—			(1,042		)
Balance at June 30, 2019	20,096,969		$	201		$	192,691		$	46,206		$	239,098		$	95		$	239,193

See accompanying notes to the unaudited condensed consolidated financial statements.

5

THE NEW HOME COMPANY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	Six Months Ended June 30,
	2019			2018
Operating activities:
Net loss	$	(396	)	$	(536	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred taxes	—			(1,481		)
Amortization of stock-based compensation	1,089			1,704
Distributions of earnings from unconsolidated joint ventures	279			715
Abandoned project costs	19			43
Equity in net income of unconsolidated joint ventures	(369		)	(215		)
Deferred profit from unconsolidated joint ventures	—			136
Depreciation and amortization	5,042			2,646
Gain on early extinguishment of debt	(969		)	—
Net changes in operating assets and liabilities:
Contracts and accounts receivable	2,152			2,854
Due from affiliates	975			788
Real estate inventories	24,970			(53,108		)
Other assets	(2,240		)	(6,095		)
Accounts payable	(12,762		)	5,256
Accrued expenses and other liabilities	1,102			(14,217		)
Net cash provided by (used in) operating activities	18,892			(61,510		)
Investing activities:
Purchases of property and equipment	(8		)	(184		)
Contributions and advances to unconsolidated joint ventures	(4,120		)	(8,954		)
Distributions of capital and repayment of advances from unconsolidated joint ventures	4,928			5,874
Interest collected on advances to unconsolidated joint ventures	—			178
Net cash provided by (used in) investing activities	800			(3,086		)
Financing activities:
Borrowings from credit facility	40,000			35,000
Repayments of credit facility	(41,500		)	—
Repurchases of senior notes	(10,856		)	—
Repurchases of common stock	(1,042		)	(2,072		)
Tax withholding paid on behalf of employees for stock awards	(488		)	(977		)
Net cash (used in) provided by financing activities	(13,886		)	31,951
Net increase (decrease) in cash, cash equivalents and restricted cash	5,806			(32,645		)
Cash, cash equivalents and restricted cash – beginning of period	42,542			123,970
Cash, cash equivalents and restricted cash – end of period	$	48,348		$	91,325

See accompanying notes to the unaudited condensed consolidated financial statements.

6

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Summary of Significant Accounting Policies

Organization

The New Home Company Inc. (the "Company"), a Delaware corporation, and its subsidiaries are primarily engaged in all aspects of residential real estate development, including acquiring land and designing, constructing and selling homes in California and Arizona.

Based on our public float at June 29, 2018, we qualify as a smaller reporting company and are subject to reduced disclosure obligations in our periodic reports and proxy statements.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring entries) necessary for the fair presentation of our results for the interim period presented. Results for the interim periods are not necessarily indicative of the results to be expected for the full year.

Unless the context otherwise requires, the terms "we", "us", "our" and "the Company" refer to the Company and its wholly owned subsidiaries, on a consolidated basis.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and notes. Accordingly, actual results could differ materially from these estimates.

Reclassification

The Company updated its reportable segments effective for the 2019 first quarter. Please refer to Note 15 for more information. Prior year comparative data has been reclassified to align with the composition of the current year reportable segments.

Segment Reporting

Accounting Standards Codification ("ASC") 280, Segment Reporting ("ASC 280") established standards for the manner in which public enterprises report information about operating segments. The Company's reportable segments are Arizona homebuilding, California homebuilding, and fee building. In accordance with ASC 280, our California homebuilding reportable segment aggregates the Northern California and Southern California homebuilding operating segments based on the similarities in long-term economic characteristics.

Cash and Cash Equivalents

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions, and short term liquid investments with a maturity date of less than three months from the date of purchase.

Restricted Cash

Restricted cash of $0.1 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, is held in accounts for payments of subcontractor costs incurred in connection with various fee building projects.

The table below shows the line items and amounts of cash and cash equivalents and restricted cash as reported within the Company's condensed consolidated balance sheets for each period shown that sum to the total of the same such amounts at the end of the periods shown in the accompanying condensed consolidated statements of cash flows.

7

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Cash and cash equivalents	$	48,224	$	90,758
Restricted cash	124		567
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	48,348	$	91,325

Real Estate Inventories and Cost of Sales

We capitalize pre-acquisition, land, development and other allocated costs, including interest, property taxes and indirect construction costs. Pre-acquisition costs, including nonrefundable land deposits, are expensed to other income (expense), net if we determine continuation of the prospective project is not probable.

Land, development and other common costs are typically allocated to real estate inventories using a methodology that approximates the relative-sales-value method. Home construction costs per production phase are recorded using the specific identification method. Cost of sales for homes closed includes the estimated total construction costs of each home at completion and an allocation of all applicable land acquisition, land development and related common costs (both incurred and estimated to be incurred) based upon the relative-sales-value of the home within each project. Changes in estimated development and common costs are allocated prospectively to remaining homes in the project.

In accordance with ASC 360, Property, Plant and Equipment ("ASC 360"), inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. We review each real estate asset on a quarterly basis or whenever indicators of impairment exist. Real estate assets include projects actively selling and projects under development or held for future development. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins or sales absorption rates, costs significantly in excess of budget, and actual or projected cash flow losses.

If there are indicators of impairment, we perform a detailed budget and cash flow review of the applicable real estate inventories to determine whether the estimated future undiscounted cash flows of the project are more or less than the asset’s carrying value. If the estimated future undiscounted cash flows exceed the asset’s carrying value, no impairment adjustment is required. However, if the estimated future undiscounted cash flows are less than the asset’s carrying value then the asset is impaired. If the asset is deemed impaired, it is written down to its fair value in accordance with ASC 820, Fair Value Measurements and Disclosures ("ASC 820").

When estimating undiscounted future cash flows of a project, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available, pricing and incentives being offered by us or other builders in other projects, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property.

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact on the estimated per unit sales price of a home, and the level of time sensitive costs (such as indirect construction, overhead and carrying costs). Depending on the underlying objective of the project, assumptions could have a significant impact on the projected cash flow analysis. For example, if our objective is to preserve operating margins, our cash flow analysis will be different than if the objective is to increase the velocity of sales. These objectives may vary significantly from project to project and change over time.

If a real estate asset is deemed impaired, the impairment is calculated by determining the amount the asset's carrying value exceeds its fair value in accordance with ASC 820. We calculate the fair value of real estate inventories considering a land residual value analysis and a discounted cash flow analysis. Under the discounted cash flow method, the fair value is determined by calculating the present value of future cash flows using a risk adjusted discount rate. Some of the critical assumptions involved with measuring the asset's fair value include estimating future revenues, sales absorption rates,

8

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

development and construction costs, and other applicable project costs. This evaluation and the assumptions used by management to determine future estimated cash flows and fair value require a substantial degree of judgment, especially with respect to real estate projects that have a substantial amount of development to be completed, have not started selling or are in the early stages of sales, or are longer in duration. Actual revenues, costs and time to complete and sell a community could vary from these estimates which could impact the calculation of fair value of the asset and the corresponding amount of impairment that is recorded in our results of operations. For the three and six months ended June 30, 2019 and 2018, no real estate impairments were recorded.

Capitalization of Interest

We follow the practice of capitalizing interest to real estate inventories during the period of development and to investments in unconsolidated joint ventures, when applicable, in accordance with ASC 835, Interest ("ASC 835"). Interest capitalized as a cost component of real estate inventories is included in cost of home sales as related homes or lots are sold. To the extent interest is capitalized to investment in unconsolidated joint ventures, it is included as a reduction of income from unconsolidated joint ventures when the related homes or lots are sold to third parties. In instances where the Company purchases land from an unconsolidated joint venture, the pro rata share of interest capitalized to investment in unconsolidated joint ventures is added to the basis of the land acquired and recognized as a cost of sale upon the delivery of the related homes or land to a third-party buyer. To the extent our debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred by us. Qualified assets represent projects that are actively selling or under development as well as investments in unconsolidated joint ventures accounted for under the equity method until such equity investees begin their principal operations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To do this, the Company performs the following five steps as outlined in ASC 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

Home Sales and Profit Recognition

In accordance with ASC 606, home sales revenue is recognized when our performance obligations within the underlying sales contracts are fulfilled. We consider our obligations fulfilled when closing conditions are complete, title has transferred to the homebuyer, and collection of the purchase price is reasonably assured. Sales incentives are recorded as a reduction of revenues when the respective home is closed. The profit we record is based on the calculation of cost of sales, which is dependent on our allocation of costs, as described in more detail above in the section entitled "Real Estate Inventories and Cost of Sales." When it is determined that the earnings process is not complete, the related revenue and profit are deferred for recognition in future periods.

Fee Building

The Company enters into fee building agreements to provide services whereby it builds homes on behalf of third-party property owners. The third-party property owner funds all project costs incurred by the Company to build and sell the homes. The Company primarily enters into cost plus fee contracts where it charges third-party property owners for all direct and indirect costs plus a fee. The fee is typically a per-unit fixed fee or based on a percentage of the cost or home sales revenue of the project, depending on the terms of the agreement with the third-party property owner. For these types of contracts, the Company recognizes revenue based on the actual total costs it has incurred plus the applicable fee. In accordance with ASC 606, we apply the percentage-of-completion method, using the cost-to-cost approach, as it most accurately measures the progress of our efforts in satisfying our obligations within the fee building agreements. Under this approach, revenue is earned in proportion to total costs incurred divided by total costs expected to be incurred. In the course of providing fee building services, the Company routinely subcontracts for services and incurs other direct costs on behalf of the property owners. These costs are passed through to the property owners and, in accordance with GAAP, are included in the Company’s revenues and cost of sales.

The Company also provides construction management and coordination services and sales and marketing services as part of agreements with third parties and its unconsolidated joint ventures. In certain contracts, the Company also provides project

9

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

management and administrative services. For most services provided, the Company fulfills its related obligations as time-based measures, according to the input method guidance described in ASC 606. Accordingly, revenue is recognized on a straight-line basis as the Company's efforts are expended evenly throughout the performance period. The Company may also have an obligation to manage the home or lot sales process as part of providing sales and marketing services. This obligation is considered fulfilled when related homes or lots close escrow, as these events represent milestones reached according to the output method guidance described in ASC 606. Accordingly, revenue is recognized in the period that the corresponding lots or homes close escrow. Costs associated with these services are recognized as incurred.

The Company’s fee building revenues have historically been concentrated with a small number of customers. For the three and six months ended June 30, 2019 and 2018, one customer comprised 95%, 93%, 95% and 96%, respectively, of fee building revenue. The balance of the fee building revenues primarily represented management fees earned from unconsolidated joint ventures and third-party customers. As of June 30, 2019 and December 31, 2018, one customer comprised 39% and 48% of contracts and accounts receivable, respectively, with the balance of contracts and accounts receivable primarily representing escrow receivables from home sales.

Variable Interest Entities

The Company accounts for variable interest entities in accordance with ASC 810, Consolidation ("ASC 810"). Under ASC 810, a variable interest entity ("VIE") is created when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the direct or indirect ability to make decisions about the entity, (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of the equity holder with disproportionately few voting rights.

Once we consider the sufficiency of equity and voting rights of each legal entity, we then evaluate the characteristics of the equity holders' interests, as a group, to see if they qualify as controlling financial interests. Our real estate joint ventures consist of limited partnerships and limited liability companies. For entities structured as limited partnerships or limited liability companies, our evaluation of whether the equity holders (equity partners other than us in each our joint ventures) lack the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members (the non-controlling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:

• Participating rights - provide the non-controlling equity holders the ability to direct significant financial and operational decision made in the ordinary course of business that most significantly influence the entity's economic performance.

• Kick-out rights - allow the non-controlling equity holders to remove the general partner or managing member without cause.

If we conclude that any of the three characteristics of a VIE are met, including if equity holders lack the characteristics of a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.

If an entity is deemed to be a VIE pursuant to ASC 810, the enterprise that has both (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE.

Under ASC 810, a nonrefundable deposit paid to an entity may be deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as real estate inventories, which we would have to write off should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a nonrefundable deposit, a VIE may have been created. At June 30, 2019, the Company had outstanding nonrefundable cash deposits of $15.3 million pertaining to land option contracts and purchase contracts.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2019 and December 31, 2018, the Company was not required to consolidate any VIEs. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

Non-controlling Interest

During 2013, the Company entered into a joint venture agreement with a third-party property owner. In accordance with ASC 810, the Company analyzed this arrangement and determined that it was not a VIE; however, the Company determined it was required to consolidate the joint venture as the Company has a controlling financial interest with the powers to direct the major decisions of the entity.  As of June 30, 2019 and December 31, 2018, the third-party investor had an equity balance of $0.1 million and $0.1 million, respectively.

Investments in and Advances to Unconsolidated Joint Ventures

We use the equity method to account for investments in homebuilding and land development joint ventures when any of the following situations exist: 1) the joint venture qualifies as a VIE and we are not the primary beneficiary, 2) we do not control the joint venture but have the ability to exercise significant influence over its operating and financial policies, or 3) we function as the managing member or general partner of the joint venture and our joint venture partner has substantive participating rights or can replace us as managing member or general partner without cause.

As of June 30, 2019, the Company concluded that none of its joint ventures were VIEs and accounted for these entities under the equity method of accounting.

Under the equity method, we recognize our proportionate share of earnings and losses generated by the joint venture upon the delivery of lots or homes to third parties. Our proportionate share of intra-entity profits and losses are eliminated until the related asset has been sold by the unconsolidated joint venture to third parties. We classify cash distributions received from equity method investees using the cumulative earnings approach consistent with ASC 230, Statement of Cash Flows ("ASC 230"). Under the cumulative earnings approach, distributions received are considered returns on investment and is classified as cash inflows from operating activities unless the cumulative distributions received exceed cumulative equity in earnings. When such an excess occurs, the current-period distribution up to this excess is considered a return of investment and is classified as cash inflows from investing activities. Our ownership interests in our unconsolidated joint ventures vary, but are generally less than or equal to 35%. The accounting policies of our joint ventures are generally consistent with those of the Company.

We review real estate inventory held by our unconsolidated joint ventures for impairment on a quarterly basis, consistent with how we review our real estate inventories as described in more detail above in the section entitled "Real Estate Inventories and Cost of Sales." We also review our investments in and advances to unconsolidated joint ventures for evidence of other-than-temporary declines in value in accordance with ASC 820. To the extent we deem any portion of our investment in and advances to unconsolidated joint ventures as not recoverable, we impair our investment accordingly. For the three and six months ended June 30, 2019 and 2018, no impairments related to investment in and advances to unconsolidated joint ventures were recorded.

Selling and Marketing Expense

Costs incurred for tangible assets directly used in the sales process such as our sales offices, design studios and model landscaping and furnishings are capitalized to other assets in the accompanying condensed consolidated balance sheets under ASC 340, Other Assets and Deferred Costs ("ASC 340"). These costs are depreciated to selling and marketing expenses generally over the shorter of 30 months or the actual estimated life of the selling community. All other selling and marketing costs, such as commissions and advertising, are expensed as incurred.

Warranty Accrual

We offer warranties on our homes that generally cover various defects in workmanship or materials, or structural construction defects for one year. In addition, we provide a more limited warranty, which generally ranges from a minimum of two years up to the period covered by the applicable statute of repose, that covers certain defined construction defects. Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Amounts are accrued based upon the Company’s historical rates. In addition, the Company has received warranty payments from third-party property owners for certain of its fee building projects that have since closed-out where the Company has the contractual risk of construction. These payments are recorded as warranty accruals. We assess the adequacy of our warranty accrual on a quarterly basis and adjust the amounts recorded if necessary. Our warranty accrual is included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets and adjustments to our warranty accrual are recorded through cost of sales.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Contracts and Accounts Receivable

Contracts and accounts receivable primarily represent the fees earned, but not collected, and reimbursable project costs incurred in connection with fee building agreements. The Company periodically evaluates the collectability of its contracts receivable, and, if it is determined that a receivable might not be fully collectible, an allowance is recorded for the amount deemed uncollectible. This allowance for doubtful accounts is estimated based on management’s evaluation of the contracts involved and the financial condition of its customers. Factors considered in such evaluations include, but are not limited to: (i) customer type; (ii) historical contract performance; (iii) historical collection and delinquency trends; (iv) customer credit worthiness; and (v) general economic conditions. In addition to contracts receivable, escrow receivables are included in contracts and accounts receivable in the accompanying condensed consolidated balance sheets. As of June 30, 2019 and December 31, 2018, no allowance was recorded related to contracts and accounts receivable.

Property, Equipment and Capitalized Selling and Marketing Costs

Property, equipment and capitalized selling and marketing costs are recorded at cost and included in other assets in the accompanying condensed consolidated balance sheets. Property and equipment are depreciated to general and administrative expenses using the straight-line method over their estimated useful lives ranging from three to five years. Leasehold improvements are stated at cost and are amortized to general and administrative expenses using the straight-line method generally over the shorter of either their estimated useful lives or the term of the lease. Capitalized selling and marketing costs are depreciated using the straight-line method to selling and marketing expenses over the shorter of either 30 months or the actual estimated life of the selling community.

Income Taxes

Income taxes are accounted for in accordance with ASC 740, Income Taxes ("ASC 740"). The consolidated provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not (defined as a likelihood of more than 50%) unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the tax asset we conclude is more likely than not unrealizable. Our assessment considers, among other things, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, the duration of statutory carryforward periods, our utilization experience with net operating losses and tax credit carryforwards and available tax planning alternatives, to the extent these items are applicable. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income during the periods in which the differences become deductible. The value of our deferred tax assets will depend on applicable income tax rates. Judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated financial statements. At June 30, 2019 and December 31, 2018, no valuation allowance was recorded.

ASC 740 defines the methodology for recognizing the benefits of uncertain tax return positions as well as guidance regarding the measurement of the resulting tax benefits.  These provisions require an enterprise to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.  In addition, these provisions provide guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  The evaluation of whether a tax position meets the more-likely-than-not recognition threshold requires a substantial degree of judgment by management based on the individual facts and circumstances. At June 30, 2019, the Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements.

The Company classifies any interest and penalties related to income taxes assessed as part of income tax expense. As of June 30, 2019, the Company has not been assessed interest or penalties by any major tax jurisdictions related to any open tax periods.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

We account for share-based awards in accordance with ASC 718, Compensation – Stock Compensation ("ASC 718") and ASC 505-50, Equity – Equity Based Payments to Non-Employees ("ASC 505-50").

ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in a company's financial statements. ASC 718 requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans.

On February 16, 2017, the Company entered into an agreement that transitioned Wayne Stelmar's role within the Company from Chief Investment Officer to a non-employee consultant and non-employee director. Per the agreement, Mr. Stelmar's outstanding equity awards continued to vest in accordance with their original terms. Under ASC 505-50, if an employee becomes a non-employee and continues to vest in an award pursuant to the award's original terms, that award will be treated as an award to a non-employee prospectively, provided the individual is required to continue providing services to the employer (such as consulting services). Based on the terms and conditions of Mr. Stelmar's consulting agreement noted above, we accounted for his share-based awards in accordance with ASC 505-50 through March 31, 2018. ASC 505-50 required that these awards be accounted for prospectively, such that the fair value of the awards was re-measured at each reporting date until the earlier of (a) the performance commitment date or (b) the date the services required under the transition agreement with Mr. Stelmar have been completed. ASC 505-50 required that compensation cost ultimately recognized in the Company's financial statements be the sum of (a) the compensation cost recognized during the period of time the individual was an employee (based on the grant-date fair value) plus (b) the fair value of the award determined on the measurement date determined in accordance with ASC 505-50 for the pro-rata portion of the vesting period in which the individual was a non-employee.

In June of 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") which expanded the scope of ASC 718 to include share-based payments for acquiring goods and services from nonemployees, with certain exceptions. Under ASC 718, the measurement date for equity-classified, share-based awards is generally the grant date of the award. The Company early adopted ASU 2018-07 on April 1, 2018, at which time Mr. Stelmar's award was the only nonemployee award outstanding. In accordance with the transition guidance, the Company assessed Mr. Stelmar's award for which a measurement date had not been established. The outstanding award was re-measured to fair value as of the April 1, 2018 adoption date. The adoption of ASU 2018-07 provided administrative relief by fixing the remaining unamortized expense of the award and eliminating the requirement to quarterly re-measure the Company's one remaining nonemployee award. The Company adopted this standard on a modified retrospective basis booking a cumulative-effect adjustment of an $18,000 increase to retained earnings and equal decrease to additional paid-in capital as of the beginning of the 2018 fiscal year. Mr. Stelmar's award was fully expensed as of March 31, 2019.

Share Repurchase and Retirement

When shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired to both retained earnings and additional paid-in capital. The portion allocated to additional paid-in capital is determined by applying a percentage, which is determined by dividing the number of shares to be retired by the number of shares issued, to the balance of additional paid-in capital as of the retirement date. The residual, if any, is allocated to retained earnings as of the retirement date.

During the six months ended June 30, 2019 and 2018, the Company repurchased and retired 153,916 and 205,240 shares of its common stock at an aggregate purchase price of $1.0 million and $2.1 million, respectively. The shares were returned to the status of authorized but unissued.

Dividends

No dividends were paid on our common stock during the three and six months ended June 30, 2019 and 2018. We currently intend to retain our future earnings to finance the development and expansion of our business and, therefore, do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, compliance with Delaware law, restrictions contained in any financing instruments, including but not limited to, our unsecured credit facility and senior notes indenture, and such other factors as our board of directors deem relevant.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recently Issued Accounting Standards

The Company currently qualifies as an "emerging growth company" pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Section 102 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards. As previously disclosed, the Company has chosen, irrevocably, to "opt out" of such extended transition period, and as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASC 842"). ASC 842 requires organizations that lease assets (referred to as "lessees") to present lease assets and lease liabilities on the balance sheet at their gross value based on the rights and obligations created by those leases. Under ASC 842, a lessee is required to recognize assets and liabilities for leases with greater than 12 month terms. Lessor accounting remains substantially similar to prior GAAP. The Company's lease agreements impacted by ASC 842 primarily relate to our corporate headquarters, other office locations and office or construction equipment where we are the lessee and are all classified as operating leases.

The Company adopted ASC 842 on January 1, 2019 under the modified retrospective approach. Under the modified retrospective approach, the Company applied the requirements of ASC 842 to its leases as of the adoption date and recognized a $3.1 million right-of-use asset and a related $3.5 million liability. The comparative information has not been restated and continues to be reported as it was previously, under the appropriate accounting standards in effect for those periods. For additional information on our operating leases, please see Note 11.

For leases that commenced before the January 1, 2019 adoption date, the Company has elected the practical expedient package outlined in ASC 842-10-65-1(f) which prescribes the following:

1.An entity need not reassess whether any expired or existing contracts contain leases.

2. An entity need not reassess the lease classification for any expired or existing leases (for example, all existing leases that were classified as operating leases in accordance with ASC 840, Leases, will be classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC 840 will be classified as finance leases).

3.An entity need not reassess initial direct costs for any existing lease.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which changes the impairment model for most financial assets and certain other instruments from an "incurred loss" approach to a new "expected credit loss" methodology. The FASB followed up with ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019 and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), in May 2019 to provide further clarification on this topic. The standard is effective for annual and interim periods beginning January 1, 2020, with early adoption permitted, and requires full retrospective application upon adoption. The Company is currently evaluating the impact of ASU 2016-13 and does not anticipate a material impact to its consolidated financial statements as a result of adoption.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The amendments in ASU 2018-13 modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-13 and does not anticipate a material impact to the consolidated financial statements as a result of adoption.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2. Computation of Income (Loss) Per Share

The following table sets forth the components used in the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019			2018
	(Dollars in thousands, except per share amounts)
Numerator:
Net income (loss) attributable to The New Home Company Inc.	$	1,572	$	115	$	(415	)	$	(525	)
Denominator:
Basic weighted-average shares outstanding	20,070,914		20,958,991		20,028,600			20,942,601
Effect of dilutive shares:
Stock options and unvested restricted stock units	24,619		65,778		—			—
Diluted weighted-average shares outstanding	20,095,533		21,024,769		20,028,600			20,942,601
Basic income (loss) per share attributable to The New Home Company Inc.	$	0.08	$	0.01	$	(0.02	)	$	(0.03	)
Diluted income (loss) per share attributable to The New Home Company Inc.	$	0.08	$	0.01	$	(0.02	)	$	(0.03	)
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	1,349,106		952,882		1,292,726			1,333,106

3. Contracts and Accounts Receivable

Contracts and accounts receivable consist of the following:

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Contracts receivable:
Costs incurred on fee building projects	$	41,038		$	159,136
Estimated earnings	909			4,401
	41,947			163,537
Less: amounts collected during the period	(35,642		)	(154,743		)
Contracts receivable	$	6,305		$	8,794
Contracts receivable:
Billed	$	—		$	—
Unbilled	6,305			8,794
	6,305			8,794
Accounts receivable:
Escrow receivables	9,530			8,787
Other receivables	278			684
Contracts and accounts receivable	$	16,113		$	18,265

Billed contracts receivable represent amounts billed to customers that have yet to be collected. Unbilled contracts receivable represents the contract revenue recognized but not yet invoiced. All unbilled receivables as of June 30, 2019 and

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2018 are expected to be billed and collected within 30 days. Accounts payable at June 30, 2019 and December 31, 2018 includes $5.6 million and $8.5 million, respectively, related to costs incurred under the Company’s fee building contracts.

4. Real Estate Inventories

Real estate inventories are summarized as follows:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Deposits and pre-acquisition costs	$	17,485	$	20,726
Land held and land under development	122,392		115,987
Homes completed or under construction	352,535		380,956
Model homes	49,542		48,621
	$	541,954	$	566,290

All of our deposits and pre-acquisition costs are nonrefundable, except for refundable deposits of $0.7 million and $0.9 million as of June 30, 2019 and December 31, 2018, respectively.

Land held and land under development includes land costs and costs incurred during site development such as development, indirects, and permits. Homes completed or under construction and model homes include all costs associated with home construction, including land, development, indirects, permits, materials and labor (except for capitalized selling and marketing costs, which are classified in other assets).

In accordance with ASC 360, inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. We review each real estate asset at the community-level on a quarterly basis or whenever indicators of impairment exist.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5. Capitalized Interest

Interest is capitalized to inventory and investment in unconsolidated joint ventures during development and other qualifying activities. Interest capitalized as a cost of inventory is included in cost of sales as related homes are closed. Interest capitalized to investment in unconsolidated joint ventures is amortized to equity in net income (loss) of unconsolidated joint ventures as related joint venture homes or lots close, or in instances where lots are sold from the unconsolidated joint venture to the Company, the interest is added to the land basis and included in cost of sales when the related lots or homes are sold to third-party buyers. For the three and six months ended June 30, 2019 and 2018 interest incurred, capitalized and expensed was as follows:

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Interest incurred	$	7,606		$	6,612		$	15,367		$	13,328
Interest capitalized to inventory	(7,606		)	(6,149		)	(15,367		)	(12,344		)
Interest capitalized to investment in unconsolidated joint ventures	—			(463		)	—			(984		)
Interest expensed	$	—		$	—		$	—		$	—
Capitalized interest in beginning inventory	$	28,600		$	19,884		$	25,681		$	16,453
Interest capitalized as a cost of inventory	7,606			6,149			15,367			12,344
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	3			5			13			5
Previously capitalized interest included in cost of home sales	(6,301		)	(3,750		)	(11,153		)	(6,514		)
Capitalized interest in ending inventory	$	29,908		$	22,288		29,908			22,288
Capitalized interest in beginning investment in unconsolidated joint ventures	$	672		$	1,962		$	713		$	1,472
Interest capitalized to investment in unconsolidated joint ventures	—			463			—			984
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	(3		)	(5		)	(13		)	(5		)
Previously capitalized interest included in equity in net income (loss) of unconsolidated joint ventures	(48		)	(18		)	(79		)	(49		)
Capitalized interest in ending investment in unconsolidated joint ventures	621			2,402			621			2,402
Total capitalized interest in ending inventory and investments in unconsolidated joint ventures	$	30,529		$	24,690		$	30,529		$	24,690
Capitalized interest as a percentage of inventory	5.5		%	4.7		%	5.5		%	4.7		%
Interest included in cost of home sales as a percentage of home sales revenue	4.4		%	3.2		%	4.7		%	3.3		%
Capitalized interest as a percentage of investment in and advances to unconsolidated joint ventures	1.8		%	4.1		%	1.8		%	4.1		%

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Investments in and Advances to Unconsolidated Joint Ventures

As of June 30, 2019 and December 31, 2018, the Company had ownership interests in 10 unconsolidated joint ventures with ownership percentages that generally ranged from 5% to 35%. The condensed combined balance sheets for our unconsolidated joint ventures accounted for under the equity method were as follows:

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Cash and cash equivalents	$	35,145		$	45,945
Restricted cash	14,740			19,205
Real estate inventories	338,176			374,607
Other assets	5,950			4,231
Total assets	$	394,011		$	443,988
Accounts payable and accrued liabilities	$	36,191		$	43,158
Notes payable	40,564			71,299
Total liabilities	76,755			114,457
The New Home Company's equity	33,016			33,617
Other partners' equity	284,240			295,914
Total equity	317,256			329,531
Total liabilities and equity	$	394,011		$	443,988
Debt-to-capitalization ratio	11.3		%	17.8		%
Debt-to-equity ratio	12.8		%	21.6		%

The condensed combined statements of operations for our unconsolidated joint ventures accounted for under the equity method were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars in thousands)
Revenues	$	59,078	$	33,879		$	101,365	$	65,892
Cost of sales and expenses	57,288		34,165			99,062		65,374
Net income (loss) of unconsolidated joint ventures	$	1,790	$	(286	)	$	2,303	$	518
Equity in net income (loss) of unconsolidated joint ventures reflected in the accompanying condensed consolidated statements of operations	$	185	$	(120	)	$	369	$	215

As a smaller reporting company, the Company is subject to the provisions of Rule 8-03(b)(3) of Regulation S-X which requires the disclosure of certain financial information for equity investees that constitute 20% of more of the Company's consolidated net income (loss). For the six months ended June 30, 2019, income allocations from two of the Company's unconsolidated joint ventures accounted for under the equity method each exceeded 20% of the Company's consolidated net income (loss). The table below presents select combined financial information for these joint ventures:

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Revenues	$	44,358	$	23,798	$	76,395	$	53,439
Cost of home sales	40,548		21,910		69,624		47,544
Gross margin	$	3,810	$	1,888	$	6,771	$	5,895
Expenses	1,983		1,779		3,840		4,193
Net income	$	1,827	$	109	$	2,931	$	1,702
Equity in net income (loss) of unconsolidated joint ventures reflected in the accompanying consolidated statements of operations	$	261	$	11	$	488	$	452

For the three and six months ended June 30, 2019 and 2018, the Company earned $0.6 million, $1.2 million, $0.7 million and $1.7 million respectively, in management fees from its unconsolidated joint ventures. For additional detail regarding management fees, please see Note 12.

7. Other Assets

Other assets consist of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Property, equipment and capitalized selling and marketing costs, net (1)	$	9,094	$	11,738
Deferred tax asset, net	13,937		13,937
Prepaid income taxes	443		514
Prepaid expenses	5,715		6,348
Warranty insurance receivable (2)	1,257		915
Right-of-use lease asset (3)	2,541		—
	$	32,987	$	33,452

(1) The Company depreciated $2.3 million, $4.9 million, $1.5 million and $2.4 million of capitalized selling and marketing costs to selling and marketing expenses during the three and six months ended June 30, 2019 and 2018, respectively. The Company depreciated $0.1 million, $0.2 million, $0.1 million and $0.2 million of property and equipment to general and administrative expenses during the three and six months ended June 30, 2019 and 2018, respectively.

(2) The Company adjusted its warranty insurance receivable by $0.6 million during the 2019 second quarter to true-up the receivable to align with actual reimbursement experience rates which resulted in pretax income of the same amount. The impact to net income was $0.4 million or $0.02 per diluted share.

(3) In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

8. Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Warranty accrual(1)	$	7,049	$	6,898
Accrued compensation and benefits	3,157		5,749
Accrued interest	6,236		6,497
Completion reserve	3,351		4,192
Lease liability(2)	2,902		—
Customer deposits	7,188		2,192
Other accrued expenses	2,492		3,500
	$	32,375	$	29,028

(1) Included in the amount at June 30, 2019 and December 31, 2018 is approximately $1.3 million and $0.9 million, respectively, of warranty liabilities estimated to be recovered by our insurance policies.

(2) In conjunction with the adoption of ASC 842, the Company established a $3.5 million lease liability on January 1, 2019. For more information, please refer to Note 1 and Note 11.

Changes in our warranty accrual are detailed in the table set forth below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Beginning warranty accrual for homebuilding projects	$	6,767		$	6,775		$	6,681		$	6,634
Warranty provision for homebuilding projects	627			470			1,054			986
Warranty payments for homebuilding projects	(581		)	(469		)	(922		)	(844		)
Adjustment to warranty accrual(1)	94			—			94			—
Ending warranty accrual for homebuilding projects	6,907			6,776			6,907			6,776
Beginning warranty accrual for fee building projects	178			223			217			225
Warranty provision for fee building projects	—			—			9			—
Warranty efforts for fee building projects	(18		)	(1		)	(66		)	(3		)
Adjustment to warranty accrual for fee building projects(1)	(18		)	—			(18		)	—
Ending warranty accrual for fee building projects	142			222			142			222
Total ending warranty accrual	$	7,049		$	6,998		$	7,049		$	6,998

(1) During the 2019 second quarter, we recorded an adjustment of $0.1 million to our warranty accrual for homebuilding projects due to higher expected warranty expenditures which is included in "Adjustment to warranty accrual" above and resulted in an increase of the same amount to cost of home sales in the accompanying condensed consolidated statement of operations. Also during the 2019 second quarter, the Company recorded an adjustment of $18,000 due to lower experience rate of expected warranty expenditures for fee building projects which is included in "Adjustment to warranty accrual for fee building projects" above and resulted in a reduction of the same amount to cost of fee building sales in the accompanying condensed consolidated statement of operations.

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We maintain general liability insurance designed to protect us against a portion of our risk of loss from construction-related warranty and construction defect claims. Our warranty accrual and related estimated insurance recoveries are based on historical claim and expense data, and expected recoveries from insurance carriers are recorded based on actual insurance claims and amounts determined using our warranty accrual estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated.

9. Senior Notes and Unsecured Revolving Credit Facility

Indebtedness consisted of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
7.25% Senior Notes due 2022, net	$	309,060	$	320,148
Unsecured revolving credit facility	66,000		67,500
Total Indebtedness	$	375,060	$	387,648

On March 17, 2017, the Company completed the sale of $250 million in aggregate principal amount of 7.25% Senior Notes due 2022 (the "Existing Notes"), in a private placement. The Existing Notes were issued at an offering price of 98.961% of their face amount, which represents a yield to maturity of 7.50%. On May 4, 2017, the Company completed a tack-on private placement offering through the sale of an additional $75 million in aggregate principal amount of the 7.25% Senior Notes due 2022 ("Additional Notes"). The Additional Notes were issued at an offering price of 102.75% of their face amount plus accrued interest since March 17, 2017, which represented a yield to maturity of 6.438%. Net proceeds from the Existing Notes were used to repay all borrowings outstanding under the Company’s senior unsecured revolving credit facility with the remainder used for general corporate purposes. Net proceeds from the Additional Notes were used for working capital, land acquisition and general corporate purposes. Interest on the Existing Notes and the Additional Notes (together, the "Notes") is paid semiannually in arrears on April 1 and October 1. The Notes were exchanged in an exchange offer for Notes that are identical to the original Notes, except that they are registered under the Securities Act, and are freely tradeable in accordance with applicable law.

The carrying amount of our Senior Notes listed above at June 30, 2019 is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million, each of which are amortized and capitalized to interest costs on a straight-line basis over the respective terms of the notes which approximates the effective interest method. The carrying amount for the Senior Notes listed above at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. Debt issuance costs for the unsecured revolving credit facility are included in other assets and amortized and capitalized to interest costs on a straight-line basis over the term of the agreement.

The Notes are general senior unsecured obligations that rank equally in right of payment to all existing and future senior indebtedness, including borrowings under the Company's senior unsecured revolving credit facility. The Notes contain certain restrictive covenants, including a limitation on additional indebtedness and a limitation on restricted payments. Restricted payments include, among other things, dividends, investments in unconsolidated entities, and stock repurchases. Under the limitation on additional indebtedness, we are permitted to incur specified categories of indebtedness but are prohibited, aside from those exceptions, from incurring further indebtedness if we do not satisfy either a leverage condition or an interest coverage condition. Exceptions to the limitation include, among other things, borrowings of up to $260 million under existing or future bank credit facilities, non-recourse indebtedness, and indebtedness incurred for the purpose of refinancing or repaying certain existing indebtedness. Under the limitation on restricted payments, we are also prohibited from making restricted payments, aside from certain exceptions, if we do not satisfy either condition. In addition, the amount of restricted payments that we can make is subject to an overall basket limitation, which builds based on, among other things, 50% of consolidated net income from January 1, 2017 forward and 100% of the net cash proceeds from qualified equity offerings. Exceptions to the foregoing limitations on our ability to make restricted payments include, among other things, investments in joint ventures and other investments up to 15% of our consolidated tangible net assets and a general basket of $15 million. The Notes are guaranteed, on an unsecured basis, jointly and severally, by all of the Company's 100% owned subsidiaries. See Note

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17 for information about the guarantees and supplemental financial statement information about our guarantor subsidiaries group and non-guarantor subsidiaries group.

During the 2019 second quarter, the Company repurchased and retired approximately $7.0 million in face value of the Notes. The Notes were purchased at 90.82% of face value, for a cash payment of $6.3 million. The Company recognized a $0.6 million gain on the early extinguishment of debt, and the unamortized discount, premium and debt issuance costs associated with the retired notes totaling approximately $90,000 were written off. Total repurchases of the Notes for the six months ended June 30, 2019 equaled $12.0 million in face value at 90.58% of the face value, for a cash payment of $10.9 million. The Company recognized a total gain on early extinguishment of debt of $1.0 million and wrote off approximately $160,000 of unamortized discount, premium and debt issuance costs associated with the Notes retired during the six months ended June 30, 2019.

The Company's unsecured revolving credit facility ("Credit Facility") is with a bank group and matures on September 1, 2020. Total commitments under the Credit Facility are $200 million with an accordion feature that allows the facility size thereunder to be increased up to an aggregate of $300 million, subject to certain financial conditions, including the availability of bank commitments. As of June 30, 2019, we had $66.0 million of outstanding borrowings under the credit facility. Interest is payable monthly and is charged at a rate of 1-month LIBOR plus a margin ranging from 2.25% to 3.00% depending on the Company’s leverage ratio as calculated at the end of each fiscal quarter. As of June 30, 2019, the interest rate under the Credit Facility was 5.40%. Pursuant to the Credit Facility, the Company is required to maintain certain financial covenants as defined in the Credit Facility, including (i) a minimum tangible net worth; (ii) maximum leverage ratios; (iii) a minimum liquidity covenant; and (iv) a minimum fixed charge coverage ratio based on EBITDA (as detailed in the Credit Facility) to interest incurred or if this test is not met, the Company maintains unrestricted cash equal to not less than the trailing 12 month consolidated interest incurred. As of June 30, 2019, the Company was in compliance with all financial covenants.

The Credit Facility also provides a $25 million sublimit for letters of credit, subject to conditions set forth in the agreement. As of June 30, 2019 and December 31, 2018, the Company had $2.3 million in outstanding letters of credit issued under the Credit Facility.

10. Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:

• 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 measurement date

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

Fair Value of Financial Instruments

The following table presents an estimated fair value of the Company's Notes and Credit Facility. The Notes are classified as Level 2 and primarily reflect estimated prices obtained from outside pricing sources. The Company's Credit Facility is classified as Level 3 within the fair value hierarchy. The Company had an outstanding balance of $66.0 million under its Credit Facility at June 30, 2019, and the estimated fair value of the outstanding balance approximated the carrying value due to the short-term nature of LIBOR contracts.

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
7.25% Senior Notes due 2022, net (1)	$	309,060	$	294,234	$	320,148	$	292,500
Unsecured revolving credit facility	$	66,000	$	66,000	$	67,500	$	67,500

(1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.    

The Company considers the carrying value of cash and cash equivalents, restricted cash, contracts and accounts receivable, accounts payable, and accrued expenses and other liabilities to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. The fair value of amounts due from affiliates is not determinable due to the related party nature of such amounts.

11. Commitments and Contingencies

From time-to-time, the Company is involved in various legal matters arising in the ordinary course of business. These claims and legal proceedings are of a nature that we believe are normal and incidental to a homebuilder. We make provisions for loss contingencies when they are probable and the amount of the loss can be reasonably estimated. Such provisions are assessed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. In view of the inherent unpredictability of litigation, we generally cannot predict their ultimate resolution, related timing or eventual loss. At this time, we do not believe that our loss contingencies, individually or in the aggregate, are material to our consolidated financial statements.

As an owner and developer of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of real estate in the vicinity of the Company’s real estate and other environmental conditions of which the Company is unaware with respect to the real estate could result in future environmental liabilities.

The Company has provided credit enhancements in connection with joint venture borrowings in the form of LTV maintenance agreements in order to secure the joint venture's performance under the loans and maintenance of certain LTV ratios. The Company has also entered into agreements with its partners in each of the unconsolidated joint ventures whereby the Company and its partners are apportioned liability under the LTV maintenance agreements according to their respective capital interest. In addition, the agreements provide the Company, to the extent its partner has an unpaid liability under such credit enhancements, the right to receive distributions from the unconsolidated joint venture that would otherwise be made to the partner. However, there is no guarantee that such distributions will be made or will be sufficient to cover the Company's liability under such LTV maintenance agreements. The loans underlying the LTV maintenance agreements comprise acquisition and development loans, construction revolvers and model home loans, and the agreements remain in force until the loans are satisfied. Due to the nature of the loans, the outstanding balance at any given time is subject to a number of factors including the status of site improvements, the mix of horizontal and vertical development underway, the timing of phase build outs, and the period necessary to complete the escrow process for homebuyers. As of June 30, 2019 and December 31, 2018, $24.4 million and $41.3 million, respectively, was outstanding under loans that are credit enhanced by the Company through LTV maintenance agreements. Under the terms of the joint venture agreements, the Company's proportionate share of LTV maintenance agreement liabilities was $4.9 million and $7.3 million, respectively, as of June 30, 2019 and December 31, 2018. In addition, the Company has provided completion agreements regarding specific performance for certain projects whereby the Company is required to complete the given project with funds provided by the beneficiary of the agreement. If there are not adequate funds available under the specific project loans, the Company would then be subject to financial liability under such completion agreements. Typically, under such terms of the joint venture agreements, the Company has the right to apportion the respective share of any costs funded under such completion agreements to its partners. However, there is no guarantee that we will be able to recover against our partners for such amounts owed to us under the terms of such joint venture agreements. In connection with joint venture borrowings, the Company also selectively provides (a) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (b) indemnification of the lender from "bad boy acts" of

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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the unconsolidated entity such as fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance, and condemnation proceeds, waste and mechanic liens, and bankruptcy.

We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. As of June 30, 2019 and December 31, 2018, the Company had outstanding surety bonds totaling $52.8 million and $50.5 million, respectively. The estimated remaining costs to complete of such improvements as of June 30, 2019 and December 31, 2018 were $25.1 million and $20.3 million, respectively. The beneficiaries of the bonds are various municipalities and other organizations. In the event that any such surety bond issued by a third party is called because the required improvements are not completed, the Company could be obligated to reimburse the issuer of the bond.

The Company accounts for contracts deemed to contain a lease under ASC 842. At the inception of a lease, or if a lease is subsequently modified, we determine whether the lease is an operating or financing lease. Our lease population is fully comprised of operating leases and includes leases for certain office space and equipment for use in our operations. For all leases with an expected term that exceeds one year, right-of-use assets and lease liabilities are recorded on the condensed consolidated balance sheets. The depreciable lives of right-of-use assets are limited to the expected term which would include any renewal options we expect to exercise. The exercise of lease renewal options is generally at our discretion and we expect that in the normal course of business, leases that expire will be renewed or replaced by other leases. Our lease payments do not contain variable payments, any residual value guarantees, or material restrictive covenants. Right-of-use lease assets are included in other assets and lease liabilities are recorded in accrued expenses and other liabilities within our condensed consolidated balance sheets and total $2.5 million and $2.9 million, respectively, at June 30, 2019.

For the three and six months ended June 30, 2019, lease costs and cash flow information for leases with terms in excess of one year was as follows:

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	(Dollars in thousands)
Lease cost:
Lease costs included in general and administrative expenses	$	265	$	620
Lease costs included in real estate inventories	207		369
Lease costs included in selling and marketing expenses	17		34
Net lease cost (1)	$	489	$	1,023
Other Information:
Lease cash flows (included in operating cash flows)(1)	$	563	$	1,053

(1) Does not include the cost of short-term leases with terms of less than one year which totaled approximately $0.2 million and $0.5 million for the three and six months ended June 30, 2019, respectively, or the benefit from a sublease agreement of one of our office spaces which totaled approximately $49,000 and $98,000 for the three and six months ended June 30, 2019, respectively.

Future minimum lease payments under our operating leases are as follows (dollars in thousands):

Remaining for 2019	$	971
2020	1,615
2021	444
2022	10
2023	2
Thereafter	—
Total lease payments(1)	$	3,042
Less: Interest(2)	140
Present value of lease liabilities(3)	$	2,902

(1)    Lease payments include options to extend lease terms that are reasonably certain of being exercised.

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THE NEW HOME COMPANY INC.

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(2) Our leases do not provide a readily determinable implicit rate. Therefore, we utilized our incremental borrowing rate for such leases to determine the present value of lease payments at the lease commencement date. There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2019.

(3) The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

12. Related Party Transactions

During the three and six months ended June 30, 2019 and 2018, the Company incurred construction-related costs on behalf of its unconsolidated joint ventures totaling $1.5 million, $3.2 million, $1.5 million and $3.6 million, respectively. As of June 30, 2019 and December 31, 2018, $0.2 million and $0.4 million, respectively, are included in due from affiliates in the accompanying condensed consolidated balance sheets related to such costs.

The Company has entered into agreements with its unconsolidated joint ventures to provide management services related to the underlying projects (collectively referred to as the "Management Agreements"). Pursuant to the Management Agreements, the Company receives a management fee based on each project’s revenues. During the three and six months ended June 30, 2019 and 2018, the Company earned $0.6 million, $1.2 million, $0.7 million and $1.7 million, respectively, in management fees, which have been recorded as fee building revenues in the accompanying condensed consolidated statements of operations. As of June 30, 2019 and December 31, 2018, $0 and $0.2 million, respectively, of management fees are included in due from affiliates in the accompanying condensed consolidated balance sheets.

One member of the Company's board of directors beneficially owns more than 10% of the Company's outstanding common stock through an affiliated entity, IHP Capital Partners VI, LLC ("IHP"), and is also affiliated with entities that have investments in two of the Company's unconsolidated joint ventures, TNHC Meridian Investors LLC (which is an owner of another entity, TNHC Newport LLC, which entity owned our "Meridian" project) and TNHC Russell Ranch LLC ("Russell Ranch"). The Company's investment in these two joint ventures was $9.8 million at June 30, 2019 and $6.5 million at December 31, 2018. A former member of the Company's board of directors who served during 2018 is affiliated with entities that have investments in three of the Company's unconsolidated joint ventures, Arantine Hills Holdings LP ("Bedford"), Calabasas Village LP, and TNHC-TCN Santa Clarita, LP. As of June 30, 2019 and December 31, 2018, the Company's investment in these three unconsolidated joint ventures totaled $10.9 million and $12.0 million, respectively.

During the 2019 second quarter, the Company entered into a second amendment to the limited liability company agreement of Russell Ranch between the Company and IHP. Prior to the execution of the second amendment, each of IHP and the Company had contributed its maximum capital commitments pursuant to the joint venture agreement. Pursuant to the second amendment, the parties agreed to fund additional required capital in the aggregate amount of approximately $26 million for certain remaining backbone improvements for the Project (the “Phase 1 Backbone Improvements”) as follows: 50% by IHP and 50% by the Company (“Amendment Additional Capital”). The Amendment Additional Capital will be returned to IHP and the Company ahead of any other contributed capital; provided that none of the Amendment Additional Capital accrues a preferred return that base capital contributions are generally afforded under the joint venture agreement. To the extent of overruns on the Phase 1 Backbone Improvements, the Company is required to fund such overrun capital (“TNHC Overrun Capital”); provided that such contributions shall receive capital account credit. Pursuant to the second amendment, the distribution of cash flow under the agreement was amended to provide that Amendment Additional Capital would be returned prior to TNHC Overrun Capital, which would, in turn, be returned ahead of the base capital preferred return and base capital.

The Company previously purchased lots from the Russell Ranch joint venture as described below (the "Phase 1 Purchase"). The parties also amended the purchase and sale contract for the Phase 1 Purchase to provide relief from the profit participation provisions of this transaction under certain circumstances.

TL Fab LP, an affiliate of one of the Company's non-employee directors, was engaged by the Company and some of its unconsolidated joint ventures as a trade contractor to provide metal fabrication services. For the three and six months ended June 30, 2019 and 2018, the Company incurred $22,000, $55,000, $0.1 million and $0.2 million, respectively, for these services. For the same periods, the Company's unconsolidated joint ventures incurred $0, $0, $0 and $0.4 million, respectively, for these services. Of these costs, $22,000 and $7,000 was due to TL Fab LP from the Company at June 30, 2019 and December 31, 2018, respectively, and $0 and $8,000 was due to TL Fab LP from the Company's unconsolidated joint ventures at June 30, 2019 and December 31, 2018, respectively.

In its ordinary course of business, the Company enters into agreements to purchase lots from unconsolidated land development joint ventures of which it is a member. In accordance with ASC 360-20, Property, Plant and Equipment - Real Estate Sales ("ASC 360-20"), the Company defers its portion of the underlying gain from the joint venture's sale of these lots to the Company. When the Company purchases lots directly from the joint venture, the deferred gain is recorded as a reduction to the Company's land basis on the purchased lots. In this instance, the gain is ultimately recognized when the Company delivers lots to third-party home buyers at the time of the home closing. At June 30, 2019 and December 31, 2018, $0.2 million and

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

$0.2 million, respectively, of deferred gain from lot transactions with the TNHC-HW Cannery LLC ("Cannery"), Bedford and Russell Ranch unconsolidated joint ventures remained unrecognized and included as a reduction to land basis in the accompanying condensed consolidated balance sheets.

The Company’s land purchase agreement with the Cannery provides for reimbursement of certain fee credits. The Company was reimbursed $0.1 million in fee credits from the Cannery during the six months ended June 30, 2018. As of June 30, 2019 and December 31, 2018, $66,000 and $37,000, respectively, in fee credits was due to the Company from the Cannery, which is included in due from affiliates in the accompanying condensed consolidated balance sheets.

On June 18, 2015, the Company entered into an agreement that effectively transitioned Joseph Davis' role within the Company from that of Chief Investment Officer to that of a non-employee consultant to the Company effective June 26, 2015 ("Transition Date"). As of the Transition Date, Mr. Davis ceased being an employee of the Company and became an independent contractor performing consulting services. For his services, Mr. Davis was compensated $5,000 per month through June 26, 2019 when his contract was amended to extend its term for one year and reduce his scope of services and compensation to $1,000 per month. At June 30, 2019, no fees were due to Mr. Davis for his consulting services. Additionally, the Company entered into a construction agreement effective September 7, 2017, with The Joseph and Terri Davis Family Trust Dated August 25, 1999 ("Davis Family Trust") of which Joseph Davis is a trustee. The agreement is a fee building contract pursuant to which the Company acts in the capacity of a general contractor to build a single family detached home on land owned by the Davis Family Trust. For its services, the Company will receive a contractor's fee and the Davis Family Trust will reimburse the Company's field overhead costs. During the three and six months ended June 30, 2019 and 2018, the Company billed the Davis Family Trust $10,000, $0.5 million, $0.6 million and $0.7 million, respectively, including reimbursable construction costs and the Company's contractor's fees which are included in fee building revenues in the accompanying condensed consolidated statements of operations. Contractor's fees comprised $0, $15,000, $17,000 and $17,100 of the total billings for the three and six months ended June 30, 2019 and 2018, respectively. The Company recorded $13,000, $0.5 million, $0.6 million and $0.6 million for the three and six months ended June 30, 2019 and 2018, respectively, for the costs of this fee building revenue which are included in fee building cost of sales in the accompanying condensed consolidated statements of operations. At June 30, 2019 and December 31, 2018, the Company was due $0 and $0.6 million, respectively, from the Davis Family Trust for construction draws, which are included in due from affiliates in the accompanying condensed consolidated balance sheets.

On February 17, 2017, the Company entered into a consulting agreement that transitioned Mr. Stelmar's role from that of Chief Investment Officer to a non-employee consultant to the Company. While an employee of the Company, Mr. Stelmar served as an employee director of the Company's Board of Directors. The agreement provides that effective upon Mr. Stelmar's termination of employment, he shall become a non-employee director and shall receive the compensation and be subject to the requirements of a non-employee director pursuant to the Company's policies. For his consulting services, Mr. Stelmar is compensated $6,000 per month. The current term is through August 17, 2019 and may be extended upon mutual consent of the parties. Additionally, Mr. Stelmar's outstanding restricted stock unit equity award granted in 2016 continued to vest in accordance with its original terms based on his continued provision of consulting services rather than continued employment and fully vested during the 2019 first quarter. At June 30, 2019 and December 31, 2018, no fees were due to Mr. Stelmar for his consulting services.

On February 14, 2019, the Company entered into a consulting agreement that transitioned Thomas Redwitz's role from that of Chief Investment Officer to a non-employee consultant to the Company effective March 1, 2019. For his consulting services, Mr. Redwitz is compensated $10,000 per month. The agreement terminates March 1, 2020 and may be extended upon mutual consent of the parties. At June 30, 2019, no fees were due to Mr. Redwitz for his consulting services.

During 2018, the Company had advances outstanding to an unconsolidated joint venture, Encore McKinley Village LLC. The note bore interest at 10% per annum and was fully repaid during the 2018 second quarter. For the three and six months ended June 30, 2018, the Company earned $49,000 and $0.1 million, respectively, in interest income on the unsecured promissory note which is included in equity in net income (loss) of unconsolidated joint ventures in the accompanying condensed consolidated statements of operations.

The Company entered into two transactions in each of 2018 and 2017 to purchase land from affiliates of IHP, which owns more than 10% of the Company's outstanding common stock and is affiliated with one member of the Company's board of directors.

The first 2017 agreement allows the Company the option to purchase lots in Northern California in a phased takedown for a gross purchase price of $16.1 million with profit participation and master marketing fees due to the seller as outlined in the contract. As of June 30, 2019, the Company has taken down approximately two-thirds of the lots, paid $0.4 million in master marketing fees, and has a $0.3 million nonrefundable deposit outstanding on the remaining lots. The second 2017 transaction

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THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

allowed the Company to purchase finished lots in Northern California which includes customary profit participation and was structured as an optioned takedown. The total purchase price, including the cost for the finished lot development and the option, was expected to be approximately $56.7 million, dependent on the timing of takedowns, as well as our obligation to pay certain fees and costs during the option maintenance period. During the 2019 second quarter, an unrelated third party entered into agreements to purchase from the IHP affiliate some of the lots under the Company's option. The Company has in turn entered into an arrangement pursuant to which it shall purchase such lots on a rolling take down basis from such unrelated third party. The unrelated third party has agreed to purchase 67% of the lots originally under contract with the IHP affiliate and has already closed on 55% of the lots originally under contract with the IHP affiliate. Following the purchase of the lots by the unrelated third party, the purchase price of remaining lots from the IHP affiliate is expected to be approximately $8.4 million. As of June 30, 2019, the Company (i) had a $2.3 million nonrefundable deposit up with the IHP affiliate, (ii) paid $0.1 million for fees and costs, (iii) paid $3.0 million in option payments, and (iv) paid $9.2 million for the purchase of lots directly from the IHP affiliate.

The first 2018 agreement allows the Company to purchase finished lots in Northern California for a gross purchase price of $8.0 million with additional profit participation, marketing fees and certain reimbursements due to the seller as outlined in the agreement. As of June 30, 2019, the Company has taken down all of the lots, paid $0.3 million in master marketing fees and reimbursed the seller $0.2 million in costs related to this contract. The second 2018 agreement allows the Company to purchase land in a master-plan community in Arizona for an estimated purchase price of $3.8 million plus profit participation and marketing fees pursuant to contract terms. The Company has an outstanding, nonrefundable deposit of $0.3 million related to this contract and had not taken down any lots as of June 30, 2019.

In the first quarter 2018, the Company entered into an agreement with its Bedford joint venture that is affiliated with one former member of the Company's board of directors for the option to purchase lots in phased takedowns. As of June 30, 2019, the Company has made a $1.5 million nonrefundable deposit as consideration for this option, and a portion of the deposit will be applied to the purchase price across the phases. The gross purchase price of the land is $10.0 million with profit participation due to seller as outlined in the contract. Subsequent to June 30, 2019, the Company entered into an amendment to this agreement to reduce the gross purchase price of the land to $9.3 million. The Company has taken down approximately two-thirds of the contracted lots and $0.7 million of the nonrefundable deposit remains outstanding. During the fourth quarter 2018, the Company entered into a second option agreement with the Bedford joint venture to purchase lots in phased takedowns. The Company made a $1.4 million nonrefundable deposit as consideration for the option, and a portion of the deposit will be applied to the purchase price across the phases. The gross purchase price of the land is $10.5 million with profit participation due to the seller pursuant to the agreement. At June 30, 2019, the Company had taken down approximately 42% of the optioned lots and $0.8 million of the deposit remained outstanding.

FMR LLC beneficially owned over 10% of the Company's common stock during 2018, and an affiliate of FMR LLC ("Fidelity") provides investment management and record keeping services to the Company’s 401(k) Plan. For the three and six months ended June 30, 2018, the Company paid Fidelity approximately $5,000 and $9,000, respectively, for 401(k) Plan record keeping and investment management services. The participants in the Company's 401(k) Plan paid Fidelity approximately $2,000 and $4,000 for the three and six months ended June 30, 2018, respectively, for record keeping and investment management services. As of June 30, 2019, FMR LLC owns less than 10% of the Company's common stock.

The Company has provided credit enhancements in connection with joint venture borrowings in the form of LTV maintenance agreements in order to secure the joint venture's performance under the loans and maintenance of certain LTV ratios. In addition, the Company has provided completion agreements regarding specific performance for certain projects whereby the Company is required to complete the given project with funds provided by the beneficiary of the agreement. For more information regarding these agreements please refer to Note 11.

13. Stock-Based Compensation

The Company's 2014 Long-Term Incentive Plan (the "2014 Incentive Plan"), was adopted by our board of directors in January 2014. The 2014 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted stock awards, restricted stock units and performance awards. The 2014 Incentive Plan will automatically expire on the tenth anniversary of its effective date.

The number of shares of our common stock authorized to be issued under the 2014 Incentive Plan is 1,644,875 shares. To the extent that shares of the Company's common stock subject to an outstanding award granted under the 2014 Incentive Plan or any predecessor plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of common stock generally shall again be available under the 2014 Incentive Plan.

27

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At our 2016 Annual Meeting of Shareholders on May 24, 2016, our shareholders approved the Company's 2016 Incentive Award Plan (the "2016 Incentive Plan"). The 2016 Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock- or cash-based awards. Non-employee directors of the Company and employees and consultants of the Company or any of its subsidiaries are eligible to receive awards under the 2016 Incentive Plan. On May 22, 2018, our shareholders approved the amended and restated 2016 Incentive Plan which increased the number of shares authorized for issuance under the plan from 800,000 to 2,100,000 shares. The amended and restated 2016 Incentive Plan will expire on April 4, 2028.

The Company has issued stock option and restricted stock unit awards under the 2014 Incentive Plan and stock option, restricted stock unit, and performance share unit awards under the 2016 Incentive Plan. As of June 30, 2019, 61,443 shares remain available for grant under the 2014 Incentive Plan and 1,053,811 shares remain available for grant under the 2016 Incentive Plan. The exercise price of stock-based awards may not be less than the market value of the Company's common stock on the date of grant. The fair value for stock options is established at the date of grant using the Black-Scholes model for time-based vesting awards. The Company's stock option, restricted stock unit awards, and performance share unit awards typically vest over a one year to three years period and the stock options expire ten years from the date of grant.

A summary of the Company’s common stock option activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding Stock Option Activity
Outstanding, beginning of period	821,470		$	11.00	826,498		$	11.00
Granted	249,283		$	5.76	—		$	—
Exercised	—		$	—	—		$	—
Forfeited	(2,736	)	$	11.00	(5,028	)	$	11.00
Outstanding, end of period	1,068,017		$	9.78	821,470		$	11.00
Exercisable, end of period	818,734		$	11.00	821,470		$	11.00

A summary of the Company’s restricted stock unit activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Grant-Date Fair Value per Share		Number of Shares		Weighted-Average Grant-Date Fair Value per Share
Restricted Stock Unit Activity
Outstanding, beginning of period	469,227		$	10.75	562,082		$	10.72
Granted	230,774		$	5.28	179,268		$	11.24
Vested	(277,401	)	$	10.50	(270,363	)	$	11.02
Forfeited	(48,178	)	$	10.91	—		$	—
Outstanding, end of period	374,422		$	7.54	470,987		$	10.74

28

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A summary of the Company’s performance share unit activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Grant-Date Fair Value per Share		Number of Shares	Weighted-Average Grant-Date Fair Value per Share
Performance Share Unit Activity
Outstanding, beginning of period	125,422		$	11.68	—	$	—
Granted (at target)	—		$	—	125,422	$	11.68
Vested	—		$	—	—	$	—
Forfeited	(26,882	)	$	11.68	—	$	—
Outstanding, end of period (at target)	98,540		$	11.68	125,422	$	11.68

The expense related to the Company's stock-based compensation programs, included in general and administrative expense in the accompanying condensed consolidated statements of operations, was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Expense related to:
Stock options	$	50	$	—	$	72	$	—
Restricted stock units and performance share units	473		862		1,017		1,704
	$	523	$	862	$	1,089	$	1,704

The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company:

	Six Months Ended June 30,
	2019	2018
Expected term (in years)	6.0	0
Expected volatility	39.9%	—
Risk-free interest rate	2.5%	—
Expected dividends	—	—
Weighted-average grant date fair value	$2.43	$0

We used the "simplified method" to establish the expected term of the common stock options granted by the Company. Our restricted stock unit awards and performance share unit awards are valued based on the closing price of our common stock on the date of grant. The number of performance share units that will vest ranges from 50%-150% of the target amount awarded based on actual cumulative earnings per share and return on equity growth from 2018-2019, subject to initial achievement of minimum thresholds. We evaluate the probability of achieving the performance targets established under each of the outstanding performance share unit awards quarterly and estimate the number of underlying units that are probable of being issued. Compensation expense for restricted stock unit and performance share unit awards is being recognized using the straight-line method over the requisite service period, subject to cumulative catch-up adjustments required as a result of changes in the number shares probable of being issued for performance share unit awards. At June 30, 2019, the probability of achieving the performance targets associated with the outstanding performance share unit awards was estimated to be 0%. Forfeitures are recognized in compensation cost during the period that the award forfeiture occurs.

29

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

At June 30, 2019, the amount of unearned stock-based compensation currently estimated to be expensed through 2022 is $2.8 million. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is 1.8 years. If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

14. Income Taxes

For the three and six months ended June 30, 2019, the Company recorded an income tax provision of $1.0 million and $0.3 million, respectively. Comparatively, the Company recorded an income tax provision of $0.1 million and an income tax benefit of $0.8 million for the three and six months ended June 30, 2018, respectively. The Company's effective tax rate for all periods differs from the federal statutory tax rates due to state income taxes, estimated deduction limitations for executive compensation and discrete items. The Company recorded a $0.3 million discrete provision in the first six months of 2019 related to stock compensation and state tax rate changes while a $0.4 million discrete benefit was taken in the comparable 2018 period primarily related to energy credits.

15. Segment Information

The Company’s operations are organized into three reportable segments: two homebuilding segments (Arizona and California) and fee building. In determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross margins, production processes, suppliers, subcontractors, regulatory environments, land position, and underlying demand and supply in accordance with ASC 280. Our California homebuilding reportable segment aggregates the Northern California and Southern California homebuilding operating segments.

Our homebuilding operations acquire and develop land and construct and sell single-family attached and detached

homes. Our fee building operations build homes and manage construction related activities on behalf of third-party property owners and our joint ventures. In addition, our corporate operations develop and implement strategic initiatives and support our operating segments by centralizing key administrative functions such as accounting, finance and treasury, information technology, insurance and risk management, litigation, marketing and human resources. A portion of the expenses incurred by corporate are allocated to the fee building segment primarily based on its respective percentage of revenues and to each homebuilding segment based on its respective investment in and advances to unconsolidated joint ventures and real estate inventories balances. The assets of our fee building segment primarily consist of cash, restricted cash and accounts receivable. The majority of our corporate personnel and resources are primarily dedicated to activities relating to our homebuilding segment, and, therefore, the balance of any unallocated corporate expenses are allocated within our homebuilding reportable segments.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 1. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

30

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Financial information relating to reportable segments was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Homebuilding revenues:
California	$	132,830		$	117,460		$	216,162		$	196,897
Arizona	7,634			—			23,488			—
Total homebuilding revenues	140,464			117,460			239,650			196,897
Fee building revenues, including management fees	22,285			38,095			41,947			81,889
Total revenues	$	162,749		$	155,555		$	281,597		$	278,786
Homebuilding pretax income (loss):
California	$	2,846		$	83		$	279		$	(1,818	)
Arizona	(796		)	(958		)	(1,274		)	(1,663		)
Total homebuilding pretax income (loss)	2,050			(875		)	(995		)	(3,481		)
Fee building pretax income, including management fees	515			1,057			909			2,152
Total pretax income (loss)	$	2,565		$	182		$	(86	)	$	(1,329	)

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Homebuilding assets:
California	$	548,223	$	551,807
Arizona	95,370		86,205
Total homebuilding assets	643,593		638,012
Fee building assets	7,064		10,879
Corporate unallocated assets	22,600		47,206
Total assets	$	673,257	$	696,097

31

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

16. Supplemental Disclosure of Cash Flow Information

The following table presents certain supplemental cash flow information:

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Supplemental disclosures of cash flow information
Interest paid, net of amounts capitalized	$	—	$	—
Income taxes paid	$	240	$	7,000

17. Supplemental Guarantor Information

The Company's 7.25% Senior Notes due 2022 (the "Notes") are guaranteed, on an unsecured basis, jointly and severally, by all of the Company's 100% owned subsidiaries (collectively, the "Guarantors"). The guarantees are full and unconditional. The Indenture governing the Notes provides that the guarantees of a Guarantor will be automatically and unconditionally released and discharged: (1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a "Restricted Subsidiary" (as defined in the Indenture), which sale, transfer, exchange or other disposition is made in compliance with applicable provisions of the Indenture; (2) upon the proper designation of such Guarantor as an "Unrestricted Subsidiary" (as defined in the Indenture), in accordance with the Indenture; (3) upon request of the Company and certification in an officers’ certificate provided to the trustee that the applicable Guarantor has become an "Immaterial Subsidiary" (as defined in the indenture), so long as such Guarantor would not otherwise be required to provide a guarantee pursuant to the Indenture; provided that, if immediately after giving effect to such release the consolidated tangible assets of all Immaterial Subsidiaries that are not Guarantors would exceed 5.0% of consolidated tangible assets, no such release shall occur, (4) if the Company exercises its legal defeasance option or covenant defeasance option under the Indenture or if the obligations of the Company and the Guarantors are discharged in compliance with applicable provisions of the Indenture, upon such exercise or discharge; (5) unless a default has occurred and is continuing, upon the release or discharge of such Guarantor from its guarantee of any indebtedness for borrowed money of the Company and the Guarantors so long as such Guarantor would not then otherwise be required to provide a guarantee pursuant to the Indenture; or (6) upon the full satisfaction of the Company’s obligations under the Indenture; provided that in each case if such Guarantor has incurred any indebtedness in reliance on its status as a Guarantor in compliance with applicable provisions of the Indenture, such Guarantor’s obligations under such indebtedness, as the case may be, so incurred are satisfied in full and discharged or are otherwise permitted to be incurred by a Restricted Subsidiary (other than a Guarantor) in compliance with applicable provisions of the Indenture. The Company has determined that separate, full financial statements of the Guarantors would not be material to investors and, accordingly, supplemental financial information for the guarantors is presented.

32

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS

	June 30, 2019
	NWHM		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	4,005	$	44,040	$	179	$	—		$	48,224
Restricted cash	—		124		—		—			124
Contracts and accounts receivable	8		16,518		—		(413		)	16,113
Intercompany receivables	228,506		—		—		(228,506		)	—
Due from affiliates	—		218		—		—			218
Real estate inventories	—		541,954		—		—			541,954
Investment in and advances to unconsolidated joint ventures	—		33,637		—		—			33,637
Investment in subsidiaries	370,716		—		—		(370,716		)	—
Other assets	18,975		14,003		12		(3		)	32,987
Total assets	$	622,210	$	650,494	$	191	$	(599,638	)	$	673,257
Liabilities and equity
Accounts payable	$	329	$	26,300	$	—	$	—		$	26,629
Accrued expenses and other liabilities	7,723		25,001		59		(408		)	32,375
Intercompany payables	—		228,506		—		(228,506		)	—
Due to affiliates	—		8		—		(8		)	—
Unsecured revolving credit facility	66,000		—		—		—			66,000
Senior notes, net	309,060		—		—		—			309,060
Total liabilities	383,112		279,815		59		(228,922		)	434,064
Stockholders' equity	239,098		370,679		37		(370,716		)	239,098
Non-controlling interest in subsidiary	—		—		95		—			95
Total equity	239,098		370,679		132		(370,716		)	239,193
Total liabilities and equity	$	622,210	$	650,494	$	191	$	(599,638	)	$	673,257

33

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2018
	NWHM		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	28,877	$	13,249	$	147	$	—		$	42,273
Restricted cash	—		269		—		—			269
Contracts and accounts receivable	7		18,926		—		(668		)	18,265
Intercompany receivables	192,341		—		—		(192,341		)	—
Due from affiliates	—		1,218		—		—			1,218
Real estate inventories	—		566,290		—		—			566,290
Investment in and advances to unconsolidated joint ventures	—		34,330		—		—			34,330
Investment in subsidiaries	396,466		—		—		(396,466		)	—
Other assets	18,643		14,812		—		(3		)	33,452
Total assets	$	636,334	$	649,094	$	147	$	(589,478	)	$	696,097
Liabilities and equity
Accounts payable	$	240	$	39,151	$	—	$	—		$	39,391
Accrued expenses and other liabilities	8,492		21,129		71		(664		)	29,028
Intercompany payables	—		192,341		—		(192,341		)	—
Due to affiliates	—		7		—		(7		)	—
Unsecured revolving credit facility	67,500		—		—		—			67,500
Senior notes, net	320,148		—		—		—			320,148
Total liabilities	396,380		252,628		71		(193,012		)	456,067
Stockholders' equity	239,954		396,466		—		(396,466		)	239,954
Non-controlling interest in subsidiary	—		—		76		—			76
Total equity	239,954		396,466		$	76	(396,466		)	240,030
Total liabilities and equity	$	636,334	$	649,094	$	147	$	(589,478	)	$	696,097

34

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Three Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	140,464		$	—		$	—		$	140,464
Fee building	—			22,285			—			—			22,285
	—			162,749			—			—			162,749
Cost of Sales:
Home sales	—			123,582			(57		)	—			123,525
Fee building	—			21,770			—			—			21,770
	—			145,352			(57		)	—			145,295
Gross Margin:
Home sales	—			16,882			57			—			16,939
Fee building	—			515			—			—			515
	—			17,397			57			—			17,454
Selling and marketing expenses	—			(9,683		)	—			—			(9,683		)
General and administrative expenses	617			(6,458		)	—			—			(5,841		)
Equity in net income of unconsolidated joint ventures	—			185			—			—			185
Equity in net income of subsidiaries	1,087			—			—			(1,087		)	—
Gain on early extinguishment of debt	552			—			—			—			552
Other income (expense), net	(106		)	4			—			—			(102		)
Pretax income	2,150			1,445			57			(1,087		)	2,565
Provision for income taxes	(578		)	(396		)	—			—			(974		)
Net income	1,572			1,049			57			(1,087		)	1,591
Net income attributable to non-controlling interest in subsidiary	—			—			(19		)	—			(19		)
Net income attributable to The New Home Company Inc.	$	1,572		$	1,049		$	38		$	(1,087	)	$	1,572

35

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	117,460		$	—		$	—	$	117,460
Fee building	—			38,095			—			—		38,095
	—			155,555			—			—		155,555
Cost of Sales:
Home sales	—			102,680			(2		)	—		102,678
Fee building	—			37,038			—			—		37,038
	—			139,718			(2		)	—		139,716
Gross Margin:
Home sales	—			14,780			2			—		14,782
Fee building	—			1,057			—			—		1,057
	—			15,837			2			—		15,839
Selling and marketing expenses	—			(9,466		)	—			—		(9,466		)
General and administrative expenses	305			(6,281		)	(3		)	—		(5,979		)
Equity in net loss of unconsolidated joint ventures	—			(120		)	—			—		(120		)
Equity in net loss of subsidiaries	(58		)	—			—			58		—
Other income (expense), net	(35		)	(57		)	—			—		(92		)
Pretax income (loss)	212			(87		)	(1		)	58		182
(Provision) benefit for income taxes	(97		)	30			—			—		(67		)
Net income (loss)	115			(57		)	(1		)	58		115
Net loss attributable to non-controlling interest in subsidiary	—			—			—			—		—
Net income (loss) attributable to The New Home Company Inc.	$	115		$	(57	)	$	(1	)	$	58	$	115

36

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Six Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	239,650		$	—		$	—	$	239,650
Fee building	—			41,947			—			—		41,947
	—			281,597			—			—		281,597
Cost of Sales:
Home sales	—			210,151			(57		)	—		210,094
Fee building	—			41,038			—			—		41,038
	—			251,189			(57		)	—		251,132
Gross Margin:
Home sales	—			29,499			57			—		29,556
Fee building	—			909			—			—		909
	—			30,408			57			—		30,465
Selling and marketing expenses	—			(18,362		)	—			—		(18,362		)
General and administrative expenses	51			(13,283		)	—			—		(13,232		)
Equity in net income of unconsolidated joint ventures	—			369			—			—		369
Equity in net loss of subsidiaries	(625		)	—			—			625		—
Gain on early extinguishment of debt	969			—			—			—		969
Other income (expense), net	(168		)	(127		)	—			—		(295		)
Pretax income (loss)	227			(995		)	57			625		(86		)
(Provision) benefit for income taxes	(642		)	332			—			—		(310		)
Net income (loss)	(415		)	(663		)	57			625		(396		)
Net income attributable to non-controlling interest in subsidiary	—			—			(19		)	—		(19		)
Net income (loss) attributable to The New Home Company Inc.	$	(415	)	$	(663	)	$	38		$	625	$	(415	)

37

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Six Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	196,897		$	—		$	—	$	196,897
Fee building	—			81,889			—			—		81,889
	—			278,786			—			—		278,786
Cost of Sales:
Home sales	—			172,350			22			—		172,372
Fee building	—			79,737			—			—		79,737
	—			252,087			22			—		252,109
Gross Margin:
Home sales	—			24,547			(22		)	—		24,525
Fee building	—			2,152			—			—		2,152
	—			26,699			(22		)	—		26,677
Selling and marketing expenses	—			(16,105		)	—			—		(16,105		)
General and administrative expenses	(801		)	(11,194		)	(3		)	—		(11,998		)
Equity in net income of unconsolidated joint ventures	—			215			—			—		215
Equity in net loss of subsidiaries	(176		)	—			—			176		—
Other income (expense), net	76			(194		)	—			—		(118		)
Pretax loss	(901		)	(579		)	(25		)	176		(1,329		)
Benefit for income taxes	376			417			—			—		793
Net loss	(525		)	(162		)	(25		)	176		(536		)
Net loss attributable to non-controlling interest in subsidiary	—			—			11			—		11
Net loss attributable to The New Home Company Inc.	$	(525	)	$	(162	)	$	(14	)	$	176	$	(525	)

38

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Net cash (used in) provided by operating activities	$	(36,110	)	$	54,970		$	32	$	—		$	18,892
Investing activities:
Purchases of property and equipment	(1		)	(7		)	—		—			(8		)
Contributions and advances to unconsolidated joint ventures	—			(4,120		)	—		—			(4,120		)
Contributions to subsidiaries from corporate	(66,575		)	—			—		66,575			—
Distributions of capital from subsidiaries	91,700			—			—		(91,700		)	—
Distributions of capital and repayment of advances from unconsolidated joint ventures	—			4,928			—		—			4,928
Net cash provided by investing activities	$	25,124		$	801		$	—	$	(25,125	)	$	800
Financing activities:
Borrowings from credit facility	40,000			—			—		—			40,000
Repayments of credit facility	(41,500		)	—			—		—			(41,500		)
Repurchase of senior notes	(10,856		)	—			—		—			(10,856		)
Contributions to subsidiaries from corporate	—			66,575			—		(66,575		)	—
Distributions to corporate from subsidiaries	—			(91,700		)	—		91,700			—
Repurchases of common stock	(1,042		)	—			—		—			(1,042		)
Tax withholding paid on behalf of employees for stock awards	(488		)	—			—		—			(488		)
Net cash used in financing activities	$	(13,886	)	$	(25,125	)	$	—	$	25,125		$	(13,886	)
Net (decrease) increase in cash, cash equivalents and restricted cash	(24,872		)	30,646			32		—			5,806
Cash, cash equivalents and restricted cash – beginning of period	28,877			13,518			147		—			42,542
Cash, cash equivalents and restricted cash – end of period	$	4,005		$	44,164		$	179	$	—		$	48,348

39

THE NEW HOME COMPANY INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Six Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Net cash used in operating activities	$	(39,156	)	$	(22,349	)	$	(5	)	$	—		$	(61,510	)
Investing activities:
Purchases of property and equipment	(22		)	(162		)	—			—			(184		)
Contributions and advances to unconsolidated joint ventures	—			(8,954		)	—			—			(8,954		)
Contributions to subsidiaries from corporate	(103,885		)	—			—			103,885			—
Distributions of capital from subsidiaries	49,975			—			—			(49,975		)	—
Distributions of capital and repayment of advances from unconsolidated joint ventures	—			5,874			—			—			5,874
Interest collected on advances to unconsolidated joint ventures	—			178			—			—			178
Net cash used in investing activities	$	(53,932	)	$	(3,064	)	$	—		$	53,910		$	(3,086	)
Financing activities:
Borrowings from credit facility	35,000			—			—			—			35,000
Contributions to subsidiaries from corporate	—			103,885			—			(103,885		)	—
Distributions to corporate from subsidiaries	—			(49,975		)	—			49,975			—
Repurchases of common stock	(2,072		)	—			—			—			(2,072		)
Tax withholding paid on behalf of employees for stock awards	(977		)	—			—			—			(977		)
Net cash provided by financing activities	$	31,951		$	53,910		$	—		$	(53,910	)	$	31,951
Net (decrease) increase in cash, cash equivalents and restricted cash	(61,137		)	28,497			(5		)	—			(32,645		)
Cash, cash equivalents and restricted cash – beginning of period	99,586			24,196			188			—			123,970
Cash, cash equivalents and restricted cash – end of period	$	38,449		$	52,693		$	183		$	—		$	91,325

40

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements contained in this quarterly report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. These forward-looking statements are frequently accompanied by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "goal," "plan," "could," "can," "might," "should," and similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in Part I, Item 1A, "Risk Factors" and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K for the year ended December 31, 2018 and Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 1A "Risk Factors" of this quarterly report on 10-Q. The following factors, among others, may cause our actual results, performance or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements:

• Risks related to our business, including among other things:

◦ our geographic concentration primarily in California;

◦ the cyclical nature of the homebuilding industry which is affected by general economic real estate and other business conditions;

◦ availability of land to acquire and our ability to acquire such land on favorable terms or at all;

◦ shortages of or increased prices for labor, land or raw materials used in housing construction;

◦ availability and skill of subcontractors at reasonable rates;

◦ employment-related liabilities with respect to our contractors' employees;

◦ the illiquid nature of real estate investments;

◦ the degree and nature of our competition;

◦ delays in the development of communities;

◦ increases in our cancellation rate;

◦ a large proportion of our fee building revenue being dependent upon one customer;

◦ construction defect product liability, warranty, and personal injury claims, including the cost and availability of insurance;

◦ increased costs, delays in land development or home construction and reduced consumer demand resulting from adverse weather conditions or other events outside our control;

◦ increased cost and reduced consumer demand resulting from power, water and other natural resource shortages or price increases;

◦ because of the seasonal nature of our business, our quarterly operating results fluctuate;

◦ we may be unable to obtain suitable bonding for the development of our housing projects;

◦ inflation could adversely affect our business and financial results;

◦ a major health and safety incident relating to our business could be costly in terms of potential liabilities and reputational damage;

◦ negative publicity or poor relations with the residents of our communities could negatively impact sales, which could cause our revenues or results of operations to decline;

◦ information systems interruption or breach in security;

◦ inefficient or ineffective allocation of capital could adversely affect or operations and/or stockholder value if expected benefits are not realized;

◦ our ability to execute our business strategies is uncertain;

◦ a reduction in our sales absorption levels may force us to incur and absorb additional community-level costs;

◦ future terrorist attacks against the United States or increased domestic or international instability could have an adverse effect on our operations;

41

• Risks related to laws and regulations, including among other things:

◦ mortgage financing, as well as our customer’s ability to obtain such financing, interest rate increases or changes in federal lending programs;

◦ changes in tax laws can increase the after-tax cost of owning a home, and further tax law changes or government fees could adversely affect demand for the homes we build, increase our costs, or negatively affect our operating results;

◦ new and existing laws and regulations, including environmental laws and regulations, or other governmental actions may increase our expenses, limit the number of homes that we can build or delay the completion of our projects;

◦ legislation relating to energy and climate change could increase our costs to construct homes;

• Risks related to financing and indebtedness, including among other things:

◦ difficulty in obtaining sufficient capital could prevent us from acquiring land for our developments or increase costs and delays in the completion of our development projects;

◦ our level of indebtedness may adversely affect our financial position and prevent us from fulfilling our debt obligations, and we may incur additional debt in the future;

◦ the significant amount and illiquid nature of our joint venture partnerships, in which we have less than a controlling interest;

◦ our current financing arrangements contain and our future financing arrangements will likely contain restrictive covenants related to our operations;

◦ a breach of the covenants under the Indenture or any of the other agreements governing our indebtedness could result in an event of default under the Indenture or other such agreements;

◦ potential future downgrades of our credit ratings could adversely affect our access to capital and could otherwise have a material adverse effect on us;

◦ interest expense on debt we incur may limit our cash available to fund our growth strategies;

◦ we may be unable to repurchase the Notes upon a change of control as required by the Indenture;

• Risks related to our organization and structure, including among other things:

◦ our dependence on our key personnel;

◦ the potential costly impact termination of employment agreements with members of our management that may prevent a change in control of the Company;

◦ our charter and bylaws could prevent a third party from acquiring us or limit the price that investors might be willing to pay for shares of our common stock;

◦ the obligations associated with being a public company require significant resources and management attention;

◦ that we are eligible to take advantage of reduced disclosure and governance requirements because of our status as an emerging growth company and smaller reporting company;

• Risks related to ownership of our common stock, including among other things:

◦ the price of our common stock is subject to volatility and our trading volume is relatively low;

◦ if securities or industry analysts do not publish, or cease publishing, research or reports about us, our business or our market, or if they change their recommendations regarding our common stock adversely, our stock price and trading volume could decline;

◦ we do not intend to pay dividends on our common stock for the foreseeable future;

◦ certain stockholders have rights to cause our Company to undertake securities offerings;

◦ our senior notes rank senior to our common stock upon bankruptcy or liquidation;

◦ certain large stockholders own a significant percentage of our shares and exert significant influence over us;

◦ there is no assurance that the existence of a stock repurchase plan will enhance shareholder value;

◦ non-U.S. holders of our common stock may be subject to United States income tax on gain realized on the sale of disposition of such shares.

Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this quarterly report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

The forward-looking statements in this quarterly report on Form 10-Q speak only as of the date of this quarterly report on Form 10-Q, and we undertake no obligation to revise or publicly release any revision to these forward-looking statements,

42

except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

Non-GAAP Measures

This quarterly report on Form 10-Q includes certain non-GAAP measures, including Adjusted EBITDA, Adjusted EBITDA margin percentage, ratio of Adjusted EBITDA to total interest incurred, net debt, ratio of net debt-to-capital, general and administrative costs excluding severance charges, general and administrative costs excluding severance charges as a percentage of home sales revenue, selling, marketing and general and administrative costs excluding severance charges, selling, marketing and general and administrative costs excluding severance charges as a percentage of home sales revenue, adjusted homebuilding gross margin (or homebuilding gross margin before interest in cost of home sales) and adjusted homebuilding gross margin percentage.  For a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin percentage, and the ratio of Adjusted EBITDA to total interest incurred to the comparable GAAP measures please see "-- Selected Financial Information." For a reconciliation of net debt and ratio of net debt-to-capital to the comparable GAAP measures, please see "-- Liquidity and Capital Resources - Debt-to-Capital Ratios." For a reconciliation of general and administrative costs excluding severance charges, general and administrative expenses excluding severance charges as a percentage of homes sales revenue, selling, marketing and general and administrative expenses excluding severance charges and selling, marketing and general and administrative expenses excluding severance charges as a percentage of home sales revenue, please see "-- Results of Operations - Selling, General and Administrative Expenses." For a reconciliation of adjusted homebuilding gross margin (or homebuilding gross margin before interest in cost of home sales) and adjusted homebuilding gross margin percentage to the comparable GAAP measures please see "-- Results of Operations - Homebuilding Gross Margin."

43

Selected Financial Information

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Revenues:
Home sales	$	140,464		$	117,460		$	239,650		$	196,897
Fee building, including management fees from unconsolidated joint ventures of $619, $672, $1,162 and $1,652, respectively	22,285			38,095			41,947			81,889
	162,749			155,555			281,597			278,786
Cost of Sales:
Home sales	123,525			102,678			210,094			172,372
Fee building	21,770			37,038			41,038			79,737
	145,295			139,716			251,132			252,109
Gross Margin:
Home sales	16,939			14,782			29,556			24,525
Fee building	515			1,057			909			2,152
	17,454			15,839			30,465			26,677
Home sales gross margin	12.1		%	12.6		%	12.3		%	12.5		%
Fee building gross margin	2.3		%	2.8		%	2.2		%	2.6		%
Selling and marketing expenses	(9,683		)	(9,466		)	(18,362		)	(16,105		)
General and administrative expenses	(5,841		)	(5,979		)	(13,232		)	(11,998		)
Equity in net income (loss) of unconsolidated joint ventures	185			(120		)	369			215
Gain on early extinguishment of debt	552			—			969			—
Other income (expense), net	(102		)	(92		)	(295		)	(118		)
Pretax income (loss)	2,565			182			(86		)	(1,329		)
(Provision) benefit for income taxes	(974		)	(67		)	(310		)	793
Net income (loss)	1,591			115			(396		)	(536		)
Net (income) loss attributable to non-controlling interest	(19		)	—			(19		)	11
Net income (loss) attributable to The New Home Company Inc.	$	1,572		$	115		$	(415	)	$	(525	)
Interest incurred	$	7,606		$	6,612		$	15,367		$	13,328
Adjusted EBITDA(1)	$	11,119		$	6,564		$	18,025		$	10,127
Adjusted EBITDA margin percentage(1)	6.8		%	4.2		%	6.4		%	3.6		%
							LTM(2) Ended June 30,
							2019			2018
Interest incurred							$	30,416		$	26,869
Adjusted EBITDA(1)							$	47,796		$	49,007
Adjusted EBITDA margin percentage (1)							7.1		%	6.4		%
Ratio of Adjusted EBITDA to total interest incurred (1)							1.6x			1.8x

44

(1) Adjusted EBITDA, Adjusted EBITDA margin percentage and ratio of Adjusted EBITDA to total interest incurred are non-GAAP measures. Adjusted EBITDA margin percentage is calculated as a percentage of total revenue. Management believes that Adjusted EBITDA, which is a non-GAAP measure, assists investors in understanding and comparing the operating characteristics of homebuilding activities by eliminating many of the differences in companies' respective capitalization, interest costs, tax position, inventory impairments and other non-recurring items. Due to the significance of the GAAP components excluded, Adjusted EBITDA should not be considered in isolation or as an alternative to net income (loss), cash flows from operations or any other performance measure prescribed by GAAP. The table below reconciles net income (loss), calculated and presented in accordance with GAAP, to Adjusted EBITDA.

	Three Months Ended June 30,						Six Months Ended June 30,						LTM(2) Ended June 30,
	2019			2018			2019			2018			2019			2018
	(Dollars in thousands)
Net income (loss)	$	1,591		$	115		$	(396	)	$	(536	)	$	(14,090	)	$	14,252
Add:
Interest amortized to cost of sales and equity in net income (loss) of unconsolidated joint ventures	6,349			3,768			11,232			6,563			24,577			14,349
Provision (benefit) for income taxes	974			67			310			(793		)	(4,972		)	13,085
Depreciation and amortization	2,386			1,624			5,042			2,646			9,027			2,859
Amortization of stock-based compensation	523			862			1,089			1,704			2,475			3,201
Cash distributions of income from unconsolidated joint ventures	19			—			279			715			279			715
Severance charges	—			—			1,788			—			1,788			—
Noncash inventory impairments and abandonments	14			8			19			43			10,182			1,120
Less:
Gain on early extinguishment of debt	(552		)	—			(969		)	—			(969		)	—
Equity in net (income) loss of unconsolidated joint ventures	(185		)	120			(369		)	(215		)	19,499			(574		)
Adjusted EBITDA	$	11,119		$	6,564		$	18,025		$	10,127		$	47,796		$	49,007
Total Revenue	$	162,749		$	155,555		$	281,597		$	278,786		$	670,377		$	760,819
Adjusted EBITDA margin percentage	6.8		%	4.2		%	6.4		%	3.6		%	7.1		%	6.4		%
Interest incurred	$	7,606		$	6,612		$	15,367		$	13,328		$	30,416		$	26,869
Ratio of Adjusted LTM(2) EBITDA to total interest incurred													1.6		x	1.8		x

(2) "LTM" indicates amounts for the trailing 12 months.

45

Overview

During the 2019 second quarter, the Company enjoyed both top and bottom-line growth and made significant progress towards reducing our leverage and strengthening our balance sheet. Home sales revenue increased 20% year-over-year from 56% more home deliveries, and our pretax income was up meaningfully over the prior year at $2.6 million versus $0.2 million. In addition, we repurchased $7.0 million of senior notes during the quarter, which when combined with a net $18.0 million pay down of our revolving credit facility, contributed to a 240 basis point sequential decrease in our net debt-to-capital ratio to 57.7%*.

We experienced solid sequential improvement in our sales absorption pace across all markets, with the 2019 second quarter monthly absorption rate up 41% over the 2019 first quarter at 2.4 sales per community, resulting in a 38% sequential increase in net new orders. We also continued to recognize benefits from our strategic repositioning to more affordable product as sales from these communities represented a higher proportion of our 2019 second quarter net new orders and an absorption pace higher than the companywide average.

Net income attributable to the Company for the 2019 second quarter was $1.6 million, or $0.08 per diluted share, compared to $0.1 million, or $0.01 per diluted share, in the prior year period. The year-over-year increase in net income was primarily attributable to a 20% increase in homebuilding revenue, a 200 basis point improvement in our SG&A rate, a $0.3 million increase in joint venture income, and a $0.6 million gain on early extinguishment of debt. These items were partially offset by a 50 basis point decline in home sales gross margins and a lower fee building gross margin due to lower fee construction activity.

We continue to take steps to lower our cost structure, strengthen our balance sheet, pursue opportunities to reduce our leverage and thoughtfully allocate resources to best position the Company for long-term success. The Company ended the quarter with $48.2 million in cash and cash equivalents and $375.1 million in debt, of which $66.0 million was outstanding under its revolving credit facility. As of June 30, 2019 the Company's debt-to-capital ratio was 61.1% and its net debt-to-capital ratio was 57.7%*, a 240 basis point sequential improvement from the 2019 first quarter.

*Net debt-to-capital ratio is a non-GAAP measure. For a reconciliation of net debt-to-capital to the appropriate GAAP measure, please see "-- Liquidity and Capital Resources - Debt-to-Capital Ratios."

46

Results of Operations

Net New Home Orders

	Three Months Ended   June 30,				Increase/(Decrease)				Six Months Ended   June 30,				Increase/(Decrease)
	2019		2018		Amount		%		2019		2018		Amount		%
Net new home orders:
Southern California	90		104		(14	)	(13	)%	148		173		(25	)	(14	)%
Northern California	53		77		(24	)	(31	)%	98		147		(49	)	(33	)%
Arizona	11		13		(2	)	(15	)%	20		15		5		33	%
Total net new home orders	154		194		(40	)	(21	)%	266		335		(69	)	(21	)%
Selling communities at end of period:
Southern California									11		11		—		—	%
Northern California									7		7		—		—	%
Arizona									2		2		—		—	%
Total selling communities									20		20		—		—	%
Monthly sales absorption rate per community: (1)
Southern California	2.5		3.1		(0.6	)	(19	)%	2.0		2.7		(0.7	)	(26	)%
Northern California	2.3		3.7		(1.4	)	(38	)%	2.2		3.6		(1.4	)	(39	)%
Arizona	1.8		2.2		(0.4	)	(18	)%	1.7		2.1		(0.4	)	(19	)%
Total monthly sales absorption rate per community (1)	2.4		3.2		(0.8	)	(25	)%	2.0		3.0		(1.0	)	(33	)%
Average selling communities:
Southern California	12		11		1		9	%	12		11		1		9	%
Northern California	8		7		1		14	%	8		7		1		14	%
Arizona	2		2		—		—	%	2		1		1		100	%
Total average selling communities	22		20		2		10	%	22		19		3		16	%
Cancellation rate	11	%	6	%	5	%	NA		12	%	6	%	6	%	NA

(1) Monthly sales absorption represents the number of net new home orders divided by the number of average selling communities for the period.

Net new home orders for the 2019 second quarter decreased 21% primarily as the result of a 25% decline in the monthly sales absorption rate. The decrease in monthly absorption rates was due to weaker buyer demand compared to the prior year, however, the 2019 second quarter monthly sales absorption pace improved 41% sequentially over the 2019 first quarter. A 10% year-over-year increase in average selling communities partially offset the slower sales pace in the 2019 second quarter, however, community closeouts late in the 2019 second quarter resulted in an ending community count of 20, flat with the prior year.

Demand for the 2019 second quarter was strongest in Southern California with a monthly absorption rate of 2.5 driven by stronger order activity at more affordably priced communities, including a high number of initial sales at a new community of attached court homes located within the Inland Empire. Overall, the Southern California market has experienced a slowdown compared to the prior year due to a run up in home prices and a decrease in demand from foreign national buyers, which contributed to our 19% year-over-year decrease in monthly sales pace in this market. Additionally, the Company's Southern California monthly absorption rate benefited during the 2018 second quarter from two newly-opened communities that experienced solid initial order activity. Northern California experienced a 38% decline in its monthly sales absorption rate for the 2019 second quarter primarily related to slower demand at our Bay Area communities due to buyer affordability constraints and because sale pace was strongest in this region in the 2018 second quarter.

47

Net new home orders for the six months ended June 30, 2019 decreased 21% as compared to the same period in 2018 primarily as a result of a 33% decline in the monthly sales absorption rate due to weaker buyer demand. A 16% increase in average selling communities partially offset the slower sales pace for the for the six months ended June 30, 2019.

During the six months ended June 30, 2019, monthly sales absorption was strongest in Northern California at 2.2 monthly sales per community, driven by strong order activity at three affordably-priced communities located within masterplan developments. However, the 39% decrease in Northern California's monthly absorption rate for the six months ended June 30, 2019 from the same period in 2018 was the largest of the divisions due to lack of affordability and strong sales experienced in the first half of 2018 from two Bay Area townhome communities, one of which sold out during the prior year period. The decrease in Southern California year-to-date absorption rates during the first half of 2019 compared to 2018 was attributable to the overall run up in home prices and a slowdown in demand from foreign national buyers in the market, and the high initial orders in the prior year from two communities that opened during the first half of 2018, as noted above.

Also impacting the decline in net new orders was the increase in the Company's cancellation rate for the 2019 second quarter to 11% from 6% for the 2018 second quarter. The cancellation rate for the six months ended June 30, 2019 was also up to 12% from 6% in the comparable prior year period. Our cancellation rate has increased moderately with our transition to more affordably-priced product where buyers are often times more credit challenged than a luxury or move-up buyer. Of the communities that opened during the last twelve months ended June 30, 2019, five offer base pricing of $600,000 or less.

Backlog

	As of June 30,
	2019					2018					% Change
	Homes	Dollar Value		Average Price		Homes	Dollar Value		Average Price		Homes		Dollar Value		Average Price
	(Dollars in thousands)
Southern California	86	$	92,438	$	1,075	139	$	141,718	$	1,020	(38	)%	(35	)%	5	%
Northern California	85	71,648		843		153	131,859		862		(44	)%	(46	)%	(2	)%
Arizona	36	37,503		1,042		15	17,354		1,157		140	%	116	%	(10	)%
Total	207	$	201,589	$	974	307	$	290,931	$	948	(33	)%	(31	)%	3	%

Backlog reflects the number of homes, net of cancellations, for which we have entered into sales contracts with customers, but for which we have not yet delivered the homes. The number of homes in backlog as of June 30, 2019 was down 33% as compared to the prior year period due to a higher backlog conversion rate of 74% for the 2019 second quarter compared to 46% for the 2018 second quarter and a 21% decrease in net orders resulting from a slower sales pace due to weaker year-over-year demand. The increase in conversion rate resulted from the Company's move to more affordably priced product which generally has quicker build cycles, as well as the Company's success in selling and delivering a higher level of spec homes that accompany these communities. The dollar value of backlog at the end of the 2019 second quarter was down 31% year-over-year to $201.6 million due to the lower number of backlog units, slightly offset by a 3% higher average selling price of the homes in backlog.

The year-over-year decrease in backlog units and value was greatest in Northern California where the decrease in net new orders from the 2019 and 2018 second quarters was also the largest of the divisions. The number of backlog units declined due to a lower number of homes in beginning backlog and a reduction in net new orders. Backlog value in Northern California decreased due to the lower number of homes in backlog, coupled with fewer homes in backlog with average selling prices over $1.0 million. Southern California ending backlog units at June 30, 2019 decreased primarily due to the 2019 second quarter backlog conversation rate of 105% compared to 64% in the 2018 second quarter due to the number of spec homes sold and delivered during the quarter, and to a lesser extent, a decrease in net new orders. The mix of homes in backlog in Southern California at June 30, 2019 shifted from the prior year and resulted in a 5% increase in the backlog average selling price driven largely by homes at a luxury community in south Orange County that opened in the third quarter of 2018 where the average price of homes in backlog exceeds $2.0 million. Our Arizona operations became a larger component of the Company's ending backlog for the 2019 second quarter with increased orders primarily from our successful Belmont community in Gilbert, Arizona that opened in the 2018 second quarter and commenced deliveries in the 2019 first quarter.

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Lots Owned and Controlled

	As of June 30,		Increase/(Decrease)
	2019	2018	Amount		%
Lots Owned:
Southern California	581	505	76		15	%
Northern California	729	314	415		132	%
Arizona	294	299	(5	)	(2	)%
Total	1,604	1,118	486		43	%
Lots Controlled:(1)
Southern California	200	807	(607	)	(75	)%
Northern California	503	959	(456	)	(48	)%
Arizona	477	343	134		39	%
Total	1,180	2,109	(929	)	(44	)%
Total Lots Owned and Controlled - Wholly Owned	2,784	3,227	(443	)	(14	)%
Fee Building(2)	1,231	1,078	153		14	%
Total Lots Owned and Controlled	4,015	4,305	(290	)	(7	)%

(1) Includes lots that we control under purchase and sale agreements or option agreements subject to customary conditions and have not yet closed. There can be no assurance that such acquisitions will occur.

(2) Lots owned by third party property owners for which we perform general contracting or construction management services.

The Company's wholly owned lots owned and controlled decreased 14% year-over-year to 2,784 lots, of which 42% of which were controlled through option contracts. The decrease in wholly owned lots owned and controlled was primarily due to an increase in deliveries during the last twelve months ended June 30, 2019 compared to the same period ending June 30, 2018 and a decrease of 400 lots controlled at June 30, 2018 that the Company did not pursue, partially offset by executed contracts for new developments across all markets in the same period.

The increase in fee building lots at June 30, 2019 as compared to the prior year period was primarily attributable to new contracts entered into during the last twelve months ended June 30, 2019, for 600 lots with our largest customer. These fee lot additions were partially offset by the delivery of 447 homes to customers in the same period.

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Home Sales Revenue and New Homes Delivered

	Three Months Ended June 30,
	2019					2018					% Change
	Homes	Dollar Value		Average Price		Homes	Dollar Value		Average Price		Homes		Dollar Value		Average Price
	(Dollars in thousands)
Southern California	91	$	95,534	$	1,050	61	$	87,278	$	1,431	49	%	9	%	(27	)%
Northern California	53	37,296		704		36	30,182		838		47	%	24	%	(16	)%
Arizona	7	7,634		1,091		—	—		NA		NA		NA		NA
Total	151	$	140,464	$	930	97	$	117,460	$	1,211	56	%	20	%	(23	)%
	Six Months Ended June 30,
	2019					2018					% Change
	Homes	Dollar Value		Average Price		Homes	Dollar Value		Average Price		Homes		Dollar Value		Average Price
	(Dollars in thousands)
Southern California	152	$	160,127	$	1,053	105	$	131,858	$	1,256	45	%	21	%	(16	)%
Northern California	81	56,035		692		76	65,039		856		7	%	(14	)%	(19	)%
Arizona	17	23,488		1,382		—	—		NA		NA		NA		NA
Total	250	$	239,650	$	959	181	$	196,897	$	1,088	38	%	22	%	(12	)%

New home deliveries increased 56% for the 2019 second quarter compared to the prior year period. The increase in deliveries was the result of a higher backlog conversion rate for the 2019 second quarter compared to the 2018 second quarter and was driven by our success at selling and delivering more speculative homes during the quarter. Home sales revenue for the three months ended June 30, 2019 increased 20% compared to the same period in 2018, primarily due to the increase in new home deliveries, partially offset by a 23% decrease in average sales price per delivery for the period.

The increase in homes sales revenue was led by Southern California with 49% more deliveries in the 2019 second quarter due to a higher backlog conversion rate compared to the 2018 second quarter, partially offset by a decrease in average selling price due to a mix shift. The 2018 second quarter included deliveries from several higher-priced, close-out communities in Orange County. In Northern California, 2019 second quarter homes sales revenue was up 24% from a 47% increase in homes delivered, which was partially offset by a 16% decline in average selling price. The increase in home deliveries was attributable to an increase in backlog conversion rate for the 2019 second quarter, while the decrease in average selling price was a result of product mix where more affordable product with base pricing below $600,000 comprised approximately 70% of 2019 second quarter deliveries compared to approximately 36% for the 2018 second quarter.

New home deliveries increased 38% for the six months ended June 30, 2019 compared to the prior year period due to a higher backlog conversion rate. Home sales revenue for the six months ended June 30, 2019 increased 22% compared to the same period in 2018, primarily due to the increase in new home deliveries, partially offset by a 12% decrease in average sales price per delivery for the period. Average selling price was down in Southern California due to the 2018 period including deliveries from several higher-priced, closed-out Orange County communities. Average selling price in Northern California declined due to the significant increase in deliveries from more affordable communities during the first half of 2019 as compared to the prior year period and fewer Bay Area deliveries, which generally are high-priced.

Homebuilding Gross Margin

Homebuilding gross margin for the 2019 second quarter was 12.1% versus 12.6% in the prior period. The 50 basis point decrease was primarily due higher interest costs resulting from slower sales absorption rate and higher incentives due to weaker buyer demand, all of which was partially offset by a product mix shift. Adjusted homebuilding gross margin, which excludes interest in cost of home sales, was 16.5% and 15.8% for the 2019 and 2018 second quarters, respectively. Adjusted homebuilding gross margin is a non-GAAP measure. See the table below reconciling this non-GAAP financial measure to homebuilding gross margin, the nearest GAAP equivalent. Excluding the impact of interest in cost of sales, the 70 basis point improvement was due to product mix shift, partially offset by higher incentives, largely in Southern California.

Homebuilding gross margin for the six months ended June 30, 2019 quarter was 12.3% versus 12.5% in the prior period. The 20 basis point decrease was primarily due to higher interest costs and incentives, which were partially offset by product

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mix shift. Adjusted homebuilding gross margin, which excludes interest in cost of home sales, was 17.0% and 15.8% for the six months ended June 30, 2019 and 2018, respectively. The 120 basis point improvement in adjusted homebuilding gross margin was primarily a result of higher interest costs from slower sales absorption rates and to a lesser extent, a product mix shift. Offsetting these items were higher incentives for the 2019 period.

	Three Months Ended June 30,								Six Months Ended June 30,
	2019		%		2018		%		2019		%		2018		%
	(Dollars in thousands)
Home sales revenue	$	140,464	100.0	%	$	117,460	100.0	%	$	239,650	100.0	%	$	196,897	100.0	%
Cost of home sales	123,525		87.9	%	102,678		87.4	%	210,094		87.7	%	172,372		87.5	%
Homebuilding gross margin	16,939		12.1	%	14,782		12.6	%	29,556		12.3	%	24,525		12.5	%
Add: Interest in cost of home sales	6,301		4.4	%	3,750		3.2	%	11,153		4.7	%	6,514		3.3	%
Adjusted homebuilding gross margin(1)	$	23,240	16.5	%	$	18,532	15.8	%	$	40,709	17.0	%	$	31,039	15.8	%

(1) Adjusted homebuilding gross margin (or homebuilding gross margin before interest in cost of home sales) is non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and our cost of debt capital has on homebuilding gross margin and permits investors to make better comparisons with our competitors who also break out and adjust gross margins in a similar fashion.

Fee Building

	Three Months Ended June 30,								Six Months Ended June 30,
	2019		%		2018		%		2019		%		2018		%
	(Dollars in thousands)
Fee building revenues	$	22,285	100.0	%	$	38,095	100.0	%	$	41,947	100.0	%	$	81,889	100.0	%
Cost of fee building	21,770		97.7	%	37,038		97.2	%	41,038		97.8	%	79,737		97.4	%
Fee building gross margin	$	515	2.3	%	$	1,057	2.8	%	$	909	2.2	%	$	2,152	2.6	%

Our fee building revenues include (i) billings to third-party land owners for general contracting services and (ii) management fees from our unconsolidated joint ventures and third-party land owners for construction and sales management services. Cost of fee building includes (i) labor, subcontractor, and other indirect construction and development costs that are reimbursable by the land owner and (ii) general and administrative, or G&A, expenses that are attributable to fee building activities and joint venture management overhead. Besides allocable G&A expenses, there are no other material costs associated with management fees from our unconsolidated joint ventures.

Billings to land owners for general contracting services are a function of construction activity and reimbursable costs are incurred generally once home construction begins. The total billings and reimbursable costs are driven by the pace at which the land owner executes its development plan. Management fees from our unconsolidated joint ventures are collected over the underlying project's life and as homes and lots are delivered. Construction management fees from third-party customers are collected over the life of the contract and sales management fees from third-party customers are collected as homes close escrow.

In the 2019 second quarter, fee building revenues decreased 42% from the prior year period, driven by a decrease in construction activity at fee building communities in Irvine, California due to lower demand levels in that market. Additionally, management fees from joint ventures and construction management fees from third parties, which are included in fee building revenue, decreased year-over-year by $0.3 million for the 2019 second quarter. Included in fee building revenues for the three months ended June 30, 2019 and 2018 were (i) $21.2 million and $36.7 million of billings to land owners, respectively, and (ii) $1.1 million and $1.4 million of management fees from our unconsolidated joint ventures and third-party land owners, respectively. Our fee building revenues have historically been concentrated with a small number of customers. For the three months ended June 30, 2019 and 2018, one customer comprised 95% and 95%, respectively, of fee building revenue.

The cost of fee building decreased in the 2019 second quarter compared to the prior year period due to the decrease in fee building activity mentioned above. The amount of G&A expenses included in the cost of fee building was $1.5 million and $1.8 million for the 2019 and 2018 second quarters, respectively. Fee building gross margin percentage decreased to 2.3% for

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the three months ended June 30, 2019 from 2.8% in the prior year period primarily due to the decrease in construction management fees from third parties, partially offset by lower allocated G&A costs.

For the six months ended June 30, 2019, fee building revenues decreased 49% from the prior year period, driven by the previously noted decrease in construction activity at fee building communities in Irvine, California. Included in fee building revenues for the six months ended June 30, 2019 and 2018 were (i) $39.6 million and $79.5 million of billings to land owners, respectively, and (ii) $2.3 million and $2.4 million of management fees from our unconsolidated joint ventures and third-party land owners, respectively. Our fee building revenues have historically been concentrated with a small number of customers. For the six months ended June 30, 2019 and 2018, one customer comprised 93% and 96%, respectively, of fee building revenue.

The cost of fee building decreased in the first half of 2019 compared to the same period in 2018 due to the decrease in fee building activity mentioned above. The amount of G&A expenses included in the cost of fee building was $3.0 million and $3.4 million for the six months ended June 30, 2019 and 2018, respectively. Fee building gross margin percentage decreased to 2.2% for the six months ended June 30, 2019 from 2.6% in the prior year period due to the decrease in fee billings to land owners and lower management fees from joint ventures, partially offset by an increase in construction management fees from third parties and lower allocated G&A costs.

Selling, General and Administrative Expenses

	Three Months Ended   June 30,				As a Percentage of Home Sales Revenue				Six Months Ended   June 30,					As a Percentage of Home Sales Revenue
	2019		2018		2019		2018		2019			2018		2019		2018
	(Dollars in thousands)
Selling and marketing expenses	$	9,683	$	9,466	6.9	%	8.0	%	$	18,362		$	16,105	7.7	%	8.2	%
General and administrative expenses ("G&A")	5,841		5,979		4.2	%	5.1	%	13,232			11,998		5.5	%	6.1	%
Total selling, marketing and G&A ("SG&A")	$	15,524	$	15,445	11.1	%	13.1	%	$	31,594		$	28,103	13.2	%	14.3	%
G&A	$	5,841	$	5,979	4.2	%	5.1	%	$	13,232		$	11,998	5.5	%	6.1	%
Less: Severance charges	—		—		—	%	—	%	(1,788		)	—		(0.8	)%	—	%
G&A, excluding severance charges	$	5,841	$	5,979	4.2	%	5.1	%	$	11,444		$	11,998	4.7	%	6.1	%
Selling and marketing expenses	$	9,683	$	9,466	6.9	%	8.0	%	$	18,362		$	16,105	7.7	%	8.2	%
G&A, excluding severance charges	5,841		5,979		4.2	%	5.1	%	11,444			11,998		4.7	%	6.1	%
SG&A, excluding severance charges	$	15,524	$	15,445	11.1	%	13.1	%	$	29,806		$	28,103	12.4	%	14.3	%

During the 2019 second quarter, our SG&A rate as a percentage of home sales revenue was 11.1% vs. 13.1% for the same period in 2018. The 200 basis point decrease was primarily due to improved leverage from higher home sales revenue, reduced marketing and advertising spend as compared to the 2018 second quarter and to a lesser extent, lower personnel expenses. These items were partially offset by higher amortization of capitalized selling and marketing costs related to the opening of certain higher-end model homes in late 2018.

During the six months ended June 30, 2019, our SG&A rate as a percentage of home sales revenue was 13.2%, down 110 basis points from the comparable prior year period. The 2019 period included $1.8 million in pretax severance charges taken in the 2019 first quarter related to right-sizing our operations by reducing headcount, including the departure of one of our executive officers. Excluding these charges, the Company's SG&A rate for the six months ended June 30, 2019 was 12.4% compared to 14.3% in the prior year period. The 190 basis point decrease was due to improved leverage from higher home sales revenue, a year-over-year reduction in marketing and advertising spend, and to a lesser extent, lower personnel expenses. Offsetting these items were higher amortization of capitalized selling and marketing costs discussed above. SG&A excluding severance charges as a percentage of home sales revenue is a non-GAAP measure. See the table above reconciling this non-GAAP financial measure to SG&A as a percentage of home sales revenue, the nearest GAAP equivalent.

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Equity in Net Income (Loss) of Unconsolidated Joint Ventures

As of June 30, 2019 and 2018, we had ownership interests in 10 unconsolidated joint ventures, of which six have active homebuilding or land development operations. We own interests in our unconsolidated joint ventures that generally range from 5% to 35% and these interests vary by entity.

The Company’s share of joint venture income for the 2019 second quarter was $0.2 million as compared to a $0.1 million loss for the 2018 period. For the six months ended June 30, 2019 and 2018, the Company's share of joint venture income was $0.4 million and $0.2 million, respectively. The year-over-year increase in joint venture income for the three and six months ended June 30, 2019 was primarily related to an increase in home deliveries and home sales revenue at our Mountain Shadows luxury community in Paradise Valley, AZ.

The following sets forth supplemental operational and financial information about our unconsolidated joint ventures. Such information is not included in our financial data for GAAP purposes, but is recognized in our results as a component of equity in net income (loss) of unconsolidated joint ventures. This data is included for informational purposes only.

	Three Months Ended   June 30,										Six Months Ended   June 30,
						Increase/(Decrease)									Increase/(Decrease)
	2019		2018			Amount			%		2019		2018		Amount			%
	(Dollars in thousands)
Unconsolidated Joint Ventures - Operational Data
Net new home orders	28		42			(14		)	(33	)%	64		78		(14		)	(18	)%
New homes delivered	53		36			17			47	%	90		68		22			32	%
Average sales price of homes delivered	$	954	$	832		$	122		15	%	$	985	$	900	$	85		9	%
Home sales revenue	$	50,567	$	29,938		$	20,629		69	%	$	88,694	$	61,178	$	27,516		45	%
Land sales revenue	8,511		3,941			4,570			116	%	12,671		4,714		7,957			169	%
Total revenues	$	59,078	$	33,879		$	25,199		74	%	$	101,365	$	65,892	$	35,473		54	%
Net income	$	1,790	$	(286	)	$	2,076		726	%	$	2,303	$	518	$	1,785		345	%
Selling communities at end of period											6		7		(1		)	(14	)%
Backlog (dollar value)											$	44,775	$	70,851	$	(26,076	)	(37	)%
Backlog (homes)											50		90		(40		)	(44	)%
Average sales price of backlog											$	896	$	787	$	109		14	%
Homebuilding lots owned and controlled											121		273		(152		)	(56	)%
Land development lots owned and controlled											1,924		2,305		(381		)	(17	)%
Total lots owned and controlled											2,045		2,578		(533		)	(21	)%

Gain on Early Extinguishment of Debt

During the 2019 second quarter, the Company repurchased and retired approximately $7.0 million in face value of its 7.25% Senior Notes due 2022. The Notes were purchased at 90.82% of face value, for a cash payment of $6.3 million. The Company recognized a $0.6 million gain on the early extinguishment of debt, and the unamortized discount, premium and debt issuance costs associated with the retired notes totaling approximately $90,000 were written off. Total repurchases of the Notes for the six months ended June 30, 2019 equaled approximately $12.0 million in face value at 90.58% of face value, for a cash payment of $10.9 million. The Company recognized a total gain on early extinguishment of debt of $1.0 million and wrote off approximately $160,000 of unamortized discount, premium and debt issuance costs associated with the Notes retired during the six months ended June 30, 2019.

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Provision/Benefit for Income Taxes

For the 2019 second quarter, the Company recorded a $1.0 million provision for income taxes compared to $0.1 million provision for the 2018 second quarter. For the six months ended June 30, 2019, the Company recorded an income tax provision of $0.3 million compared to an $0.8 million benefit for the prior year period. For the three months ended June 30, 2019 and 2018, the Company's effective tax rate was 38.0% and 36.8%, respectively, with the rate increase attributable to the impact of expected deduction limitations had on each period. The tax rates for the six month periods were impacted by discrete items. The Company recorded a $0.3 million discrete provision in the first six months of 2019 related to stock compensation and state tax rate changes while a $0.4 million discrete benefit was taken in the comparable 2018 period primarily related to energy credits.

Liquidity and Capital Resources

Overview

Our principal sources of capital for the six months ended June 30, 2019 were cash generated from home sales activities, borrowing from our credit facility, distributions from our unconsolidated joint ventures, and management fees from our fee building agreements. Our principal uses of capital for the six months ended June 30, 2019 were land purchases, land development, home construction, contributions and advances to our unconsolidated joint ventures, repurchases of the Company's common stock and bonds, paydowns on our credit facility, and payment of operating expenses, interest and routine liabilities.

Cash flows for each of our communities depend on their stage in the development cycle, and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, and construction of model homes, roads, utilities, general landscaping and other amenities. Because these costs are a component of our real estate inventories and not recognized in our consolidated statement of operations until a home is delivered, we incur significant cash outlays prior to our recognition of earnings. In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflows associated with home and land construction were previously incurred. From a liquidity standpoint, we are actively acquiring and developing lots to maintain or grow our lot supply and community count. As we expand our business, we expect cash outlays for land purchases, land development and home construction at times to exceed cash generated by operations. We are currently focused on reducing our debt levels and leverage and therefore expect to spend less on land purchases than we have over the last few years.

We ended the second quarter of 2019 with $48.2 million of cash and cash equivalents, a $6.0 million increase from December 31, 2018. Over the next few quarters we expect to generate cash from the sale of our inventory, including unsold and presold homes under construction as well as land sales. After reducing our debt and leverage levels within our target range, we intend to deploy a portion of cash generated from the sale of inventory to acquire and develop strategic, well-positioned lots that represent opportunities to generate future income and cash flows by allocating capital to best position the Company for long-term success.

As of June 30, 2019 and December 31, 2018, we had $5.6 million and $8.5 million, respectively, in accounts payable that related to costs incurred under our fee building agreements. Funding to pay these amounts is the obligation of the third-party land owner, which is generally funded on a monthly basis. Similarly, contracts and accounts receivable and due from affiliates as of the same dates included $6.3 million and $8.8 million, respectively, related to the payment of the above payables.

We intend to utilize both debt and equity as part of our ongoing financing strategy, coupled with redeployment of cash flows from continuing operations, to operate our business. As of June 30, 2019, we had outstanding borrowings of $313.0 million in aggregate principal related to our Senior Notes due 2022 and $66.0 million related to our revolving credit facility. We will consider a number of factors when evaluating our level of indebtedness and when making decisions regarding the incurrence of new indebtedness, including the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the ability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service. In addition, our debt contains certain financial covenants that limit the amount of leverage we can maintain.

We intend to finance future acquisitions and developments with what we believe to be the most advantageous source of capital available to us at the time of the transaction, which may include unsecured corporate level debt, property-level debt, and other public, private or bank debt, seller land banking arrangements, or common and preferred equity.

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Senior Notes Due 2022

On March 17, 2017, the Company completed the sale of $250 million in aggregate principal amount of 7.25% Senior Unsecured Notes due 2022 (the "Existing Notes"), in a private placement. The Notes were issued at an offering price of 98.961% of their face amount, which represented a yield to maturity of 7.50%. On May 4, 2017, the Company completed a tack-on private placement offering through the sale of an additional $75 million in aggregate principal amount of the 7.25% Senior Notes due 2022 ("Additional Notes"). The Additional Notes were issued at an offering price of 102.75% of their face amount plus accrued interest since March 17, 2017, which represented a yield to maturity of 6.438%. Net proceeds from the Existing Notes were used to repay all borrowings outstanding under the Company’s revolving credit facility with the remainder used for general corporate purposes. Net proceeds from the Additional Notes were used for working capital, land acquisition and general corporate purposes. Interest on the Existing Notes and the Additional Notes (together, the "Notes") is payable semiannually in arrears on April 1 and October 1. The maturity date of the Notes is April 1, 2022. The Notes were exchanged in an exchange offer for Notes that are identical to the original Notes, except that they are registered under the Securities Act of 1933 and are freely tradeable in accordance with applicable law. During the first half of 2019, the Company repurchased approximately $12.0 million of the Notes at 90.58% of face value reducing the outstanding aggregate principal amount to $313.0 million.

The Notes contain certain restrictive covenants, including a limitation on additional indebtedness and a limitation on restricted payments. Restricted payments include, among other things, dividends, investments in unconsolidated entities, and stock repurchases. Under the limitation on additional indebtedness, we are permitted to incur specified categories of indebtedness but are prohibited, aside from those exceptions, from incurring further indebtedness if we do not satisfy either a leverage condition or an interest coverage condition. The leverage and interest coverage conditions are summarized in the table below, as described and defined further in the indenture for the Notes. Exceptions to the additional indebtedness limitation include, among other things, borrowings of up to $260 million under existing or future bank credit facilities, non-recourse indebtedness, and indebtedness incurred for the purpose of refinancing or repaying certain existing indebtedness. Under the limitation on restricted payments, we are also prohibited from making restricted payments, aside from certain exceptions, if we do not satisfy either condition. In addition, the amount of restricted payments that we can make is subject to an overall basket limitation, which builds based on, among other things, 50% of consolidated net income from January 1, 2017 forward and 100% of the net cash proceeds from qualified equity offerings. Exceptions to the foregoing limitations on our ability to make restricted payments include, among other things, investments in joint ventures and other investments up to 15% of our consolidated tangible net assets and a general basket of $15 million. The Notes are guaranteed by all of the Company's 100% owned subsidiaries, for more information about these guarantees, please see Note 17 of the notes to our condensed consolidated financial statements.

	June 30, 2019
Financial Conditions	Actual	Requirement
Fixed Charge Coverage Ratio: EBITDA to Consolidated Interest Incurred; or	1.6	> 2.0 : 1.0
Leverage Ratio: Indebtedness to Tangible Net Worth	1.57	< 2.25 : 1.0

As of June 30, 2019, we were able to satisfy the leverage condition.

Senior Unsecured Revolving Credit Facility

The Company's senior unsecured revolving credit facility ("Credit Facility") is with a bank group and matures on September 1, 2020. Total commitments under the Credit Facility are $200 million with an accordion feature that allows the facility size thereunder to be increased up to an aggregate of $300 million, subject to certain conditions, including the availability of bank commitments.

As of June 30, 2019, we had $66.0 million of outstanding borrowings under the Credit Facility. Interest is payable monthly and is charged at a rate of 1-month LIBOR plus a margin ranging from 2.25% to 3.00% depending on the Company’s leverage ratio as calculated at the end of each fiscal quarter. As of June 30, 2019, the interest rate under the Credit Facility was 5.40%. Pursuant to the Credit Facility, the Company is required to maintain certain financial covenants as defined in the Credit Facility, including, but not limited to, those listed in the following table.

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	June 30, 2019
Financial Covenants	Actual		Covenant Requirement
	(Dollars in thousands)
Unencumbered Liquid Assets (Minimum Liquidity Covenant)	$	48,224	$	10,000	(1)
EBITDA to Interest Incurred(2)	1.55		> 1.75 : 1.0
Tangible Net Worth(3)	$	239,098	$	188,362
Leverage Ratio	58.5%		< 65%

(1) So long as the Company is in compliance with the interest coverage test (see Note 2), the minimum unencumbered liquid assets that the Company must maintain as of the quarter end measurement date is $10 million.

(2) If the EBITDA to Interest Incurred test is not met, it will not be considered an event of default so long as the Company maintains unrestricted cash equal to not less than the trailing 12 month consolidated interest incurred (as defined in the Credit Facility agreement) which was $30.5 million as of June 30, 2019. The Company was in compliance with this requirement with an unrestricted cash balance of $48.2 million at June 30, 2019.

(3) The Credit Facility previously applied an "adjusted leverage ratio" test computed as total joint venture debt divided by total joint venture equity. This covenant ceased to apply as of September 30, 2017 because our consolidated tangible net worth exceeded $250 million in that quarter. Once the adjusted leverage ratio ceased to apply, consolidated tangible net worth is reduced by an adjustment equal to the aggregate amount of investments in and advance to unconsolidated joint ventures that exceed 35% of consolidated tangible net worth as calculated without giving effect to this adjustment (the "Adjustment Amount"). The Adjustment Amount was considered in the calculation of consolidated tangible net worth.

As of June 30, 2019, we were in compliance with all financial covenants under our Credit Facility.

Stock Repurchase Program

On May 10, 2018, our board of directors approved a stock repurchase program (the "Repurchase Program") authorizing the repurchase of the Company's common stock with an aggregate value of up to $15 million. Repurchases of the Company's common stock may be made in open-market transactions, effected through a broker-dealer at prevailing market prices, in privately negotiated transactions, in block trades or by other means in accordance with federal securities laws, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934. The Repurchase Program does not obligate the Company to repurchase any particular amount or number of shares of common stock, and it may be modified, suspended or discontinued at any time. The timing and amount of repurchases are determined by the Company’s management at its discretion and be based on a variety of factors, such as the market price of the Company’s common stock, corporate and contractual requirements, general market and economic conditions and legal requirements. For the six months ended June 30, 2019, the Company repurchased and retired 153,916 shares totaling $1.0 million. As of June 30, 2019, the Company had repurchased and retired in aggregate 1,157,032 shares totaling $9.6 million and had remaining authorization to purchase $5.4 million of common shares.

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Debt-to-Capital Ratios

We believe that debt-to-capital ratios provide useful information to the users of our financial statements regarding our financial position and leverage. Net debt-to-capital ratio is a non-GAAP financial measure. See the table below reconciling this non-GAAP measure to debt-to-capital ratio, the nearest GAAP equivalent.

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Total debt, net of unamortized discount, premium and debt issuance costs	$	375,060		$	387,648
Equity, exclusive of non-controlling interest	239,098			239,954
Total capital	$	614,158		$	627,602
Ratio of debt-to-capital(1)	61.1		%	61.8		%
Total debt, net of unamortized discount, premium and debt issuance costs	$	375,060		$	387,648
Less: Cash, cash equivalents and restricted cash	48,348			42,542
Net debt	326,712			345,106
Equity, exclusive of non-controlling interest	239,098			239,954
Total capital	$	565,810		$	585,060
Ratio of net debt-to-capital(2)	57.7		%	59.0		%

(1) The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt, net of unamortized discount, premium and debt issuance costs by total capital (the sum of total debt, net of unamortized discount, premium and debt issuance costs plus equity), exclusive of non-controlling interest.  

(2) The ratio of net debt-to-capital is computed as the quotient obtained by dividing net debt (which is total debt, net of unamortized discount, premium and debt issuance costs less cash, cash equivalents and restricted cash to the extent necessary to reduce the debt balance to zero) by total capital, exclusive of non-controlling interest. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-capital is a relevant financial measure for investors to understand the leverage employed in our operations and as an indicator of our ability to obtain financing. We believe that by deducting our cash from our debt, we provide a measure of our indebtedness that takes into account our cash liquidity. We believe this provides useful information as the ratio of debt-to-capital does not take into account our liquidity and we believe that the ratio net of cash provides supplemental information by which our financial position may be considered. Investors may also find this to be helpful when comparing our leverage to the leverage of our competitors that present similar information.

Cash Flows — Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018

For the six months ended June 30, 2019 as compared to the six months ended June 30, 2018, the comparison of cash flows is as follows:

• Net cash provided by operating activities was $18.9 million for the six months ended June 30, 2019 versus net cash used in operating activities of $61.5 million for the six months ended June 30, 2018. The year-over-year change was primarily a result of a net increase in cash inflow related to the reduction in real estate inventories to $25.0 million for the 2019 period as compared to an outflow of $53.1 million for the 2018 period. The change in real estate inventories cash flow was driven by the year-over-year increase in proceeds from home sales in the first half of 2019, and a decrease in land acquisition and development spend.

• Net cash provided by investing activities was $0.8 million for the six months ended June 30, 2019 compared to net cash used in investing activities of $3.1 million for the six months ended June 30, 2018. For the six months ended June 30, 2019, net distributions from unconsolidated joint ventures were $0.8 million compared to net contributions and advances to unconsolidated joint ventures of $3.1 million for the six months ended June 30, 2018. The increase in net distributions for the 2019 period was primarily due to a $3.1 million year-over-year reduction in joint venture contributions to one land development joint venture in Northern California.

• Net cash used in financing activities was $13.9 million for the six months ended June 30, 2019 versus $32.0 million of net cash provided by financing activities for the six months ended June 30, 2018. The outflow in 2019 reflects $10.9 million of cash paid to repurchase and retire our 7.25% Senior Notes due 2022 as well as a net pay down on our credit facility of $1.5 million compared to net borrowings of $35 million in the prior year.

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Off-Balance Sheet Arrangements and Contractual Obligations

Option Contracts

In the ordinary course of business, we enter into land option contracts in order to procure lots for the construction of our homes. We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots. These purchase contracts typically require a cash deposit and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements by the sellers, including obtaining applicable property and development entitlements. We also utilize option contracts with land sellers and financial intermediaries as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, to reduce the use of funds from our corporate financing sources, and to enhance our return on capital. Option contracts generally require a nonrefundable deposit for the right to acquire lots over a specified period of time at pre-determined prices. We generally have the right at our discretion to terminate our obligations under both purchase contracts and option contracts by forfeiting our cash deposit with no further financial responsibility to the land seller or financial intermediary. In some instances, we may also expend funds for due diligence and development activities with respect to our option contracts prior to purchase which we would have to write off should we not purchase the land. As of June 30, 2019, we had $15.3 million of nonrefundable and $0.7 million of refundable cash deposits pertaining to land option contracts and purchase contracts with an estimated aggregate remaining purchase price of $118.1 million, net of deposits. These cash deposits are included as a component of our real estate inventories in our condensed consolidated balance sheets.

Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more prevalent in certain geographic regions.

Joint Ventures

We enter into land development and homebuilding joint ventures from time to time as means of:

• leveraging our capital base

• accessing larger lot positions

• expanding our market opportunities

• managing financial and market risk associated with land holdings

These joint ventures have historically obtained secured acquisition, development and/or construction financing which reduces the use of funds from our corporate financing sources.

We are subject to certain contingent obligations in connection with our unconsolidated joint ventures. The Company has provided credit enhancements in connection with joint venture borrowings in the form of loan-to-value ("LTV") maintenance agreements in order to secure the joint venture's performance under the loans and maintenance of certain LTV ratios. The Company has also entered into agreements with its partners in each of the unconsolidated joint ventures whereby the Company and its partners are apportioned liability under the LTV maintenance agreements according to their respective capital interest. In addition, the agreements provide the Company, to the extent its partner has an unpaid liability under such credit enhancements, the right to receive distributions from the unconsolidated joint venture that would otherwise be made to the partner. However, there is no guarantee that such distributions will be made or will be sufficient to cover the Company's liability under such LTV maintenance agreements. The loans underlying the LTV maintenance agreements comprise acquisition and development loans, construction revolvers and model home loans, and the agreements remain in force until the loans are satisfied. Due to the nature of the loans, the outstanding balance at any given time is subject to a number of factors including the status of site improvements, the mix of horizontal and vertical development underway, the timing of phase build outs, and the period necessary to complete the escrow process for homebuyers. As of June 30, 2019 and December 31, 2018, $24.4 million and $41.3 million, respectively, was outstanding under loans that are credit enhanced by the Company through LTV maintenance agreements. Under the terms of the joint venture agreements, the Company's proportionate share of LTV maintenance agreement liabilities was $4.9 million and $7.3 million as of June 30, 2019 and December 31, 2018, respectively. In addition, the Company has provided completion agreements regarding specific performance for certain projects whereby the Company is required to complete the given project with funds provided by the beneficiary of the agreement. If there are not adequate funds available under the specific project loans, the Company would then be subject to financial liability under such completion guaranties. Typically, under such terms of the joint venture agreements, the Company has the right to apportion the respective share of any costs funded under such completion guaranties to its partners. However, there is no guarantee that we will be able to recover against our partners for such amounts owed to us under the terms of such joint venture agreements. In connection with joint venture borrowings, the Company also selectively provides (a) an environmental indemnity provided to

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the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (b) indemnification of the lender from customary "bad boy acts" of the unconsolidated entity such as fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance, and condemnation proceeds, waste and mechanic liens, and bankruptcy. Additionally, in some cases, under our joint venture agreements, our shares of profits and losses may be greater than our contribution percentage.

For more information about our off-balance sheet arrangements, please see Note 11 to our condensed consolidated financial statements.

As of June 30, 2019, we held membership interests in 10 unconsolidated joint ventures, six of which related to homebuilding activities and four related to land development as noted below. Of the 10 joint ventures, six have active homebuilding or land development activities ongoing and the balance are effectively inactive with only limited warranty activities. We were a party to two loan-to-value maintenance agreements related to unconsolidated joint ventures as of June 30, 2019. The following table reflects certain financial and other information related to our unconsolidated joint ventures as of June 30, 2019:

			June 30, 2019
	Year Formed	Location		Total Joint Venture						NWHM Equity (3)		Debt-to-Total Capital-ization		Loan-to- Value Maintenance Agreement	Estimated Future Capital Commitment(4)		Lots Owned and Controlled
Joint Venture (Project Name)			Contribu-tion %(1)	Assets		Debt(2)		Equity
				(Dollars in 000's)
TNHC-HW San Jose LLC (Orchard Park)	2012	San Jose, CA	15%	$	2,149	$	—	$	382	$	115	—	%	N/A	$	—	—
TNHC-TCN Santa Clarita LP (Villa Metro)(5)	2012	Santa Clarita, CA	10%	903		—		211		53		—	%	N/A	—		—
TNHC Newport LLC (Meridian)(5)	2013	Newport Beach, CA	12%	1,750		—		1,603		287		—	%	N/A	—		—
Encore McKinley Village LLC (McKinley Village)	2013	Sacramento, CA	10%	46,410		7,769		35,107		3,512		18	%	Yes	—		91
TNHC Russell Ranch LLC (Russell Ranch)(5)(6)(7)	2013	Folsom, CA	35%	59,553		—		49,654		9,553		—	%	N/A	10,651		631
TNHC-HW Foster City LLC (Foster Square)(6)	2013	Foster City, CA	35%	890		—		891		414		—	%	N/A	—		—
Calabasas Village LP (Avanti)(5)	2013	Calabasas, CA	10%	12,398		—		11,483		1,147		—	%	N/A	—		—
TNHC-HW Cannery LLC (Cannery Park)(6)	2013	Davis, CA	35%	6,124		—		5,235		1,833		—	%	N/A	—		13
Arantine Hills Holdings LP (Bedford)(5)(6)	2014	Corona, CA	5%	215,299		16,230		185,425		9,272		8	%	No	1,467		1,280
TNHC Mountain Shadows LLC (Mountain Shadows)	2015	Paradise Valley, AZ	25%	48,535		16,565		27,265		6,830		38	%	Yes	—		30
Total Unconsolidated Joint Ventures				$	394,011	$	40,564	$	317,256	$	33,016	11	%		$	12,118	2,045

(1) Actual equity interests may differ due to current phase of underlying project's life cycle. The contribution percentage reflects the percentage of capital we are generally obligated to contribute (subject to adjustment under the joint venture agreement) and generally (subject to waterfall provisions) aligns with our percentage of distributions. In some cases our share of profit and losses may be greater than our contribution percentage.

(2) The carrying value of the debt is presented net of $0.2 million in unamortized debt issuance costs. Scheduled maturities of the unconsolidated joint venture debt as of June 30, 2019 are as follows: $16.7 million matures in 2019, $16.3 million matures in 2020, and $7.8 million matures in 2021. The $16.7 million of Mountain Shadows debt is due December 14, 2019; however, pursuant to the agreement, advances made related to the

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construction of a presold home shall be due and payable 12 months after the initial advance of such loan with the option to extend an additional three months (provided no event of default has occurred).

(3) Represents the Company's equity in unconsolidated joint ventures. Equity does not include $0.6 million of interest capitalized to certain investments in unconsolidated joint ventures which along with equity, are included in investments in and advances to unconsolidated joint ventures in the accompanying condensed consolidated balance sheets.

(4) Estimated future capital commitment represents our proportionate share of estimated future contributions to the respective unconsolidated joint ventures as of June 30, 2019. Actual contributions may differ materially.

(5) Certain current and former members of the Company's board of directors are affiliated with entities that have an investment in these joint ventures. See Note 12 to the condensed consolidated financial statements.

(6) Land development joint venture.

(7) The Company's share of capital contributions for certain improvements in the aggregate amount of approximately $26 million is 50%.

As of June 30, 2019, the unconsolidated joint ventures were in compliance with their respective loan covenants, where applicable, and we were not required to make any loan-to-value maintenance related payments during the three and six months ended June 30, 2019.

Inflation

Our homebuilding and fee building segments can be adversely impacted by inflation, primarily from higher land, financing, labor, material and construction costs. In addition, inflation can lead to higher mortgage rates, which can significantly affect the affordability of mortgage financing to homebuyers. While we attempt to pass on cost increases to customers through increased prices, when weak housing market conditions exist, we may be unable to offset cost increases with higher selling prices.

Seasonality

Historically, the homebuilding industry experiences seasonal fluctuations in quarterly operating results and capital requirements. We typically experience the highest new home order activity in spring and summer, although this activity is also highly dependent on the number of active selling communities, timing of new community openings and other market factors. Since it typically takes five to nine months to construct a new home, depending on whether it is single-family detached or multi-family attached, we typically deliver more homes in the second half of the year as spring and summer home orders convert to home deliveries. Because of this seasonality, home starts, construction costs and related cash outflows have historically been highest in the second and third quarters, and a higher level of cash receipts from home deliveries occurs during the second half of the year. We expect this seasonal pattern to continue over the long-term, although it may be affected by volatility in the homebuilding industry and the opening and closeout of communities.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting policies generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Management evaluates such estimates and judgments on an on-going basis and makes adjustments as deemed necessary. Actual results could differ from these estimates if conditions are significantly different in the future.

Our critical accounting estimates and policies have not changed from those reported in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2018.

Recently Issued Accounting Standards

The portion of Note 1 to the accompanying notes to unaudited condensed consolidated financial statements under the heading "Recently Issued Accounting Standards" included in this quarterly report on Form 10-Q is incorporated herein by reference.

JOBS Act

We qualify as an "emerging growth company" pursuant to the provisions of the JOBS Act. For as long as we are an "emerging growth company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation and shareholder advisory votes on golden parachute compensation.

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In addition, Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An "emerging growth company" can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we have chosen to "opt out" of such extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There has been no material change to the information about our market risk as disclosed in Part II, Item 7A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure based on the definition of "disclosure controls and procedures" in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to provide a reasonable level of assurance of achieving our desired disclosure control objectives. In designing controls and procedures specified in the SEC's rules and forms, and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error and mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of controls.

At the end of the period being reported upon, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2019.

Changes in Internal Controls

There was no change in the Company’s internal control over financial reporting that occurred during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.     Legal Proceedings

We are involved in various claims and litigation arising in the ordinary course of business. We do not believe that any such claims and litigation will materially affect our results of operations or financial position.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2018.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

None.

Purchases of Equity Securities by the Issuer

The Company did not make any purchases of its common stock during the three months ended June 30, 2019.

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Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.

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Item 6.    Exhibits

Exhibit Number	Exhibit Description
3.1	Amended and Restated Certificate of Incorporation of The New Home Company Inc. (incorporated by reference to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2013)
3.2	State of Delaware Certificate of Change of Registered Agent and/or Registered Office (incorporated by reference to Exhibit 3.1 of the Company's Current Report on Form 8-K filed on August 1, 2016)
3.3	Amended and Restated Bylaws of The New Home Company Inc. (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on August 1, 2016)
4.1	Specimen Common Stock Certificate of The New Home Company Inc. (incorporated by reference to Exhibit 4.1 of the Company’s Registration Statement on Form S-1 (Amendment No. 10, filed on January 24, 2014))
4.2	Investor Rights Agreement among The New Home Company Inc., TNHC Partners LLC, IHP Capital Partners VI, LLC, WATT/TNHC LLC, TCN/TNHC LP and collectively H. Lawrence Webb, Wayne J. Stelmar, Joseph D. Davis and Thomas Redwitz (incorporated by reference to Exhibit 4.2 of the Company's Annual Report on Form 10-K for the year ended December 31, 2013)
4.3	Amendment No. 1 to Investor Rights Agreement among The New Home Company Inc., TNHC Partners LLC, IHP Capital Partners VI, LLC, WATT/TNHC, LLC, TCN/TNHC LP and collectively H. Lawrence Webb, Wayne J. Stelmar, Joseph D. Davis and Thomas Redwitz (incorporated by reference to Exhibit 10.1 of the Company's Current Report on form 8-K filed on May 23, 2018)
10.1*	Second Amendment to Limited Liability Company Agreement of TNHC Russell Ranch between TNHC Land Company LLC and IHP Capital Partners VI, LLC
31.1*	Chief Executive Officer Section 302 Certification of Periodic Report
31.2*	Chief Financial Officer Section 302 Certification of Periodic Report
32.1**	Chief Executive Officer Section 906 Certification of Periodic Report
32.2**	Chief Financial Officer Section 906 Certification of Periodic Report
101*	The following materials from The New Home Company Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in eXtensible Business Reporting Language (XBRL): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Equity, (iv) Condensed Consolidated Statements of Cash Flows, and (v) Notes to Unaudited Condensed Consolidated Financial Statements.
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*

Filed herewith

**

Furnished herewith. The information in Exhibits 32.1 and 32.2 shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act (including this Report), unless the Registrant specifically incorporates the foregoing information into those documents by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

The New Home Company Inc.
By:	/s/ H. Lawrence Webb
	H. Lawrence Webb
	Chief Executive Officer
By:	/s/ John M. Stephens
	John M. Stephens
	Chief Financial Officer

Date: July 30, 2019

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EX-10.1

Exhibit 10.1

SECOND AMENDMENT TO LIMITED LIABILITY COMPANY AGREEMENT OF TNHC RUSSELL RANCH LLC

This Second Amendment to Limited Liability Company Agreement of TNHC RUSSELL RANCH LLC (“Amendment”) is entered into by and between TNHC LAND COMPANY LLC, a Delaware limited liability company (“TNHC”) and IHP CAPITAL PARTNERS VI, LLC, a Delaware limited liability company (“IHP”) as of this 1st day of May, 2019 (the “Effective Date”).

RECITALS

A.    TNHC and IHP entered into that certain Limited Liability Company Agreement of TNHC Russell Ranch LLC, a Delaware limited liability company, dated as of May 22, 2013 (the “Original Agreement”), as amended by that certain First Amendment to Limited Liability Company Agreement dated as of August 4, 2017 (the “First Amendment” and with the Original Agreement referred to collectively as the “Agreement”). Unless otherwise defined herein, all capitalized terms used in this Amendment shall have the same meaning as provided in the Agreement.

B.    In connection with the development of the Project, the Company has incurred and expects to incur in the future, additional costs above those originally anticipated in the Approved Business Plan as set forth in the First Amendment. The Members desire to amend the Agreement to provide for the contribution of additional capital by the Members to address these increased costs, to amend the Approved Business Plan (which includes amending the Approved Project Budget) and to modify certain other provisions of the Agreement.

AGREEMENT

Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Members agree as follows:

1.Approved Business Plan. This Amendment supersedes that certain Action by Written Consent of the Members of TNHC Russell Ranch LLC dated as March 27, 2019 which shall be of no further force or effect following the execution of this Amendment. The Members agree that the Approved Business Plan for the Company approved by that certain Action by Written Consent of the Members of TNHC Russell Ranch LLC dated as of August 4, 2017 is hereby deleted and that the new Approved Business Plan for the Company shall be that which is attached as Exhibit B to that certain Action by Written Consent of the Members of TNHC Russell Ranch LLC dated concurrently herewith (the “April Action”), which includes updates to the Project Costs, the Approved Project Budget, the Project Proforma, and the Critical Dates Schedule, all as defined in the First Amendment (collectively, the “Approved Business Plan”).

2.Errors or Omissions in Budget. TNHC hereby reaffirms its obligations under Section 1.05(g) of the Agreement as to the Approved Project Budget attached to the April Action.

1

3.Additional Capital.

a.Pursuant to the First Amendment, IHP’s Maximum Capital Commitment pursuant to Section 2.02(a) of the Agreement was increased from Twenty-Five Million Dollars ($25,000,000) to Fifty Million Dollars ($50,000,000) and TNHC’s Maximum Capital Commitment pursuant to Section 2.02(b) of the Agreement was increased from Thirteen Million Four Hundred Fifty Thousand Dollars ($13,450,000) to Forty-Three Million Dollars ($43,000,000). Subsequently, TNHC’s Maximum Capital Commitment was reduced to $27,000,000 in accordance with the terms of the First Amendment. Such increased amounts of IHP’s Maximum Capital Commitment and TNHC’s Maximum Capital Commitment are considered Base Capital. As of the Effective Date, IHP and TNHC have contributed all of their respective Maximum Capital Commitments.

b.The Members hereby acknowledge and agree that Additional Capital in the aggregate amount of Twenty-Six Million Dollars ($26,000,000) is now required beyond the Maximum Capital Commitments in order for the Company to complete the remaining backbone improvements for Phase 1 of the Property and which are set forth in the Approved Project Budget (“Remaining Phase 1 Backbone Work”). The Members hereby agree that IHP and TNHC will each fund up to Thirteen Million Dollars ($13,000,000) as Additional Capital (such amounts collectively referred to herein as the “Amendment Additional Capital”). As of the Effective Date, IHP and TNHC have each already contributed Two Hundred Two Thousand Fifty-Five Dollars ($202,055) towards such costs, which sums shall be considered Amendment Additional Capital. The Amendment Additional Capital will be contributed fifty percent (50%) by IHP and fifty percent (50%) by TNHC. None of the Amendment Additional Capital will accrue a Preferred Return. The Amendment Additional Capital actually contributed to the Company will be returned in accordance with the amended Section 3.02 of the Agreement, as set forth below. The Members acknowledge that the Remaining Phase 1 Backbone Work and the Amendment Additional Capital to be funded by the Members in accordance with this Paragraph 3(b) does not include the work which will be required in connection with Phase 2 of the Property.

4.Cost Overruns. Notwithstanding anything to the contrary in the Agreement, the Members hereby acknowledge and agree that TNHC will be solely responsible for funding capital to the Company to cover all cost overruns in completing the Remaining Phase 1 Backbone Work in excess of the amounts set forth in the Approved Project Budget for the Remaining Phase 1 Backbone Work after taking into consideration any available contingency set forth in the Approved Project Budget and any then realized savings, if any, in any line items in the Approved Project Budget (such amounts referred to herein as the “TNHC Overrun Capital”). The TNHC Overrun Capital actually contributed to the Company shall not accrue a Preferred Return and will be returned in accordance with the amended Section 3.02 of the Agreement, as set forth below.

5.Distributions of Cash Flow. Section 3.02 of the Agreement shall be deleted in its entirety and the following inserted in its place:

“3.02    Distributions of Cash Flow. Except as provided elsewhere in this Agreement, cash held in the Collection Account from time to time in excess of (1) reserves withheld to fund the Unfunded SIR Amount, if applicable, and (2) such reserves as are established from time to time by the Members for anticipated

2

cash disbursements that will have to be made before anticipated additional cash receipts will provide the funds therefore (the “Cash Flow”) shall be distributed to the Members as soon as it becomes available for distribution, but in no event less often than monthly by the 25^th day of each calendar month, in the following order of priority:

(a)Preferred Return on Senior Capital. First, to the Members in the ratio that the accrued and unpaid Preferred Return on Senior Capital contributed by each Member bears to the aggregate of the accrued ·and unpaid Preferred Return on Senior Capital contributed by both Members, until and to the extent required to reduce each Member’s accrued and unpaid Preferred Return on all such Senior Capital to zero (0).

(b)Senior Capital. Next, to each Member as a reduction of its Unrecovered Capital Account in the ratio that the Senior Capital contributed by each Member bears to the aggregate of the Senior Capital contributed by both Members, until and to the extent required to reduce each Member’s Senior Capital to zero (0).

(c)Amendment Additional Capital. Next, to each Member as a reduction of its Unrecovered Capital Account in the ratio that the Amendment Additional Capital contributed by each Member bears to the aggregate of the Amendment Additional Capital contributed by both Members, until and to the extent required to reduce each Member’s Amendment Additional Capital to zero (0).

(d)TNHC Overrun Capital. Next, to TNHC as a reduction of its Unrecovered Capital Account in the amount of the TNHC Overrun Capital contributed by TNHC, until and to the extent required to reduce TNHC’s TNHC Overrun Capital to zero (0).

(e)Base Capital Preferred Return. Next, to the Members in the ratio that the balance of the accrued and unpaid Base Capital Preferred Return of each Member bears to the aggregate of the balance of accrued and unpaid Base Capital Preferred Return of both Members, until and to the extent required to reduce each Member’s accrued and unpaid Preferred Return to zero (0).

(f)Base Capital. Next, to each Member as a reduction of its Unrecovered Capital Account in the ratio that the capital contributed (excluding Senior Capital) by each Member bears to the aggregate of the capital contributed (excluding Senior Capital) by both Members, until and to the extent required to reduce each Member’s Unrecovered Capital Account to zero (0).

(g)Profits. Thereafter, to the Members in accordance with their Percentage Interests.”

6.Second Amendment to Phase 1 Sale Agreement. Pursuant to that certain Sale Agreement and Joint Escrow Instructions dated August 10, 2017, as amended by that certain First Amendment to

3

Sale Agreement and Joint Escrow Instructions dated July 31, 2018 (collectively, the “Sale Agreement”), the Company, as “Owner” agreed to sell, and THE NEW HOME COMPANY NORTHERN CALIFORNIA LLC, a Delaware limited liability company, as “Builder”, agreed to purchase, that certain real property owned by the Company described in the Sale Agreement. The Members hereby approve the Company entering into that certain Second Amendment to Sale Agreement and Joint Escrow Instructions in the form attached hereto as Exhibit A (the “Second Amendment to Sale Agreement”), to further modify and amend the Sale Agreement on the terms and conditions set forth in the Second Amendment to Sale Agreement. The Sale Agreement, as amended by the Second Amendment to Sale Agreement provides for the delivery of the PAPA and PAPA Deed of Trust at the Closing (as those terms are defined in the Sale Agreement). The Members hereby acknowledge and agree that, provided all of the then required terms and conditions of the PAPA and PAPA Deed of Trust or of the Second Amendment to Sale Agreement have been satisfied, TNHC shall have the authority to execute on behalf of the Company a release or reconveyance of the PAPA Deed of Trust in accordance with the terms of the PAPA and PAPA Deed of Trust or of the Second Amendment to Sale Agreement without further approval or consent of IHP.

7.No Further Changes. Except as expressly modified by this Amendment, there are no other amendments or modifications to the Agreement and it shall remain in full force and effect. In the event of any conflict between the terms of this Amendment and the terms of the Agreement, the terms of this Amendment shall control.

8.Costs. All costs and expenses incurred by IHP and TNHC in connection with the preparation and negotiation of this Amendment shall be borne by the Company.

9.Miscellaneous. This Amendment may be executed in counterparts, each of which when taken together shall constitute one original. This Amendment shall be binding on the parties hereto and their successors and assigns.

[SIGNATURES ON FOLLOWING PAGE]

4

Executed as of the date first above written.

“TNHC”	TNHC LAND COMPANY LLC, a Delaware limited liability company
	By: /s/ John Stephens    Name: John Stephens Its: Chief Financial Officer By: /s/ Leonard Miller    Name: Leonard Miller Its: Chief Operating Officer
“IHP”	IHP CAPITAL PARTNERS VI LLC, a Delaware limited liability company By: Institutional Housing Partners VI L.P., a California limited partnership, Its Manager By: IHP Capital Partners, a California corporation Its General Partner
	By: /s/ Douglas C. Neff By: /s/ Donald S. Grant

5

EXHIBIT A

SECOND AMENDMENT TO SALE AGREEMENT

SECOND AMENDMENT

TO SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

This Second Amendment to Agreement Sale Agreement and Joint Escrow Instructions (“Amendment”) is executed on April ___, 2019 (“Effective Date") by TNHC RUSSELL RANCH LLC, a Delaware limited liability company (“Owner”), and THE NEW HOME COMPANY NORTHERN CALIFORNIA LLC, a Delaware limited liability company (“Builder”) and TNHC REALTY AND CONSTRUCTION INC., a Delaware corporation (“Contractor”). Owner, Builder and Contractor are hereinafter individually referred to as a “Party” and collectively as the “Parties.”

RECITALS

A.The Parties entered into that certain Sale Agreement and Joint Escrow Instructions dated August 10, 2017, as amended by that certain First Amendment to Sale Agreement and Joint Escrow Instructions dated July 31, 2018 (collectively, the “Agreement”), pursuant to which Owner agreed to sell and Builder agreed to purchase certain real property described in the Agreement. Capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings given them in the Agreement.

B.The Parties now desire to amend the Agreement as set forth below.

Now, therefore, in consideration of good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

1.Profit Participation.

1.1    Pursuant to Section 1.4 of the Agreement, the Parties agreed that, in addition to the payment of the Purchase Price, at the Closing Owner and Builder would enter into that certain the Profit Participation Agreement attached to the Agreement as Exhibit “D” (the “PAPA”), and would record against the Property at the Closing the PAPA Deed of Trust (as defined in the PAPA). The Parties also agreed that, pursuant to Section 1.4 of the Agreement, if Builder elects to sell all or any portion of the Property or the Builder’s Lots (“Transferred Lots”) to another builder (“Other Builder”), prior to the closing of such sale, the Other Builder shall execute and deliver to Owner the PAPA (modified to reflect that it does not apply to the Builder’s Lots retained by Builder; deleting references to this Agreement and import of applicable defined terms from this Agreement as needed and modifications to reflect the application of “Total Costs of Sale” to the Transferred Lots consistent with Exhibit 1 to the PAPA) which shall apply only to the Transferred Lots (“Other Builder PAPA”) and upon execution of such Other Builder PAPA by the Other Builder, and the recordation of the Other PAPA Deed of Trust (as defined below) against the Transferred Lots, the Transferred Lots shall be deemed deleted from the PAPA and Builder shall have no further PAPA obligations of any kind regarding the Transferred Lots.

1.2    Notwithstanding anything to the contrary in Section 1.4 of, or elsewhere in, the Agreement, the Parties agree that if Builder, in its sole discretion, elects to sell any Transferred Lots to an Other Builder that is a third party unrelated to Builder, provided Builder enters into a contract(s) to sell Transferred Lots on or before December 31, 2019 and such sale(s) close on or before December 31, 2020, Builder will not be obligated to require such Other Builder(s)

to execute and deliver to Owner an Other Builder PAPA as to such Transferred Lots sold to an Other Builder, Owner will not require Builder to pay any participation to Owner under the PAPA for such Transferred Lots; automatically upon close of escrow for the sale of the Transferred Lots ("Transfer Escrow") the PAPA shall terminate as to such Transferred Lots and no later than the business day prior to the date scheduled for the close of the Transfer Escrow (provided Builder has notified Owner in writing at least five (5) business days in advance of the scheduled closing date of such date and the contact information and location of the Transfer Escrow) Owner will execute, acknowledge and deliver into the Transfer Escrow, in a commercially reasonable form required by the escrow holder under the Transfer Escrow, a release and reconveyance of the PAPA Deed of Trust solely as to the applicable Transferred Lots so that at the close of the Transfer Escrow the Transferred Lots shall be released from the lien of the PAPA Deed of Trust. Promptly following receipt of written request from Builder, Owner will deliver to Builder a written statement that can be delivered to one or more Other Builders confirming that the PAPA will terminate as to the Transferred Lots upon the close of escrow of Transferred Lots in accordance with this Amendment.

2.No Other Amendments. There are no amendments or modifications to the Agreement other than this Amendment. Except as specifically set forth herein, the Agreement remains unmodified and in full force and effect.

3.Conflicts. In the event of any conflict between this Amendment and the Agreement, the terms of this Amendment shall control.

4.Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original, but all of which shall together constitute a single instrument.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

The Parties have executed this Amendment to be effective as of the Effective Date.

OWNER:	BUILDER:
TNHC RUSSELL RANCH LLC, a Delaware limited liability company	THE NEW HOME COMPANY NORTHERN CALIFORNIA LLC, a Delaware limited liability company
By:TNHC LAND COMPANY LLC, a Delaware limited liability company, its Managing Member By: Name: Its: By: Name: Its:	By: Name: Its: By: Name: Its:
	CONTRACTOR:
IHP CAPITAL PARTNERS VI, LLC, a Delaware limited liability company, its Member By:Institutional Housing Partners VI L.P., a California limited partnership, Its Manager By:IHP Capital Partners, a California corporation Its General Partner	TNHC REALTY AND CONSTRUCTION INC., a Delaware corporation By:__________________________ Its:__________________________ Name:__________________________ By:__________________________ Its:__________________________ Name:__________________________
By: By:

EX-31.1

Exhibit 31.1

Section 302 CERTIFICATION

I, H. Lawrence Webb, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of The New Home Company Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 30, 2019	/s/ H. Lawrence Webb
		H. Lawrence Webb
		Chief Executive Officer (Principal Executive Officer)

EX-31.2

Exhibit 31.2

Section 302 CERTIFICATION

I, John M. Stephens, certify that:

(1) I have reviewed this quarterly report on Form 10-Q of The New Home Company Inc.;

(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

(4) The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(5) The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	July 30, 2019	/s/ John M. Stephens
		John M. Stephens
		Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The New Home Company Inc. (the “Company”) for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, H. Lawrence Webb, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 30, 2019	/s/ H. Lawrence Webb
		H. Lawrence Webb
		Chief Executive Officer (Principal Executive Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of The New Home Company Inc. (the “Company”) for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John M. Stephens, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	July 30, 2019	/s/ John M. Stephens
		John M. Stephens
		Chief Financial Officer (Principal Financial Officer)

XML

DEI Document - shares	6 Months Ended
	Jun. 30, 2019	Jul. 26, 2019
Entity [Abstract]
Document Transition Report	false
Document Quarterly Report	true
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	NWHM
Entity Incorporation, State or Country Code	DE
Entity Registrant Name	New Home Co Inc.
Entity Address, Address Line One	85 Enterprise
Entity Address, Address Line Two	Suite 450
Entity Address, City or Town	Aliso Viejo
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92656
City Area Code	949
Local Phone Number	382-7800
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Central Index Key	0001574596
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Entity File Number	001-36283
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2
Amendment Flag	false
Entity Common Stock, Shares Outstanding		20,096,969
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Small Business	true
Entity Shell Company	false
Entity Tax Identification Number	27-0560089
Security Exchange Name	NYSE

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents		$ 48,224	$ 42,273
Restricted cash		124	269
Contracts and accounts receivable		16,113	18,265
Due from affiliates		218	1,218
Real estate inventories		541,954	566,290
Investment in and advances to unconsolidated joint ventures		33,637	34,330
Other assets		32,987	33,452
Total assets		673,257	696,097
Liabilities and equity
Accounts payable		26,629	39,391
Accrued expenses and other liabilities		32,375	29,028
Unsecured revolving credit facility		66,000	67,500
Senior notes, net	[1]	309,060	320,148
Total liabilities		434,064	456,067
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, no shares outstanding		0	0
Common stock, $0.01 par value, 500,000,000 shares authorized, 20,096,969 and 20,058,904, shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively		201	201
Additional paid-in capital		192,691	193,132
Retained earnings		46,206	46,621
Total stockholders' equity		239,098	239,954
Non-controlling interest in subsidiary		95	76
Total equity		239,193	240,030
Total liabilities and equity		$ 673,257	$ 696,097

[1] (1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares outstanding	0	0
Common stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	20,096,969	20,058,904
Common stock, shares outstanding	20,096,969	20,058,904

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenues
Revenue	$ 162,749	$ 155,555	$ 281,597	$ 278,786
Cost of Goods and Services Sold
Cost of Goods and Services Sold	145,295	139,716	251,132	252,109
Gross Profit
Gross Profit Home Sales	16,939	14,782	29,556	24,525
Gross Profit Fee Building	515	1,057	909	2,152
Gross Profit	17,454	15,839	30,465	26,677
Costs and Expenses
Selling and marketing expenses	(9,683)	(9,466)	(18,362)	(16,105)
General and administrative expenses	(5,841)	(5,979)	(13,232)	(11,998)
Equity in net income (loss) of unconsolidated joint ventures	185	(120)	369	215
Gain on early extinguishment of debt	552	0	969	0
Other income (expense), net	(102)	(92)	(295)	(118)
Pretax income (loss)	2,565	182	(86)	(1,329)
(Provision) benefit for income taxes	(974)	(67)	(310)	793
Net income (loss)	1,591	115	(396)	(536)
Net (income) loss attributable to non-controlling interest	(19)	0	(19)	11
Net income (loss) attributable to The New Home Company Inc.	$ 1,572	$ 115	$ (415)	$ (525)
Earnings (Loss) per share attributable to The New Home Company Inc.
Basic (in dollars per share)	$ 0.08	$ 0.01	$ (0.02)	$ (0.03)
Diluted (in dollars per share)	$ 0.08	$ 0.01	$ (0.02)	$ (0.03)
Weighted average number of shares outstanding
Basic (in shares)	20,070,914	20,958,991	20,028,600	20,942,601
Diluted (in shares)	20,095,533	21,024,769	20,028,600	20,942,601
Home Sales
Revenues
Revenue	$ 140,464	$ 117,460	$ 239,650	$ 196,897
Cost of Goods and Services Sold
Cost of Goods and Services Sold	123,525	102,678	210,094	172,372
Fee Building
Revenues
Revenue	22,285	38,095	41,947	81,889
Cost of Goods and Services Sold
Cost of Goods and Services Sold	$ 21,770	$ 37,038	$ 41,038	$ 79,737

XML

Unaudited Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue	$ 162,749	$ 155,555	$ 281,597	$ 278,786
Management Service [Member]
Revenue	$ 619	$ 672	$ 1,162	$ 1,652

XML

Unaudited Condensed Consolidated Statement of Equity - USD ($) $ in Thousands	Total	Stockholders' Equity [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Non-controlling Interest [Member]
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of ASU 2018-07	$ (3,365)	$ (3,365)		$ (18)	$ (3,347)
Net Income (Loss) Attributable to Parent	(525)	(525)			(525)
Beginning balance at Dec. 31, 2017	264,080	263,990	$ 209	199,474	64,307	$ 90
Beginning Balance, Shares at Dec. 31, 2017			20,876,837
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(536)
Net Income (Loss) Attributable to Noncontrolling Interest	(11)					(11)
Stock-based compensation expense	1,704	1,704		1,704
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans	(977)	(977)		(977)
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans, shares			(86,182)
Shares issued through stock plans	0	0	$ 2	(2)
Shares issued through stock plans, shares			270,363
Repurchase of common stock, Shares			(205,240)
Repurchase of common stock	(2,072)	(2,072)	$ (2)	(1,947)	123
Ending balance at Jun. 30, 2018	258,834	258,755	$ 209	198,234	60,312	79
Ending Balance, Shares at Jun. 30, 2018			20,855,778
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Adoption of ASU 2018-07	0	0		(18)	18
Net Income (Loss) Attributable to Parent	115	115			115
Beginning balance at Mar. 31, 2018	259,952	259,873	$ 210	199,361	60,302	79
Beginning Balance, Shares at Mar. 31, 2018			21,007,902
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	115
Net Income (Loss) Attributable to Noncontrolling Interest	0					0
Stock-based compensation expense	862	862		862
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans	(23)	(23)		(23)
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans, shares			(2,366)
Shares issued through stock plans	0	0	$ 1	(1)
Shares issued through stock plans, shares			55,482
Repurchase of common stock, Shares			(205,240)
Repurchase of common stock	(2,072)	(2,072)	$ (2)	(1,947)	123
Ending balance at Jun. 30, 2018	258,834	258,755	$ 209	198,234	60,312	79
Ending Balance, Shares at Jun. 30, 2018			20,855,778
Net Income (Loss) Attributable to Parent	(415)	(415)
Beginning balance at Dec. 31, 2018	$ 240,030	239,954	$ 201	193,132	46,621	76
Beginning Balance, Shares at Dec. 31, 2018	20,058,904		20,058,904
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ (396)
Net Income (Loss) Attributable to Noncontrolling Interest	19					19
Stock-based compensation expense	1,089	1,089		1,089
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans	(488)	(488)		(488)
Shares net settled with the Company to satisfy employee personal income tax liabilities resulting from share based compensation plans, shares			(85,420)
Shares issued through stock plans	0	0	$ 2	(2)
Shares issued through stock plans, shares			277,401
Repurchase of common stock, Shares			(153,916)
Repurchase of common stock	(1,042)	(1,042)	$ (2)	(1,040)	0
Ending balance at Jun. 30, 2019	$ 239,193	239,098	$ 201	192,691	46,206	95
Ending Balance, Shares at Jun. 30, 2019	20,096,969		20,096,969
Net Income (Loss) Attributable to Parent	$ 1,572	1,572			1,572
Beginning balance at Mar. 31, 2019	237,079	237,003	$ 200	192,169	44,634	76
Beginning Balance, Shares at Mar. 31, 2019			20,049,113
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	1,591
Net Income (Loss) Attributable to Noncontrolling Interest	19					19
Stock-based compensation expense	523	523		523
Shares issued through stock plans	0	0	$ 1	(1)
Shares issued through stock plans, shares			47,856
Ending balance at Jun. 30, 2019	$ 239,193	$ 239,098	$ 201	$ 192,691	$ 46,206	$ 95
Ending Balance, Shares at Jun. 30, 2019	20,096,969		20,096,969

XML

Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Operating activities:
Net loss	$ (396)	$ (536)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Deferred taxes	0	(1,481)
Amortization of stock-based compensation	1,089	1,704
Distributions of earnings from unconsolidated joint ventures	279	715
Inventory impairments		0
Abandoned project costs	19	43
Equity in net income of unconsolidated joint ventures	(369)	(215)
Deferred profit from unconsolidated joint ventures	0	136
Depreciation and amortization	5,042	2,646
Gain on early extinguishment of debt	(969)	0
Net changes in operating assets and liabilities:
Contracts and accounts receivable	2,152	2,854
Due from affiliates	975	788
Real estate inventories	24,970	(53,108)
Other assets	(2,240)	(6,095)
Accounts payable	(12,762)	5,256
Accrued expenses and other liabilities	1,102	(14,217)
Net cash provided by (used in) operating activities	18,892	(61,510)
Investing activities:
Purchases of property and equipment	(8)	(184)
Contributions and advances to unconsolidated joint ventures	(4,120)	(8,954)
Distributions of capital and repayment of advances from unconsolidated joint ventures	4,928	5,874
Interest collected on advances to unconsolidated joint ventures	0	178
Net cash provided by (used in) investing activities	800	(3,086)
Financing activities:
Borrowings from credit facility	40,000	35,000
Repayments of credit facility	(41,500)	0
Early Repayment of Senior Debt	(10,856)	0
Repurchases of common stock	(1,042)	(2,072)
Tax withholding paid on behalf of employees for stock awards	(488)	(977)
Net cash (used in) provided by financing activities	(13,886)	31,951
Net (decrease) increase in cash, cash equivalents and restricted cash	5,806	(32,645)
Cash, cash equivalents and restricted cash – beginning of period	42,542	123,970
Cash, cash equivalents and restricted cash – end of period	$ 48,348	$ 91,325

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Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Account Policies

Organization and Summary of Significant Accounting Policies

Organization

The New Home Company Inc. (the "Company"), a Delaware corporation, and its subsidiaries are primarily engaged in all aspects of residential real estate development, including acquiring land and designing, constructing and selling homes in California and Arizona.

Based on our public float at June 29, 2018, we qualify as a smaller reporting company and are subject to reduced disclosure obligations in our periodic reports and proxy statements.

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring entries) necessary for the fair presentation of our results for the interim period presented. Results for the interim periods are not necessarily indicative of the results to be expected for the full year.

Unless the context otherwise requires, the terms "we", "us", "our" and "the Company" refer to the Company and its wholly owned subsidiaries, on a consolidated basis.

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and notes. Accordingly, actual results could differ materially from these estimates.

Reclassification

The Company updated its reportable segments effective for the 2019 first quarter. Please refer to Note 15 for more information. Prior year comparative data has been reclassified to align with the composition of the current year reportable segments.

Segment Reporting

Accounting Standards Codification ("ASC") 280, Segment Reporting ("ASC 280") established standards for the manner in which public enterprises report information about operating segments. The Company's reportable segments are Arizona homebuilding, California homebuilding, and fee building. In accordance with ASC 280, our California homebuilding reportable segment aggregates the Northern California and Southern California homebuilding operating segments based on the similarities in long-term economic characteristics.

Cash and Cash Equivalents

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions, and short term liquid investments with a maturity date of less than three months from the date of purchase.

Restricted Cash

Restricted cash of $0.1 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, is held in accounts for payments of subcontractor costs incurred in connection with various fee building projects.

The table below shows the line items and amounts of cash and cash equivalents and restricted cash as reported within the Company's condensed consolidated balance sheets for each period shown that sum to the total of the same such amounts at the end of the periods shown in the accompanying condensed consolidated statements of cash flows.

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Cash and cash equivalents	$	48,224	$	90,758
Restricted cash	124		567
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	48,348	$	91,325

Real Estate Inventories and Cost of Sales

We capitalize pre-acquisition, land, development and other allocated costs, including interest, property taxes and indirect construction costs. Pre-acquisition costs, including nonrefundable land deposits, are expensed to other income (expense), net if we determine continuation of the prospective project is not probable.

Land, development and other common costs are typically allocated to real estate inventories using a methodology that approximates the relative-sales-value method. Home construction costs per production phase are recorded using the specific identification method. Cost of sales for homes closed includes the estimated total construction costs of each home at completion and an allocation of all applicable land acquisition, land development and related common costs (both incurred and estimated to be incurred) based upon the relative-sales-value of the home within each project. Changes in estimated development and common costs are allocated prospectively to remaining homes in the project.

In accordance with ASC 360, Property, Plant and Equipment ("ASC 360"), inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. We review each real estate asset on a quarterly basis or whenever indicators of impairment exist. Real estate assets include projects actively selling and projects under development or held for future development. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins or sales absorption rates, costs significantly in excess of budget, and actual or projected cash flow losses.

If there are indicators of impairment, we perform a detailed budget and cash flow review of the applicable real estate inventories to determine whether the estimated future undiscounted cash flows of the project are more or less than the asset’s carrying value. If the estimated future undiscounted cash flows exceed the asset’s carrying value, no impairment adjustment is required. However, if the estimated future undiscounted cash flows are less than the asset’s carrying value then the asset is impaired. If the asset is deemed impaired, it is written down to its fair value in accordance with ASC 820, Fair Value Measurements and Disclosures ("ASC 820").

When estimating undiscounted future cash flows of a project, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available, pricing and incentives being offered by us or other builders in other projects, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property.

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact on the estimated per unit sales price of a home, and the level of time sensitive costs (such as indirect construction, overhead and carrying costs). Depending on the underlying objective of the project, assumptions could have a significant impact on the projected cash flow analysis. For example, if our objective is to preserve operating margins, our cash flow analysis will be different than if the objective is to increase the velocity of sales. These objectives may vary significantly from project to project and change over time.

If a real estate asset is deemed impaired, the impairment is calculated by determining the amount the asset's carrying value exceeds its fair value in accordance with ASC 820. We calculate the fair value of real estate inventories considering a land residual value analysis and a discounted cash flow analysis. Under the discounted cash flow method, the fair value is determined by calculating the present value of future cash flows using a risk adjusted discount rate. Some of the critical assumptions involved with measuring the asset's fair value include estimating future revenues, sales absorption rates,

development and construction costs, and other applicable project costs. This evaluation and the assumptions used by management to determine future estimated cash flows and fair value require a substantial degree of judgment, especially with respect to real estate projects that have a substantial amount of development to be completed, have not started selling or are in the early stages of sales, or are longer in duration. Actual revenues, costs and time to complete and sell a community could vary from these estimates which could impact the calculation of fair value of the asset and the corresponding amount of impairment that is recorded in our results of operations. For the three and six months ended June 30, 2019 and 2018, no real estate impairments were recorded.

Capitalization of Interest

We follow the practice of capitalizing interest to real estate inventories during the period of development and to investments in unconsolidated joint ventures, when applicable, in accordance with ASC 835, Interest ("ASC 835"). Interest capitalized as a cost component of real estate inventories is included in cost of home sales as related homes or lots are sold. To the extent interest is capitalized to investment in unconsolidated joint ventures, it is included as a reduction of income from unconsolidated joint ventures when the related homes or lots are sold to third parties. In instances where the Company purchases land from an unconsolidated joint venture, the pro rata share of interest capitalized to investment in unconsolidated joint ventures is added to the basis of the land acquired and recognized as a cost of sale upon the delivery of the related homes or land to a third-party buyer. To the extent our debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred by us. Qualified assets represent projects that are actively selling or under development as well as investments in unconsolidated joint ventures accounted for under the equity method until such equity investees begin their principal operations.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To do this, the Company performs the following five steps as outlined in ASC 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

Home Sales and Profit Recognition

In accordance with ASC 606, home sales revenue is recognized when our performance obligations within the underlying sales contracts are fulfilled. We consider our obligations fulfilled when closing conditions are complete, title has transferred to the homebuyer, and collection of the purchase price is reasonably assured. Sales incentives are recorded as a reduction of revenues when the respective home is closed. The profit we record is based on the calculation of cost of sales, which is dependent on our allocation of costs, as described in more detail above in the section entitled "Real Estate Inventories and Cost of Sales." When it is determined that the earnings process is not complete, the related revenue and profit are deferred for recognition in future periods.

Fee Building

The Company enters into fee building agreements to provide services whereby it builds homes on behalf of third-party property owners. The third-party property owner funds all project costs incurred by the Company to build and sell the homes. The Company primarily enters into cost plus fee contracts where it charges third-party property owners for all direct and indirect costs plus a fee. The fee is typically a per-unit fixed fee or based on a percentage of the cost or home sales revenue of the project, depending on the terms of the agreement with the third-party property owner. For these types of contracts, the Company recognizes revenue based on the actual total costs it has incurred plus the applicable fee. In accordance with ASC 606, we apply the percentage-of-completion method, using the cost-to-cost approach, as it most accurately measures the progress of our efforts in satisfying our obligations within the fee building agreements. Under this approach, revenue is earned in proportion to total costs incurred divided by total costs expected to be incurred. In the course of providing fee building services, the Company routinely subcontracts for services and incurs other direct costs on behalf of the property owners. These costs are passed through to the property owners and, in accordance with GAAP, are included in the Company’s revenues and cost of sales.

The Company also provides construction management and coordination services and sales and marketing services as part of agreements with third parties and its unconsolidated joint ventures. In certain contracts, the Company also provides project

management and administrative services. For most services provided, the Company fulfills its related obligations as time-based measures, according to the input method guidance described in ASC 606. Accordingly, revenue is recognized on a straight-line basis as the Company's efforts are expended evenly throughout the performance period. The Company may also have an obligation to manage the home or lot sales process as part of providing sales and marketing services. This obligation is considered fulfilled when related homes or lots close escrow, as these events represent milestones reached according to the output method guidance described in ASC 606. Accordingly, revenue is recognized in the period that the corresponding lots or homes close escrow. Costs associated with these services are recognized as incurred.

The Company’s fee building revenues have historically been concentrated with a small number of customers. For the three and six months ended June 30, 2019 and 2018, one customer comprised 95%, 93%, 95% and 96%, respectively, of fee building revenue. The balance of the fee building revenues primarily represented management fees earned from unconsolidated joint ventures and third-party customers. As of June 30, 2019 and December 31, 2018, one customer comprised 39% and 48% of contracts and accounts receivable, respectively, with the balance of contracts and accounts receivable primarily representing escrow receivables from home sales.

Variable Interest Entities

The Company accounts for variable interest entities in accordance with ASC 810, Consolidation ("ASC 810"). Under ASC 810, a variable interest entity ("VIE") is created when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the direct or indirect ability to make decisions about the entity, (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of the equity holder with disproportionately few voting rights.

Once we consider the sufficiency of equity and voting rights of each legal entity, we then evaluate the characteristics of the equity holders' interests, as a group, to see if they qualify as controlling financial interests. Our real estate joint ventures consist of limited partnerships and limited liability companies. For entities structured as limited partnerships or limited liability companies, our evaluation of whether the equity holders (equity partners other than us in each our joint ventures) lack the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members (the non-controlling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:

• Participating rights - provide the non-controlling equity holders the ability to direct significant financial and operational decision made in the ordinary course of business that most significantly influence the entity's economic performance.

• Kick-out rights - allow the non-controlling equity holders to remove the general partner or managing member without cause.

If we conclude that any of the three characteristics of a VIE are met, including if equity holders lack the characteristics of a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.

If an entity is deemed to be a VIE pursuant to ASC 810, the enterprise that has both (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE.

Under ASC 810, a nonrefundable deposit paid to an entity may be deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as real estate inventories, which we would have to write off should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a nonrefundable deposit, a VIE may have been created. At June 30, 2019, the Company had outstanding nonrefundable cash deposits of $15.3 million pertaining to land option contracts and purchase contracts.

As of June 30, 2019 and December 31, 2018, the Company was not required to consolidate any VIEs. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

Non-controlling Interest

During 2013, the Company entered into a joint venture agreement with a third-party property owner. In accordance with ASC 810, the Company analyzed this arrangement and determined that it was not a VIE; however, the Company determined it was required to consolidate the joint venture as the Company has a controlling financial interest with the powers to direct the major decisions of the entity.  As of June 30, 2019 and December 31, 2018, the third-party investor had an equity balance of $0.1 million and $0.1 million, respectively.

Investments in and Advances to Unconsolidated Joint Ventures

We use the equity method to account for investments in homebuilding and land development joint ventures when any of the following situations exist: 1) the joint venture qualifies as a VIE and we are not the primary beneficiary, 2) we do not control the joint venture but have the ability to exercise significant influence over its operating and financial policies, or 3) we function as the managing member or general partner of the joint venture and our joint venture partner has substantive participating rights or can replace us as managing member or general partner without cause.

As of June 30, 2019, the Company concluded that none of its joint ventures were VIEs and accounted for these entities under the equity method of accounting.

Under the equity method, we recognize our proportionate share of earnings and losses generated by the joint venture upon the delivery of lots or homes to third parties. Our proportionate share of intra-entity profits and losses are eliminated until the related asset has been sold by the unconsolidated joint venture to third parties. We classify cash distributions received from equity method investees using the cumulative earnings approach consistent with ASC 230, Statement of Cash Flows ("ASC 230"). Under the cumulative earnings approach, distributions received are considered returns on investment and is classified as cash inflows from operating activities unless the cumulative distributions received exceed cumulative equity in earnings. When such an excess occurs, the current-period distribution up to this excess is considered a return of investment and is classified as cash inflows from investing activities. Our ownership interests in our unconsolidated joint ventures vary, but are generally less than or equal to 35%. The accounting policies of our joint ventures are generally consistent with those of the Company.

We review real estate inventory held by our unconsolidated joint ventures for impairment on a quarterly basis, consistent with how we review our real estate inventories as described in more detail above in the section entitled "Real Estate Inventories and Cost of Sales." We also review our investments in and advances to unconsolidated joint ventures for evidence of other-than-temporary declines in value in accordance with ASC 820. To the extent we deem any portion of our investment in and advances to unconsolidated joint ventures as not recoverable, we impair our investment accordingly. For the three and six months ended June 30, 2019 and 2018, no impairments related to investment in and advances to unconsolidated joint ventures were recorded.

Selling and Marketing Expense

Costs incurred for tangible assets directly used in the sales process such as our sales offices, design studios and model landscaping and furnishings are capitalized to other assets in the accompanying condensed consolidated balance sheets under ASC 340, Other Assets and Deferred Costs ("ASC 340"). These costs are depreciated to selling and marketing expenses generally over the shorter of 30 months or the actual estimated life of the selling community. All other selling and marketing costs, such as commissions and advertising, are expensed as incurred.

Warranty Accrual

We offer warranties on our homes that generally cover various defects in workmanship or materials, or structural construction defects for one year. In addition, we provide a more limited warranty, which generally ranges from a minimum of two years up to the period covered by the applicable statute of repose, that covers certain defined construction defects. Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Amounts are accrued based upon the Company’s historical rates. In addition, the Company has received warranty payments from third-party property owners for certain of its fee building projects that have since closed-out where the Company has the contractual risk of construction. These payments are recorded as warranty accruals. We assess the adequacy of our warranty accrual on a quarterly basis and adjust the amounts recorded if necessary. Our warranty accrual is included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets and adjustments to our warranty accrual are recorded through cost of sales.

Contracts and Accounts Receivable

Contracts and accounts receivable primarily represent the fees earned, but not collected, and reimbursable project costs incurred in connection with fee building agreements. The Company periodically evaluates the collectability of its contracts receivable, and, if it is determined that a receivable might not be fully collectible, an allowance is recorded for the amount deemed uncollectible. This allowance for doubtful accounts is estimated based on management’s evaluation of the contracts involved and the financial condition of its customers. Factors considered in such evaluations include, but are not limited to: (i) customer type; (ii) historical contract performance; (iii) historical collection and delinquency trends; (iv) customer credit worthiness; and (v) general economic conditions. In addition to contracts receivable, escrow receivables are included in contracts and accounts receivable in the accompanying condensed consolidated balance sheets. As of June 30, 2019 and December 31, 2018, no allowance was recorded related to contracts and accounts receivable.

Property, Equipment and Capitalized Selling and Marketing Costs

Property, equipment and capitalized selling and marketing costs are recorded at cost and included in other assets in the accompanying condensed consolidated balance sheets. Property and equipment are depreciated to general and administrative expenses using the straight-line method over their estimated useful lives ranging from three to five years. Leasehold improvements are stated at cost and are amortized to general and administrative expenses using the straight-line method generally over the shorter of either their estimated useful lives or the term of the lease. Capitalized selling and marketing costs are depreciated using the straight-line method to selling and marketing expenses over the shorter of either 30 months or the actual estimated life of the selling community.

Income Taxes

Income taxes are accounted for in accordance with ASC 740, Income Taxes ("ASC 740"). The consolidated provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not (defined as a likelihood of more than 50%) unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the tax asset we conclude is more likely than not unrealizable. Our assessment considers, among other things, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, the duration of statutory carryforward periods, our utilization experience with net operating losses and tax credit carryforwards and available tax planning alternatives, to the extent these items are applicable. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income during the periods in which the differences become deductible. The value of our deferred tax assets will depend on applicable income tax rates. Judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated financial statements. At June 30, 2019 and December 31, 2018, no valuation allowance was recorded.

ASC 740 defines the methodology for recognizing the benefits of uncertain tax return positions as well as guidance regarding the measurement of the resulting tax benefits.  These provisions require an enterprise to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.  In addition, these provisions provide guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  The evaluation of whether a tax position meets the more-likely-than-not recognition threshold requires a substantial degree of judgment by management based on the individual facts and circumstances. At June 30, 2019, the Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements.

The Company classifies any interest and penalties related to income taxes assessed as part of income tax expense. As of June 30, 2019, the Company has not been assessed interest or penalties by any major tax jurisdictions related to any open tax periods.

Stock-Based Compensation

We account for share-based awards in accordance with ASC 718, Compensation – Stock Compensation ("ASC 718") and ASC 505-50, Equity – Equity Based Payments to Non-Employees ("ASC 505-50").

ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in a company's financial statements. ASC 718 requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans.

On February 16, 2017, the Company entered into an agreement that transitioned Wayne Stelmar's role within the Company from Chief Investment Officer to a non-employee consultant and non-employee director. Per the agreement, Mr. Stelmar's outstanding equity awards continued to vest in accordance with their original terms. Under ASC 505-50, if an employee becomes a non-employee and continues to vest in an award pursuant to the award's original terms, that award will be treated as an award to a non-employee prospectively, provided the individual is required to continue providing services to the employer (such as consulting services). Based on the terms and conditions of Mr. Stelmar's consulting agreement noted above, we accounted for his share-based awards in accordance with ASC 505-50 through March 31, 2018. ASC 505-50 required that these awards be accounted for prospectively, such that the fair value of the awards was re-measured at each reporting date until the earlier of (a) the performance commitment date or (b) the date the services required under the transition agreement with Mr. Stelmar have been completed. ASC 505-50 required that compensation cost ultimately recognized in the Company's financial statements be the sum of (a) the compensation cost recognized during the period of time the individual was an employee (based on the grant-date fair value) plus (b) the fair value of the award determined on the measurement date determined in accordance with ASC 505-50 for the pro-rata portion of the vesting period in which the individual was a non-employee.

In June of 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") which expanded the scope of ASC 718 to include share-based payments for acquiring goods and services from nonemployees, with certain exceptions. Under ASC 718, the measurement date for equity-classified, share-based awards is generally the grant date of the award. The Company early adopted ASU 2018-07 on April 1, 2018, at which time Mr. Stelmar's award was the only nonemployee award outstanding. In accordance with the transition guidance, the Company assessed Mr. Stelmar's award for which a measurement date had not been established. The outstanding award was re-measured to fair value as of the April 1, 2018 adoption date. The adoption of ASU 2018-07 provided administrative relief by fixing the remaining unamortized expense of the award and eliminating the requirement to quarterly re-measure the Company's one remaining nonemployee award. The Company adopted this standard on a modified retrospective basis booking a cumulative-effect adjustment of an $18,000 increase to retained earnings and equal decrease to additional paid-in capital as of the beginning of the 2018 fiscal year. Mr. Stelmar's award was fully expensed as of March 31, 2019.

Share Repurchase and Retirement

When shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired to both retained earnings and additional paid-in capital. The portion allocated to additional paid-in capital is determined by applying a percentage, which is determined by dividing the number of shares to be retired by the number of shares issued, to the balance of additional paid-in capital as of the retirement date. The residual, if any, is allocated to retained earnings as of the retirement date.

During the six months ended June 30, 2019 and 2018, the Company repurchased and retired 153,916 and 205,240 shares of its common stock at an aggregate purchase price of $1.0 million and $2.1 million, respectively. The shares were returned to the status of authorized but unissued.

Dividends

No dividends were paid on our common stock during the three and six months ended June 30, 2019 and 2018. We currently intend to retain our future earnings to finance the development and expansion of our business and, therefore, do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, compliance with Delaware law, restrictions contained in any financing instruments, including but not limited to, our unsecured credit facility and senior notes indenture, and such other factors as our board of directors deem relevant.

Recently Issued Accounting Standards

The Company currently qualifies as an "emerging growth company" pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Section 102 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards. As previously disclosed, the Company has chosen, irrevocably, to "opt out" of such extended transition period, and as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASC 842"). ASC 842 requires organizations that lease assets (referred to as "lessees") to present lease assets and lease liabilities on the balance sheet at their gross value based on the rights and obligations created by those leases. Under ASC 842, a lessee is required to recognize assets and liabilities for leases with greater than 12 month terms. Lessor accounting remains substantially similar to prior GAAP. The Company's lease agreements impacted by ASC 842 primarily relate to our corporate headquarters, other office locations and office or construction equipment where we are the lessee and are all classified as operating leases.

The Company adopted ASC 842 on January 1, 2019 under the modified retrospective approach. Under the modified retrospective approach, the Company applied the requirements of ASC 842 to its leases as of the adoption date and recognized a $3.1 million right-of-use asset and a related $3.5 million liability. The comparative information has not been restated and continues to be reported as it was previously, under the appropriate accounting standards in effect for those periods. For additional information on our operating leases, please see Note 11.

For leases that commenced before the January 1, 2019 adoption date, the Company has elected the practical expedient package outlined in ASC 842-10-65-1(f) which prescribes the following:

1.An entity need not reassess whether any expired or existing contracts contain leases.

2. An entity need not reassess the lease classification for any expired or existing leases (for example, all existing leases that were classified as operating leases in accordance with ASC 840, Leases, will be classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC 840 will be classified as finance leases).

3.An entity need not reassess initial direct costs for any existing lease.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which changes the impairment model for most financial assets and certain other instruments from an "incurred loss" approach to a new "expected credit loss" methodology. The FASB followed up with ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019 and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), in May 2019 to provide further clarification on this topic. The standard is effective for annual and interim periods beginning January 1, 2020, with early adoption permitted, and requires full retrospective application upon adoption. The Company is currently evaluating the impact of ASU 2016-13 and does not anticipate a material impact to its consolidated financial statements as a result of adoption.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The amendments in ASU 2018-13 modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-13 and does not anticipate a material impact to the consolidated financial statements as a result of adoption.

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Computation of Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Computation of Earnings (Loss) Per Share

Computation of Income (Loss) Per Share

The following table sets forth the components used in the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019			2018
	(Dollars in thousands, except per share amounts)
Numerator:
Net income (loss) attributable to The New Home Company Inc.	$	1,572	$	115	$	(415	)	$	(525	)
Denominator:
Basic weighted-average shares outstanding	20,070,914		20,958,991		20,028,600			20,942,601
Effect of dilutive shares:
Stock options and unvested restricted stock units	24,619		65,778		—			—
Diluted weighted-average shares outstanding	20,095,533		21,024,769		20,028,600			20,942,601
Basic income (loss) per share attributable to The New Home Company Inc.	$	0.08	$	0.01	$	(0.02	)	$	(0.03	)
Diluted income (loss) per share attributable to The New Home Company Inc.	$	0.08	$	0.01	$	(0.02	)	$	(0.03	)
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	1,349,106		952,882		1,292,726			1,333,106

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Contracts and Accounts Receivable

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Contracts and Accounts Receivable

Contracts and Accounts Receivable

Contracts and accounts receivable consist of the following:

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Contracts receivable:
Costs incurred on fee building projects	$	41,038		$	159,136
Estimated earnings	909			4,401
	41,947			163,537
Less: amounts collected during the period	(35,642		)	(154,743		)
Contracts receivable	$	6,305		$	8,794
Contracts receivable:
Billed	$	—		$	—
Unbilled	6,305			8,794
	6,305			8,794
Accounts receivable:
Escrow receivables	9,530			8,787
Other receivables	278			684
Contracts and accounts receivable	$	16,113		$	18,265

Billed contracts receivable represent amounts billed to customers that have yet to be collected. Unbilled contracts receivable represents the contract revenue recognized but not yet invoiced. All unbilled receivables as of June 30, 2019 and

December 31, 2018 are expected to be billed and collected within 30 days. Accounts payable at June 30, 2019 and December 31, 2018 includes $5.6 million and $8.5 million, respectively, related to costs incurred under the Company’s fee building contracts.

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Real Estate Inventories

6 Months Ended

Jun. 30, 2019

Real Estate [Abstract]

Real Estate Inventories

Real Estate Inventories

Real estate inventories are summarized as follows:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Deposits and pre-acquisition costs	$	17,485	$	20,726
Land held and land under development	122,392		115,987
Homes completed or under construction	352,535		380,956
Model homes	49,542		48,621
	$	541,954	$	566,290

All of our deposits and pre-acquisition costs are nonrefundable, except for refundable deposits of $0.7 million and $0.9 million as of June 30, 2019 and December 31, 2018, respectively.

Land held and land under development includes land costs and costs incurred during site development such as development, indirects, and permits. Homes completed or under construction and model homes include all costs associated with home construction, including land, development, indirects, permits, materials and labor (except for capitalized selling and marketing costs, which are classified in other assets).

In accordance with ASC 360, inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. We review each real estate asset at the community-level on a quarterly basis or whenever indicators of impairment exist.

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Capitalized Interest (Notes)

6 Months Ended

Jun. 30, 2019

Capitalized Interest [Abstract]

Capitalized Interest

Capitalized Interest

Interest is capitalized to inventory and investment in unconsolidated joint ventures during development and other qualifying activities. Interest capitalized as a cost of inventory is included in cost of sales as related homes are closed. Interest capitalized to investment in unconsolidated joint ventures is amortized to equity in net income (loss) of unconsolidated joint ventures as related joint venture homes or lots close, or in instances where lots are sold from the unconsolidated joint venture to the Company, the interest is added to the land basis and included in cost of sales when the related lots or homes are sold to third-party buyers. For the three and six months ended June 30, 2019 and 2018 interest incurred, capitalized and expensed was as follows:

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Interest incurred	$	7,606		$	6,612		$	15,367		$	13,328
Interest capitalized to inventory	(7,606		)	(6,149		)	(15,367		)	(12,344		)
Interest capitalized to investment in unconsolidated joint ventures	—			(463		)	—			(984		)
Interest expensed	$	—		$	—		$	—		$	—
Capitalized interest in beginning inventory	$	28,600		$	19,884		$	25,681		$	16,453
Interest capitalized as a cost of inventory	7,606			6,149			15,367			12,344
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	3			5			13			5
Previously capitalized interest included in cost of home sales	(6,301		)	(3,750		)	(11,153		)	(6,514		)
Capitalized interest in ending inventory	$	29,908		$	22,288		29,908			22,288
Capitalized interest in beginning investment in unconsolidated joint ventures	$	672		$	1,962		$	713		$	1,472
Interest capitalized to investment in unconsolidated joint ventures	—			463			—			984
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	(3		)	(5		)	(13		)	(5		)
Previously capitalized interest included in equity in net income (loss) of unconsolidated joint ventures	(48		)	(18		)	(79		)	(49		)
Capitalized interest in ending investment in unconsolidated joint ventures	621			2,402			621			2,402
Total capitalized interest in ending inventory and investments in unconsolidated joint ventures	$	30,529		$	24,690		$	30,529		$	24,690
Capitalized interest as a percentage of inventory	5.5		%	4.7		%	5.5		%	4.7		%
Interest included in cost of home sales as a percentage of home sales revenue	4.4		%	3.2		%	4.7		%	3.3		%
Capitalized interest as a percentage of investment in and advances to unconsolidated joint ventures	1.8		%	4.1		%	1.8		%	4.1		%

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Investments in and advances to unconsolidated joint ventures

6 Months Ended

Jun. 30, 2019

Equity Method Investments and Joint Ventures [Abstract]

Investments in and Advances to Unconsolidated Joint Ventures

Unconsolidated Joint Ventures

As of June 30, 2019 and December 31, 2018, the Company had ownership interests in 10 unconsolidated joint ventures with ownership percentages that generally ranged from 5% to 35%. The condensed combined balance sheets for our unconsolidated joint ventures accounted for under the equity method were as follows:

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Cash and cash equivalents	$	35,145		$	45,945
Restricted cash	14,740			19,205
Real estate inventories	338,176			374,607
Other assets	5,950			4,231
Total assets	$	394,011		$	443,988
Accounts payable and accrued liabilities	$	36,191		$	43,158
Notes payable	40,564			71,299
Total liabilities	76,755			114,457
The New Home Company's equity	33,016			33,617
Other partners' equity	284,240			295,914
Total equity	317,256			329,531
Total liabilities and equity	$	394,011		$	443,988
Debt-to-capitalization ratio	11.3		%	17.8		%
Debt-to-equity ratio	12.8		%	21.6		%

The condensed combined statements of operations for our unconsolidated joint ventures accounted for under the equity method were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars in thousands)
Revenues	$	59,078	$	33,879		$	101,365	$	65,892
Cost of sales and expenses	57,288		34,165			99,062		65,374
Net income (loss) of unconsolidated joint ventures	$	1,790	$	(286	)	$	2,303	$	518
Equity in net income (loss) of unconsolidated joint ventures reflected in the accompanying condensed consolidated statements of operations	$	185	$	(120	)	$	369	$	215

As a smaller reporting company, the Company is subject to the provisions of Rule 8-03(b)(3) of Regulation S-X which requires the disclosure of certain financial information for equity investees that constitute 20% of more of the Company's consolidated net income (loss). For the six months ended June 30, 2019, income allocations from two of the Company's unconsolidated joint ventures accounted for under the equity method each exceeded 20% of the Company's consolidated net income (loss). The table below presents select combined financial information for these joint ventures:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Revenues	$	44,358	$	23,798	$	76,395	$	53,439
Cost of home sales	40,548		21,910		69,624		47,544
Gross margin	$	3,810	$	1,888	$	6,771	$	5,895
Expenses	1,983		1,779		3,840		4,193
Net income	$	1,827	$	109	$	2,931	$	1,702
Equity in net income (loss) of unconsolidated joint ventures reflected in the accompanying consolidated statements of operations	$	261	$	11	$	488	$	452

For the three and six months ended June 30, 2019 and 2018, the Company earned $0.6 million, $1.2 million, $0.7 million and $1.7 million respectively, in management fees from its unconsolidated joint ventures. For additional detail regarding management fees, please see Note 12.

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Other Assets

6 Months Ended

Jun. 30, 2019

Other Assets [Abstract]

Other Assets

Other Assets

Other assets consist of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Property, equipment and capitalized selling and marketing costs, net (1)	$	9,094	$	11,738
Deferred tax asset, net	13,937		13,937
Prepaid income taxes	443		514
Prepaid expenses	5,715		6,348
Warranty insurance receivable (2)	1,257		915
Right-of-use lease asset (3)	2,541		—
	$	32,987	$	33,452

(1) The Company depreciated $2.3 million, $4.9 million, $1.5 million and $2.4 million of capitalized selling and marketing costs to selling and marketing expenses during the three and six months ended June 30, 2019 and 2018, respectively. The Company depreciated $0.1 million, $0.2 million, $0.1 million and $0.2 million of property and equipment to general and administrative expenses during the three and six months ended June 30, 2019 and 2018, respectively.

(2) The Company adjusted its warranty insurance receivable by $0.6 million during the 2019 second quarter to true-up the receivable to align with actual reimbursement experience rates which resulted in pretax income of the same amount. The impact to net income was $0.4 million or $0.02 per diluted share.

(3)

In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

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Accrued Expenses and Other Liabilities

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Accrued Expenses and Other Liabilities

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities consist of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Warranty accrual(1)	$	7,049	$	6,898
Accrued compensation and benefits	3,157		5,749
Accrued interest	6,236		6,497
Completion reserve	3,351		4,192
Lease liability(2)	2,902		—
Customer deposits	7,188		2,192
Other accrued expenses	2,492		3,500
	$	32,375	$	29,028

(1) Included in the amount at June 30, 2019 and December 31, 2018 is approximately $1.3 million and $0.9 million, respectively, of warranty liabilities estimated to be recovered by our insurance policies.

(2) In conjunction with the adoption of ASC 842, the Company established a $3.5 million lease liability on January 1, 2019. For more information, please refer to Note 1 and Note 11.

Changes in our warranty accrual are detailed in the table set forth below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Beginning warranty accrual for homebuilding projects	$	6,767		$	6,775		$	6,681		$	6,634
Warranty provision for homebuilding projects	627			470			1,054			986
Warranty payments for homebuilding projects	(581		)	(469		)	(922		)	(844		)
Adjustment to warranty accrual(1)	94			—			94			—
Ending warranty accrual for homebuilding projects	6,907			6,776			6,907			6,776
Beginning warranty accrual for fee building projects	178			223			217			225
Warranty provision for fee building projects	—			—			9			—
Warranty efforts for fee building projects	(18		)	(1		)	(66		)	(3		)
Adjustment to warranty accrual for fee building projects(1)	(18		)	—			(18		)	—
Ending warranty accrual for fee building projects	142			222			142			222
Total ending warranty accrual	$	7,049		$	6,998		$	7,049		$	6,998

(1) During the 2019 second quarter, we recorded an adjustment of $0.1 million to our warranty accrual for homebuilding projects due to higher expected warranty expenditures which is included in "Adjustment to warranty accrual" above and resulted in an increase of the same amount to cost of home sales in the accompanying condensed consolidated statement of operations. Also during the 2019 second quarter, the Company recorded an adjustment of $18,000 due to lower experience rate of expected warranty expenditures for fee building projects which is included in "Adjustment to warranty accrual for fee building projects" above and resulted in a reduction of the same amount to cost of fee building sales in the accompanying condensed consolidated statement of operations.

We maintain general liability insurance designed to protect us against a portion of our risk of loss from construction-related warranty and construction defect claims. Our warranty accrual and related estimated insurance recoveries are based on historical claim and expense data, and expected recoveries from insurance carriers are recorded based on actual insurance claims and amounts determined using our warranty accrual estimates, our insurance policy coverage limits for the applicable policy years and historical recovery rates. Because of the inherent uncertainty and variability in these assumptions, our actual insurance recoveries could differ significantly from amounts currently estimated.

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Senior Notes and Unsecured Revolving Credit Facility

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Senior Notes Payable and Unsecured Revolving Credit Facility

Senior Notes and Unsecured Revolving Credit Facility

Indebtedness consisted of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
7.25% Senior Notes due 2022, net	$	309,060	$	320,148
Unsecured revolving credit facility	66,000		67,500
Total Indebtedness	$	375,060	$	387,648

On March 17, 2017, the Company completed the sale of $250 million in aggregate principal amount of 7.25% Senior Notes due 2022 (the "Existing Notes"), in a private placement. The Existing Notes were issued at an offering price of 98.961% of their face amount, which represents a yield to maturity of 7.50%. On May 4, 2017, the Company completed a tack-on private placement offering through the sale of an additional $75 million in aggregate principal amount of the 7.25% Senior Notes due 2022 ("Additional Notes"). The Additional Notes were issued at an offering price of 102.75% of their face amount plus accrued interest since March 17, 2017, which represented a yield to maturity of 6.438%. Net proceeds from the Existing Notes were used to repay all borrowings outstanding under the Company’s senior unsecured revolving credit facility with the remainder used for general corporate purposes. Net proceeds from the Additional Notes were used for working capital, land acquisition and general corporate purposes. Interest on the Existing Notes and the Additional Notes (together, the "Notes") is paid semiannually in arrears on April 1 and October 1. The Notes were exchanged in an exchange offer for Notes that are identical to the original Notes, except that they are registered under the Securities Act, and are freely tradeable in accordance with applicable law.

The carrying amount of our Senior Notes listed above at June 30, 2019 is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million, each of which are amortized and capitalized to interest costs on a straight-line basis over the respective terms of the notes which approximates the effective interest method. The carrying amount for the Senior Notes listed above at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. Debt issuance costs for the unsecured revolving credit facility are included in other assets and amortized and capitalized to interest costs on a straight-line basis over the term of the agreement.

The Notes are general senior unsecured obligations that rank equally in right of payment to all existing and future senior indebtedness, including borrowings under the Company's senior unsecured revolving credit facility. The Notes contain certain restrictive covenants, including a limitation on additional indebtedness and a limitation on restricted payments. Restricted payments include, among other things, dividends, investments in unconsolidated entities, and stock repurchases. Under the limitation on additional indebtedness, we are permitted to incur specified categories of indebtedness but are prohibited, aside from those exceptions, from incurring further indebtedness if we do not satisfy either a leverage condition or an interest coverage condition. Exceptions to the limitation include, among other things, borrowings of up to $260 million under existing or future bank credit facilities, non-recourse indebtedness, and indebtedness incurred for the purpose of refinancing or repaying certain existing indebtedness. Under the limitation on restricted payments, we are also prohibited from making restricted payments, aside from certain exceptions, if we do not satisfy either condition. In addition, the amount of restricted payments that we can make is subject to an overall basket limitation, which builds based on, among other things, 50% of consolidated net income from January 1, 2017 forward and 100% of the net cash proceeds from qualified equity offerings. Exceptions to the foregoing limitations on our ability to make restricted payments include, among other things, investments in joint ventures and other investments up to 15% of our consolidated tangible net assets and a general basket of $15 million. The Notes are guaranteed, on an unsecured basis, jointly and severally, by all of the Company's 100% owned subsidiaries. See Note

17 for information about the guarantees and supplemental financial statement information about our guarantor subsidiaries group and non-guarantor subsidiaries group.

During the 2019 second quarter, the Company repurchased and retired approximately $7.0 million in face value of the Notes. The Notes were purchased at 90.82% of face value, for a cash payment of $6.3 million. The Company recognized a $0.6 million gain on the early extinguishment of debt, and the unamortized discount, premium and debt issuance costs associated with the retired notes totaling approximately $90,000 were written off. Total repurchases of the Notes for the six months ended June 30, 2019 equaled $12.0 million in face value at 90.58% of the face value, for a cash payment of $10.9 million. The Company recognized a total gain on early extinguishment of debt of $1.0 million and wrote off approximately $160,000 of unamortized discount, premium and debt issuance costs associated with the Notes retired during the six months ended June 30, 2019.

The Company's unsecured revolving credit facility ("Credit Facility") is with a bank group and matures on September 1, 2020. Total commitments under the Credit Facility are $200 million with an accordion feature that allows the facility size thereunder to be increased up to an aggregate of $300 million, subject to certain financial conditions, including the availability of bank commitments. As of June 30, 2019, we had $66.0 million of outstanding borrowings under the credit facility. Interest is payable monthly and is charged at a rate of 1-month LIBOR plus a margin ranging from 2.25% to 3.00% depending on the Company’s leverage ratio as calculated at the end of each fiscal quarter. As of June 30, 2019, the interest rate under the Credit Facility was 5.40%. Pursuant to the Credit Facility, the Company is required to maintain certain financial covenants as defined in the Credit Facility, including (i) a minimum tangible net worth; (ii) maximum leverage ratios; (iii) a minimum liquidity covenant; and (iv) a minimum fixed charge coverage ratio based on EBITDA (as detailed in the Credit Facility) to interest incurred or if this test is not met, the Company maintains unrestricted cash equal to not less than the trailing 12 month consolidated interest incurred. As of June 30, 2019, the Company was in compliance with all financial covenants.

The Credit Facility also provides a $25 million sublimit for letters of credit, subject to conditions set forth in the agreement. As of June 30, 2019 and December 31, 2018, the Company had $2.3 million in outstanding letters of credit issued under the Credit Facility.

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Fair Value Disclosures

6 Months Ended

Jun. 30, 2019

Fair Value Disclosures [Abstract]

Fair Value Disclosures

Fair Value Disclosures

ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and requires assets and liabilities carried at fair value to be classified and disclosed in the following three categories:

• 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 measurement date

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

Fair Value of Financial Instruments

The following table presents an estimated fair value of the Company's Notes and Credit Facility. The Notes are classified as Level 2 and primarily reflect estimated prices obtained from outside pricing sources. The Company's Credit Facility is classified as Level 3 within the fair value hierarchy. The Company had an outstanding balance of $66.0 million under its Credit Facility at June 30, 2019, and the estimated fair value of the outstanding balance approximated the carrying value due to the short-term nature of LIBOR contracts.

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
7.25% Senior Notes due 2022, net (1)	$	309,060	$	294,234	$	320,148	$	292,500
Unsecured revolving credit facility	$	66,000	$	66,000	$	67,500	$	67,500

(1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.    

The Company considers the carrying value of cash and cash equivalents, restricted cash, contracts and accounts receivable, accounts payable, and accrued expenses and other liabilities to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. The fair value of amounts due from affiliates is not determinable due to the related party nature of such amounts.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

From time-to-time, the Company is involved in various legal matters arising in the ordinary course of business. These claims and legal proceedings are of a nature that we believe are normal and incidental to a homebuilder. We make provisions for loss contingencies when they are probable and the amount of the loss can be reasonably estimated. Such provisions are assessed at least quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel, and other information and events pertaining to a particular case. In view of the inherent unpredictability of litigation, we generally cannot predict their ultimate resolution, related timing or eventual loss. At this time, we do not believe that our loss contingencies, individually or in the aggregate, are material to our consolidated financial statements.

As an owner and developer of real estate, the Company is subject to various environmental laws of federal, state and local governments. The Company is not aware of any environmental liability that could have a material adverse effect on its financial condition or results of operations. However, changes in applicable environmental laws and regulations, the uses and conditions of real estate in the vicinity of the Company’s real estate and other environmental conditions of which the Company is unaware with respect to the real estate could result in future environmental liabilities.

The Company has provided credit enhancements in connection with joint venture borrowings in the form of LTV maintenance agreements in order to secure the joint venture's performance under the loans and maintenance of certain LTV ratios. The Company has also entered into agreements with its partners in each of the unconsolidated joint ventures whereby the Company and its partners are apportioned liability under the LTV maintenance agreements according to their respective capital interest. In addition, the agreements provide the Company, to the extent its partner has an unpaid liability under such credit enhancements, the right to receive distributions from the unconsolidated joint venture that would otherwise be made to the partner. However, there is no guarantee that such distributions will be made or will be sufficient to cover the Company's liability under such LTV maintenance agreements. The loans underlying the LTV maintenance agreements comprise acquisition and development loans, construction revolvers and model home loans, and the agreements remain in force until the loans are satisfied. Due to the nature of the loans, the outstanding balance at any given time is subject to a number of factors including the status of site improvements, the mix of horizontal and vertical development underway, the timing of phase build outs, and the period necessary to complete the escrow process for homebuyers. As of June 30, 2019 and December 31, 2018, $24.4 million and $41.3 million, respectively, was outstanding under loans that are credit enhanced by the Company through LTV maintenance agreements. Under the terms of the joint venture agreements, the Company's proportionate share of LTV maintenance agreement liabilities was $4.9 million and $7.3 million, respectively, as of June 30, 2019 and December 31, 2018. In addition, the Company has provided completion agreements regarding specific performance for certain projects whereby the Company is required to complete the given project with funds provided by the beneficiary of the agreement. If there are not adequate funds available under the specific project loans, the Company would then be subject to financial liability under such completion agreements. Typically, under such terms of the joint venture agreements, the Company has the right to apportion the respective share of any costs funded under such completion agreements to its partners. However, there is no guarantee that we will be able to recover against our partners for such amounts owed to us under the terms of such joint venture agreements. In connection with joint venture borrowings, the Company also selectively provides (a) an environmental indemnity provided to the lender that holds the lender harmless from and against losses arising from the discharge of hazardous materials from the property and non-compliance with applicable environmental laws; and (b) indemnification of the lender from "bad boy acts" of

the unconsolidated entity such as fraud, misrepresentation, misapplication or non-payment of rents, profits, insurance, and condemnation proceeds, waste and mechanic liens, and bankruptcy.

We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. As of June 30, 2019 and December 31, 2018, the Company had outstanding surety bonds totaling $52.8 million and $50.5 million, respectively. The estimated remaining costs to complete of such improvements as of June 30, 2019 and December 31, 2018 were $25.1 million and $20.3 million, respectively. The beneficiaries of the bonds are various municipalities and other organizations. In the event that any such surety bond issued by a third party is called because the required improvements are not completed, the Company could be obligated to reimburse the issuer of the bond.

The Company accounts for contracts deemed to contain a lease under ASC 842. At the inception of a lease, or if a lease is subsequently modified, we determine whether the lease is an operating or financing lease. Our lease population is fully comprised of operating leases and includes leases for certain office space and equipment for use in our operations. For all leases with an expected term that exceeds one year, right-of-use assets and lease liabilities are recorded on the condensed consolidated balance sheets. The depreciable lives of right-of-use assets are limited to the expected term which would include any renewal options we expect to exercise. The exercise of lease renewal options is generally at our discretion and we expect that in the normal course of business, leases that expire will be renewed or replaced by other leases. Our lease payments do not contain variable payments, any residual value guarantees, or material restrictive covenants. Right-of-use lease assets are included in other assets and lease liabilities are recorded in accrued expenses and other liabilities within our condensed consolidated balance sheets and total $2.5 million and $2.9 million, respectively, at June 30, 2019.

For the three and six months ended June 30, 2019, lease costs and cash flow information for leases with terms in excess of one year was as follows:

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	(Dollars in thousands)
Lease cost:
Lease costs included in general and administrative expenses	$	265	$	620
Lease costs included in real estate inventories	207		369
Lease costs included in selling and marketing expenses	17		34
Net lease cost (1)	$	489	$	1,023
Other Information:
Lease cash flows (included in operating cash flows)(1)	$	563	$	1,053

(1) Does not include the cost of short-term leases with terms of less than one year which totaled approximately $0.2 million and $0.5 million for the three and six months ended June 30, 2019, respectively, or the benefit from a sublease agreement of one of our office spaces which totaled approximately $49,000 and $98,000 for the three and six months ended June 30, 2019, respectively.

Future minimum lease payments under our operating leases are as follows (dollars in thousands):

Remaining for 2019	$	971
2020	1,615
2021	444
2022	10
2023	2
Thereafter	—
Total lease payments(1)	$	3,042
Less: Interest(2)	140
Present value of lease liabilities(3)	$	2,902

(1)    Lease payments include options to extend lease terms that are reasonably certain of being exercised.

(2) Our leases do not provide a readily determinable implicit rate. Therefore, we utilized our incremental borrowing rate for such leases to determine the present value of lease payments at the lease commencement date. There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2019.

(3) The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

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Related Party Transactions

6 Months Ended

Jun. 30, 2019

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

During the three and six months ended June 30, 2019 and 2018, the Company incurred construction-related costs on behalf of its unconsolidated joint ventures totaling $1.5 million, $3.2 million, $1.5 million and $3.6 million, respectively. As of June 30, 2019 and December 31, 2018, $0.2 million and $0.4 million, respectively, are included in due from affiliates in the accompanying condensed consolidated balance sheets related to such costs.

The Company has entered into agreements with its unconsolidated joint ventures to provide management services related to the underlying projects (collectively referred to as the "Management Agreements"). Pursuant to the Management Agreements, the Company receives a management fee based on each project’s revenues. During the three and six months ended June 30, 2019 and 2018, the Company earned $0.6 million, $1.2 million, $0.7 million and $1.7 million, respectively, in management fees, which have been recorded as fee building revenues in the accompanying condensed consolidated statements of operations. As of June 30, 2019 and December 31, 2018, $0 and $0.2 million, respectively, of management fees are included in due from affiliates in the accompanying condensed consolidated balance sheets.

One member of the Company's board of directors beneficially owns more than 10% of the Company's outstanding common stock through an affiliated entity, IHP Capital Partners VI, LLC ("IHP"), and is also affiliated with entities that have investments in two of the Company's unconsolidated joint ventures, TNHC Meridian Investors LLC (which is an owner of another entity, TNHC Newport LLC, which entity owned our "Meridian" project) and TNHC Russell Ranch LLC ("Russell Ranch"). The Company's investment in these two joint ventures was $9.8 million at June 30, 2019 and $6.5 million at December 31, 2018. A former member of the Company's board of directors who served during 2018 is affiliated with entities that have investments in three of the Company's unconsolidated joint ventures, Arantine Hills Holdings LP ("Bedford"), Calabasas Village LP, and TNHC-TCN Santa Clarita, LP. As of June 30, 2019 and December 31, 2018, the Company's investment in these three unconsolidated joint ventures totaled $10.9 million and $12.0 million, respectively.

During the 2019 second quarter, the Company entered into a second amendment to the limited liability company agreement of Russell Ranch between the Company and IHP. Prior to the execution of the second amendment, each of IHP and the Company had contributed its maximum capital commitments pursuant to the joint venture agreement. Pursuant to the second amendment, the parties agreed to fund additional required capital in the aggregate amount of approximately $26 million for certain remaining backbone improvements for the Project (the “Phase 1 Backbone Improvements”) as follows: 50% by IHP and 50% by the Company (“Amendment Additional Capital”). The Amendment Additional Capital will be returned to IHP and the Company ahead of any other contributed capital; provided that none of the Amendment Additional Capital accrues a preferred return that base capital contributions are generally afforded under the joint venture agreement. To the extent of overruns on the Phase 1 Backbone Improvements, the Company is required to fund such overrun capital (“TNHC Overrun Capital”); provided that such contributions shall receive capital account credit. Pursuant to the second amendment, the distribution of cash flow under the agreement was amended to provide that Amendment Additional Capital would be returned prior to TNHC Overrun Capital, which would, in turn, be returned ahead of the base capital preferred return and base capital.

The Company previously purchased lots from the Russell Ranch joint venture as described below (the "Phase 1 Purchase"). The parties also amended the purchase and sale contract for the Phase 1 Purchase to provide relief from the profit participation provisions of this transaction under certain circumstances.

TL Fab LP, an affiliate of one of the Company's non-employee directors, was engaged by the Company and some of its unconsolidated joint ventures as a trade contractor to provide metal fabrication services. For the three and six months ended June 30, 2019 and 2018, the Company incurred $22,000, $55,000, $0.1 million and $0.2 million, respectively, for these services. For the same periods, the Company's unconsolidated joint ventures incurred $0, $0, $0 and $0.4 million, respectively, for these services. Of these costs, $22,000 and $7,000 was due to TL Fab LP from the Company at June 30, 2019 and December 31, 2018, respectively, and $0 and $8,000 was due to TL Fab LP from the Company's unconsolidated joint ventures at June 30, 2019 and December 31, 2018, respectively.

In its ordinary course of business, the Company enters into agreements to purchase lots from unconsolidated land development joint ventures of which it is a member. In accordance with ASC 360-20, Property, Plant and Equipment - Real Estate Sales ("ASC 360-20"), the Company defers its portion of the underlying gain from the joint venture's sale of these lots to the Company. When the Company purchases lots directly from the joint venture, the deferred gain is recorded as a reduction to the Company's land basis on the purchased lots. In this instance, the gain is ultimately recognized when the Company delivers lots to third-party home buyers at the time of the home closing. At June 30, 2019 and December 31, 2018, $0.2 million and

$0.2 million, respectively, of deferred gain from lot transactions with the TNHC-HW Cannery LLC ("Cannery"), Bedford and Russell Ranch unconsolidated joint ventures remained unrecognized and included as a reduction to land basis in the accompanying condensed consolidated balance sheets.

The Company’s land purchase agreement with the Cannery provides for reimbursement of certain fee credits. The Company was reimbursed $0.1 million in fee credits from the Cannery during the six months ended June 30, 2018. As of June 30, 2019 and December 31, 2018, $66,000 and $37,000, respectively, in fee credits was due to the Company from the Cannery, which is included in due from affiliates in the accompanying condensed consolidated balance sheets.

On June 18, 2015, the Company entered into an agreement that effectively transitioned Joseph Davis' role within the Company from that of Chief Investment Officer to that of a non-employee consultant to the Company effective June 26, 2015 ("Transition Date"). As of the Transition Date, Mr. Davis ceased being an employee of the Company and became an independent contractor performing consulting services. For his services, Mr. Davis was compensated $5,000 per month through June 26, 2019 when his contract was amended to extend its term for one year and reduce his scope of services and compensation to $1,000 per month. At June 30, 2019, no fees were due to Mr. Davis for his consulting services. Additionally, the Company entered into a construction agreement effective September 7, 2017, with The Joseph and Terri Davis Family Trust Dated August 25, 1999 ("Davis Family Trust") of which Joseph Davis is a trustee. The agreement is a fee building contract pursuant to which the Company acts in the capacity of a general contractor to build a single family detached home on land owned by the Davis Family Trust. For its services, the Company will receive a contractor's fee and the Davis Family Trust will reimburse the Company's field overhead costs. During the three and six months ended June 30, 2019 and 2018, the Company billed the Davis Family Trust $10,000, $0.5 million, $0.6 million and $0.7 million, respectively, including reimbursable construction costs and the Company's contractor's fees which are included in fee building revenues in the accompanying condensed consolidated statements of operations. Contractor's fees comprised $0, $15,000, $17,000 and $17,100 of the total billings for the three and six months ended June 30, 2019 and 2018, respectively. The Company recorded $13,000, $0.5 million, $0.6 million and $0.6 million for the three and six months ended June 30, 2019 and 2018, respectively, for the costs of this fee building revenue which are included in fee building cost of sales in the accompanying condensed consolidated statements of operations. At June 30, 2019 and December 31, 2018, the Company was due $0 and $0.6 million, respectively, from the Davis Family Trust for construction draws, which are included in due from affiliates in the accompanying condensed consolidated balance sheets.

On February 17, 2017, the Company entered into a consulting agreement that transitioned Mr. Stelmar's role from that of Chief Investment Officer to a non-employee consultant to the Company. While an employee of the Company, Mr. Stelmar served as an employee director of the Company's Board of Directors. The agreement provides that effective upon Mr. Stelmar's termination of employment, he shall become a non-employee director and shall receive the compensation and be subject to the requirements of a non-employee director pursuant to the Company's policies. For his consulting services, Mr. Stelmar is compensated $6,000 per month. The current term is through August 17, 2019 and may be extended upon mutual consent of the parties. Additionally, Mr. Stelmar's outstanding restricted stock unit equity award granted in 2016 continued to vest in accordance with its original terms based on his continued provision of consulting services rather than continued employment and fully vested during the 2019 first quarter. At June 30, 2019 and December 31, 2018, no fees were due to Mr. Stelmar for his consulting services.

On February 14, 2019, the Company entered into a consulting agreement that transitioned Thomas Redwitz's role from that of Chief Investment Officer to a non-employee consultant to the Company effective March 1, 2019. For his consulting services, Mr. Redwitz is compensated $10,000 per month. The agreement terminates March 1, 2020 and may be extended upon mutual consent of the parties. At June 30, 2019, no fees were due to Mr. Redwitz for his consulting services.

During 2018, the Company had advances outstanding to an unconsolidated joint venture, Encore McKinley Village LLC. The note bore interest at 10% per annum and was fully repaid during the 2018 second quarter. For the three and six months ended June 30, 2018, the Company earned $49,000 and $0.1 million, respectively, in interest income on the unsecured promissory note which is included in equity in net income (loss) of unconsolidated joint ventures in the accompanying condensed consolidated statements of operations.

The Company entered into two transactions in each of 2018 and 2017 to purchase land from affiliates of IHP, which owns more than 10% of the Company's outstanding common stock and is affiliated with one member of the Company's board of directors.

The first 2017 agreement allows the Company the option to purchase lots in Northern California in a phased takedown for a gross purchase price of $16.1 million with profit participation and master marketing fees due to the seller as outlined in the contract. As of June 30, 2019, the Company has taken down approximately two-thirds of the lots, paid $0.4 million in master marketing fees, and has a $0.3 million nonrefundable deposit outstanding on the remaining lots. The second 2017 transaction

allowed the Company to purchase finished lots in Northern California which includes customary profit participation and was structured as an optioned takedown. The total purchase price, including the cost for the finished lot development and the option, was expected to be approximately $56.7 million, dependent on the timing of takedowns, as well as our obligation to pay certain fees and costs during the option maintenance period. During the 2019 second quarter, an unrelated third party entered into agreements to purchase from the IHP affiliate some of the lots under the Company's option. The Company has in turn entered into an arrangement pursuant to which it shall purchase such lots on a rolling take down basis from such unrelated third party. The unrelated third party has agreed to purchase 67% of the lots originally under contract with the IHP affiliate and has already closed on 55% of the lots originally under contract with the IHP affiliate. Following the purchase of the lots by the unrelated third party, the purchase price of remaining lots from the IHP affiliate is expected to be approximately $8.4 million. As of June 30, 2019, the Company (i) had a $2.3 million nonrefundable deposit up with the IHP affiliate, (ii) paid $0.1 million for fees and costs, (iii) paid $3.0 million in option payments, and (iv) paid $9.2 million for the purchase of lots directly from the IHP affiliate.

The first 2018 agreement allows the Company to purchase finished lots in Northern California for a gross purchase price of $8.0 million with additional profit participation, marketing fees and certain reimbursements due to the seller as outlined in the agreement. As of June 30, 2019, the Company has taken down all of the lots, paid $0.3 million in master marketing fees and reimbursed the seller $0.2 million in costs related to this contract. The second 2018 agreement allows the Company to purchase land in a master-plan community in Arizona for an estimated purchase price of $3.8 million plus profit participation and marketing fees pursuant to contract terms. The Company has an outstanding, nonrefundable deposit of $0.3 million related to this contract and had not taken down any lots as of June 30, 2019.

In the first quarter 2018, the Company entered into an agreement with its Bedford joint venture that is affiliated with one former member of the Company's board of directors for the option to purchase lots in phased takedowns. As of June 30, 2019, the Company has made a $1.5 million nonrefundable deposit as consideration for this option, and a portion of the deposit will be applied to the purchase price across the phases. The gross purchase price of the land is $10.0 million with profit participation due to seller as outlined in the contract. Subsequent to June 30, 2019, the Company entered into an amendment to this agreement to reduce the gross purchase price of the land to $9.3 million. The Company has taken down approximately two-thirds of the contracted lots and $0.7 million of the nonrefundable deposit remains outstanding. During the fourth quarter 2018, the Company entered into a second option agreement with the Bedford joint venture to purchase lots in phased takedowns. The Company made a $1.4 million nonrefundable deposit as consideration for the option, and a portion of the deposit will be applied to the purchase price across the phases. The gross purchase price of the land is $10.5 million with profit participation due to the seller pursuant to the agreement. At June 30, 2019, the Company had taken down approximately 42% of the optioned lots and $0.8 million of the deposit remained outstanding.

FMR LLC beneficially owned over 10% of the Company's common stock during 2018, and an affiliate of FMR LLC ("Fidelity") provides investment management and record keeping services to the Company’s 401(k) Plan. For the three and six months ended June 30, 2018, the Company paid Fidelity approximately $5,000 and $9,000, respectively, for 401(k) Plan record keeping and investment management services. The participants in the Company's 401(k) Plan paid Fidelity approximately $2,000 and $4,000 for the three and six months ended June 30, 2018, respectively, for record keeping and investment management services. As of June 30, 2019, FMR LLC owns less than 10% of the Company's common stock.

The Company has provided credit enhancements in connection with joint venture borrowings in the form of LTV maintenance agreements in order to secure the joint venture's performance under the loans and maintenance of certain LTV ratios. In addition, the Company has provided completion agreements regarding specific performance for certain projects whereby the Company is required to complete the given project with funds provided by the beneficiary of the agreement. For more information regarding these agreements please refer to Note 11.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

Stock-Based Compensation

The Company's 2014 Long-Term Incentive Plan (the "2014 Incentive Plan"), was adopted by our board of directors in January 2014. The 2014 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, restricted and unrestricted stock awards, restricted stock units and performance awards. The 2014 Incentive Plan will automatically expire on the tenth anniversary of its effective date.

The number of shares of our common stock authorized to be issued under the 2014 Incentive Plan is 1,644,875 shares. To the extent that shares of the Company's common stock subject to an outstanding award granted under the 2014 Incentive Plan or any predecessor plan are not issued or delivered by reason of the expiration, termination, cancellation or forfeiture of such award or the settlement of such award in cash, then such shares of common stock generally shall again be available under the 2014 Incentive Plan.

At our 2016 Annual Meeting of Shareholders on May 24, 2016, our shareholders approved the Company's 2016 Incentive Award Plan (the "2016 Incentive Plan"). The 2016 Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock- or cash-based awards. Non-employee directors of the Company and employees and consultants of the Company or any of its subsidiaries are eligible to receive awards under the 2016 Incentive Plan. On May 22, 2018, our shareholders approved the amended and restated 2016 Incentive Plan which increased the number of shares authorized for issuance under the plan from 800,000 to 2,100,000 shares. The amended and restated 2016 Incentive Plan will expire on April 4, 2028.

The Company has issued stock option and restricted stock unit awards under the 2014 Incentive Plan and stock option, restricted stock unit, and performance share unit awards under the 2016 Incentive Plan. As of June 30, 2019, 61,443 shares remain available for grant under the 2014 Incentive Plan and 1,053,811 shares remain available for grant under the 2016 Incentive Plan. The exercise price of stock-based awards may not be less than the market value of the Company's common stock on the date of grant. The fair value for stock options is established at the date of grant using the Black-Scholes model for time-based vesting awards. The Company's stock option, restricted stock unit awards, and performance share unit awards typically vest over a one year to three years period and the stock options expire ten years from the date of grant.

A summary of the Company’s common stock option activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding Stock Option Activity
Outstanding, beginning of period	821,470		$	11.00	826,498		$	11.00
Granted	249,283		$	5.76	—		$	—
Exercised	—		$	—	—		$	—
Forfeited	(2,736	)	$	11.00	(5,028	)	$	11.00
Outstanding, end of period	1,068,017		$	9.78	821,470		$	11.00
Exercisable, end of period	818,734		$	11.00	821,470		$	11.00

A summary of the Company’s restricted stock unit activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Grant-Date Fair Value per Share		Number of Shares		Weighted-Average Grant-Date Fair Value per Share
Restricted Stock Unit Activity
Outstanding, beginning of period	469,227		$	10.75	562,082		$	10.72
Granted	230,774		$	5.28	179,268		$	11.24
Vested	(277,401	)	$	10.50	(270,363	)	$	11.02
Forfeited	(48,178	)	$	10.91	—		$	—
Outstanding, end of period	374,422		$	7.54	470,987		$	10.74

A summary of the Company’s performance share unit activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Grant-Date Fair Value per Share		Number of Shares	Weighted-Average Grant-Date Fair Value per Share
Performance Share Unit Activity
Outstanding, beginning of period	125,422		$	11.68	—	$	—
Granted (at target)	—		$	—	125,422	$	11.68
Vested	—		$	—	—	$	—
Forfeited	(26,882	)	$	11.68	—	$	—
Outstanding, end of period (at target)	98,540		$	11.68	125,422	$	11.68

The expense related to the Company's stock-based compensation programs, included in general and administrative expense in the accompanying condensed consolidated statements of operations, was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Expense related to:
Stock options	$	50	$	—	$	72	$	—
Restricted stock units and performance share units	473		862		1,017		1,704
	$	523	$	862	$	1,089	$	1,704

The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company:

	Six Months Ended June 30,
	2019	2018
Expected term (in years)	6.0	0
Expected volatility	39.9%	—
Risk-free interest rate	2.5%	—
Expected dividends	—	—
Weighted-average grant date fair value	$2.43	$0

We used the "simplified method" to establish the expected term of the common stock options granted by the Company. Our restricted stock unit awards and performance share unit awards are valued based on the closing price of our common stock on the date of grant. The number of performance share units that will vest ranges from 50%-150% of the target amount awarded based on actual cumulative earnings per share and return on equity growth from 2018-2019, subject to initial achievement of minimum thresholds. We evaluate the probability of achieving the performance targets established under each of the outstanding performance share unit awards quarterly and estimate the number of underlying units that are probable of being issued. Compensation expense for restricted stock unit and performance share unit awards is being recognized using the straight-line method over the requisite service period, subject to cumulative catch-up adjustments required as a result of changes in the number shares probable of being issued for performance share unit awards. At June 30, 2019, the probability of achieving the performance targets associated with the outstanding performance share unit awards was estimated to be 0%. Forfeitures are recognized in compensation cost during the period that the award forfeiture occurs.

At June 30, 2019, the amount of unearned stock-based compensation currently estimated to be expensed through 2022 is $2.8 million. The weighted-average period over which the unearned stock-based compensation is expected to be recognized is 1.8 years. If there are any modifications or cancellations of the underlying unvested awards, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense.

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Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

For the three and six months ended June 30, 2019, the Company recorded an income tax provision of $1.0 million and $0.3 million, respectively. Comparatively, the Company recorded an income tax provision of $0.1 million and an income tax benefit of $0.8 million for the three and six months ended June 30, 2018, respectively. The Company's effective tax rate for all periods differs from the federal statutory tax rates due to state income taxes, estimated deduction limitations for executive compensation and discrete items. The Company recorded a $0.3 million discrete provision in the first six months of 2019 related to stock compensation and state tax rate changes while a $0.4 million discrete benefit was taken in the comparable 2018 period primarily related to energy credits.

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Segment Information

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Segment Information

Segment Information

The Company’s operations are organized into three reportable segments: two homebuilding segments (Arizona and California) and fee building. In determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross margins, production processes, suppliers, subcontractors, regulatory environments, land position, and underlying demand and supply in accordance with ASC 280. Our California homebuilding reportable segment aggregates the Northern California and Southern California homebuilding operating segments.

Our homebuilding operations acquire and develop land and construct and sell single-family attached and detached

homes. Our fee building operations build homes and manage construction related activities on behalf of third-party property owners and our joint ventures. In addition, our corporate operations develop and implement strategic initiatives and support our operating segments by centralizing key administrative functions such as accounting, finance and treasury, information technology, insurance and risk management, litigation, marketing and human resources. A portion of the expenses incurred by corporate are allocated to the fee building segment primarily based on its respective percentage of revenues and to each homebuilding segment based on its respective investment in and advances to unconsolidated joint ventures and real estate inventories balances. The assets of our fee building segment primarily consist of cash, restricted cash and accounts receivable. The majority of our corporate personnel and resources are primarily dedicated to activities relating to our homebuilding segment, and, therefore, the balance of any unallocated corporate expenses are allocated within our homebuilding reportable segments.

The reportable segments follow the same accounting policies as our consolidated financial statements described in Note 1. Operational results of each reportable segment are not necessarily indicative of the results that would have been achieved had the reportable segment been an independent, stand-alone entity during the periods presented.

Financial information relating to reportable segments was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Homebuilding revenues:
California	$	132,830		$	117,460		$	216,162		$	196,897
Arizona	7,634			—			23,488			—
Total homebuilding revenues	140,464			117,460			239,650			196,897
Fee building revenues, including management fees	22,285			38,095			41,947			81,889
Total revenues	$	162,749		$	155,555		$	281,597		$	278,786
Homebuilding pretax income (loss):
California	$	2,846		$	83		$	279		$	(1,818	)
Arizona	(796		)	(958		)	(1,274		)	(1,663		)
Total homebuilding pretax income (loss)	2,050			(875		)	(995		)	(3,481		)
Fee building pretax income, including management fees	515			1,057			909			2,152
Total pretax income (loss)	$	2,565		$	182		$	(86	)	$	(1,329	)

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Homebuilding assets:
California	$	548,223	$	551,807
Arizona	95,370		86,205
Total homebuilding assets	643,593		638,012
Fee building assets	7,064		10,879
Corporate unallocated assets	22,600		47,206
Total assets	$	673,257	$	696,097

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Supplemental Disclosure of Cash Flow Information (Notes)

6 Months Ended

Jun. 30, 2019

Supplemental Cash Flow Elements [Abstract]

Supplemental Disclosure of Cash Flow Information

Supplemental Disclosure of Cash Flow Information

The following table presents certain supplemental cash flow information:

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Supplemental disclosures of cash flow information
Interest paid, net of amounts capitalized	$	—	$	—
Income taxes paid	$	240	$	7,000

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Supplemental Guarantor Information (Notes)

6 Months Ended

Jun. 30, 2019

Supplemental Guarantor Information [Abstract]

Supplemental Guarantor Info [Text Block]

Supplemental Guarantor Information

The Company's 7.25% Senior Notes due 2022 (the "Notes") are guaranteed, on an unsecured basis, jointly and severally, by all of the Company's 100% owned subsidiaries (collectively, the "Guarantors"). The guarantees are full and unconditional. The Indenture governing the Notes provides that the guarantees of a Guarantor will be automatically and unconditionally released and discharged: (1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a "Restricted Subsidiary" (as defined in the Indenture), which sale, transfer, exchange or other disposition is made in compliance with applicable provisions of the Indenture; (2) upon the proper designation of such Guarantor as an "Unrestricted Subsidiary" (as defined in the Indenture), in accordance with the Indenture; (3) upon request of the Company and certification in an officers’ certificate provided to the trustee that the applicable Guarantor has become an "Immaterial Subsidiary" (as defined in the indenture), so long as such Guarantor would not otherwise be required to provide a guarantee pursuant to the Indenture; provided that, if immediately after giving effect to such release the consolidated tangible assets of all Immaterial Subsidiaries that are not Guarantors would exceed 5.0% of consolidated tangible assets, no such release shall occur, (4) if the Company exercises its legal defeasance option or covenant defeasance option under the Indenture or if the obligations of the Company and the Guarantors are discharged in compliance with applicable provisions of the Indenture, upon such exercise or discharge; (5) unless a default has occurred and is continuing, upon the release or discharge of such Guarantor from its guarantee of any indebtedness for borrowed money of the Company and the Guarantors so long as such Guarantor would not then otherwise be required to provide a guarantee pursuant to the Indenture; or (6) upon the full satisfaction of the Company’s obligations under the Indenture; provided that in each case if such Guarantor has incurred any indebtedness in reliance on its status as a Guarantor in compliance with applicable provisions of the Indenture, such Guarantor’s obligations under such indebtedness, as the case may be, so incurred are satisfied in full and discharged or are otherwise permitted to be incurred by a Restricted Subsidiary (other than a Guarantor) in compliance with applicable provisions of the Indenture. The Company has determined that separate, full financial statements of the Guarantors would not be material to investors and, accordingly, supplemental financial information for the guarantors is presented.

SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEETS

	June 30, 2019
	NWHM		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	4,005	$	44,040	$	179	$	—		$	48,224
Restricted cash	—		124		—		—			124
Contracts and accounts receivable	8		16,518		—		(413		)	16,113
Intercompany receivables	228,506		—		—		(228,506		)	—
Due from affiliates	—		218		—		—			218
Real estate inventories	—		541,954		—		—			541,954
Investment in and advances to unconsolidated joint ventures	—		33,637		—		—			33,637
Investment in subsidiaries	370,716		—		—		(370,716		)	—
Other assets	18,975		14,003		12		(3		)	32,987
Total assets	$	622,210	$	650,494	$	191	$	(599,638	)	$	673,257
Liabilities and equity
Accounts payable	$	329	$	26,300	$	—	$	—		$	26,629
Accrued expenses and other liabilities	7,723		25,001		59		(408		)	32,375
Intercompany payables	—		228,506		—		(228,506		)	—
Due to affiliates	—		8		—		(8		)	—
Unsecured revolving credit facility	66,000		—		—		—			66,000
Senior notes, net	309,060		—		—		—			309,060
Total liabilities	383,112		279,815		59		(228,922		)	434,064
Stockholders' equity	239,098		370,679		37		(370,716		)	239,098
Non-controlling interest in subsidiary	—		—		95		—			95
Total equity	239,098		370,679		132		(370,716		)	239,193
Total liabilities and equity	$	622,210	$	650,494	$	191	$	(599,638	)	$	673,257

	December 31, 2018
	NWHM		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	28,877	$	13,249	$	147	$	—		$	42,273
Restricted cash	—		269		—		—			269
Contracts and accounts receivable	7		18,926		—		(668		)	18,265
Intercompany receivables	192,341		—		—		(192,341		)	—
Due from affiliates	—		1,218		—		—			1,218
Real estate inventories	—		566,290		—		—			566,290
Investment in and advances to unconsolidated joint ventures	—		34,330		—		—			34,330
Investment in subsidiaries	396,466		—		—		(396,466		)	—
Other assets	18,643		14,812		—		(3		)	33,452
Total assets	$	636,334	$	649,094	$	147	$	(589,478	)	$	696,097
Liabilities and equity
Accounts payable	$	240	$	39,151	$	—	$	—		$	39,391
Accrued expenses and other liabilities	8,492		21,129		71		(664		)	29,028
Intercompany payables	—		192,341		—		(192,341		)	—
Due to affiliates	—		7		—		(7		)	—
Unsecured revolving credit facility	67,500		—		—		—			67,500
Senior notes, net	320,148		—		—		—			320,148
Total liabilities	396,380		252,628		71		(193,012		)	456,067
Stockholders' equity	239,954		396,466		—		(396,466		)	239,954
Non-controlling interest in subsidiary	—		—		76		—			76
Total equity	239,954		396,466		$	76	(396,466		)	240,030
Total liabilities and equity	$	636,334	$	649,094	$	147	$	(589,478	)	$	696,097

SUPPLEMENTAL CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

	Three Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	140,464		$	—		$	—		$	140,464
Fee building	—			22,285			—			—			22,285
	—			162,749			—			—			162,749
Cost of Sales:
Home sales	—			123,582			(57		)	—			123,525
Fee building	—			21,770			—			—			21,770
	—			145,352			(57		)	—			145,295
Gross Margin:
Home sales	—			16,882			57			—			16,939
Fee building	—			515			—			—			515
	—			17,397			57			—			17,454
Selling and marketing expenses	—			(9,683		)	—			—			(9,683		)
General and administrative expenses	617			(6,458		)	—			—			(5,841		)
Equity in net income of unconsolidated joint ventures	—			185			—			—			185
Equity in net income of subsidiaries	1,087			—			—			(1,087		)	—
Gain on early extinguishment of debt	552			—			—			—			552
Other income (expense), net	(106		)	4			—			—			(102		)
Pretax income	2,150			1,445			57			(1,087		)	2,565
Provision for income taxes	(578		)	(396		)	—			—			(974		)
Net income	1,572			1,049			57			(1,087		)	1,591
Net income attributable to non-controlling interest in subsidiary	—			—			(19		)	—			(19		)
Net income attributable to The New Home Company Inc.	$	1,572		$	1,049		$	38		$	(1,087	)	$	1,572

	Three Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	117,460		$	—		$	—	$	117,460
Fee building	—			38,095			—			—		38,095
	—			155,555			—			—		155,555
Cost of Sales:
Home sales	—			102,680			(2		)	—		102,678
Fee building	—			37,038			—			—		37,038
	—			139,718			(2		)	—		139,716
Gross Margin:
Home sales	—			14,780			2			—		14,782
Fee building	—			1,057			—			—		1,057
	—			15,837			2			—		15,839
Selling and marketing expenses	—			(9,466		)	—			—		(9,466		)
General and administrative expenses	305			(6,281		)	(3		)	—		(5,979		)
Equity in net loss of unconsolidated joint ventures	—			(120		)	—			—		(120		)
Equity in net loss of subsidiaries	(58		)	—			—			58		—
Other income (expense), net	(35		)	(57		)	—			—		(92		)
Pretax income (loss)	212			(87		)	(1		)	58		182
(Provision) benefit for income taxes	(97		)	30			—			—		(67		)
Net income (loss)	115			(57		)	(1		)	58		115
Net loss attributable to non-controlling interest in subsidiary	—			—			—			—		—
Net income (loss) attributable to The New Home Company Inc.	$	115		$	(57	)	$	(1	)	$	58	$	115

	Six Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	239,650		$	—		$	—	$	239,650
Fee building	—			41,947			—			—		41,947
	—			281,597			—			—		281,597
Cost of Sales:
Home sales	—			210,151			(57		)	—		210,094
Fee building	—			41,038			—			—		41,038
	—			251,189			(57		)	—		251,132
Gross Margin:
Home sales	—			29,499			57			—		29,556
Fee building	—			909			—			—		909
	—			30,408			57			—		30,465
Selling and marketing expenses	—			(18,362		)	—			—		(18,362		)
General and administrative expenses	51			(13,283		)	—			—		(13,232		)
Equity in net income of unconsolidated joint ventures	—			369			—			—		369
Equity in net loss of subsidiaries	(625		)	—			—			625		—
Gain on early extinguishment of debt	969			—			—			—		969
Other income (expense), net	(168		)	(127		)	—			—		(295		)
Pretax income (loss)	227			(995		)	57			625		(86		)
(Provision) benefit for income taxes	(642		)	332			—			—		(310		)
Net income (loss)	(415		)	(663		)	57			625		(396		)
Net income attributable to non-controlling interest in subsidiary	—			—			(19		)	—		(19		)
Net income (loss) attributable to The New Home Company Inc.	$	(415	)	$	(663	)	$	38		$	625	$	(415	)

	Six Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	196,897		$	—		$	—	$	196,897
Fee building	—			81,889			—			—		81,889
	—			278,786			—			—		278,786
Cost of Sales:
Home sales	—			172,350			22			—		172,372
Fee building	—			79,737			—			—		79,737
	—			252,087			22			—		252,109
Gross Margin:
Home sales	—			24,547			(22		)	—		24,525
Fee building	—			2,152			—			—		2,152
	—			26,699			(22		)	—		26,677
Selling and marketing expenses	—			(16,105		)	—			—		(16,105		)
General and administrative expenses	(801		)	(11,194		)	(3		)	—		(11,998		)
Equity in net income of unconsolidated joint ventures	—			215			—			—		215
Equity in net loss of subsidiaries	(176		)	—			—			176		—
Other income (expense), net	76			(194		)	—			—		(118		)
Pretax loss	(901		)	(579		)	(25		)	176		(1,329		)
Benefit for income taxes	376			417			—			—		793
Net loss	(525		)	(162		)	(25		)	176		(536		)
Net loss attributable to non-controlling interest in subsidiary	—			—			11			—		11
Net loss attributable to The New Home Company Inc.	$	(525	)	$	(162	)	$	(14	)	$	176	$	(525	)

SUPPLEMENTAL CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Net cash (used in) provided by operating activities	$	(36,110	)	$	54,970		$	32	$	—		$	18,892
Investing activities:
Purchases of property and equipment	(1		)	(7		)	—		—			(8		)
Contributions and advances to unconsolidated joint ventures	—			(4,120		)	—		—			(4,120		)
Contributions to subsidiaries from corporate	(66,575		)	—			—		66,575			—
Distributions of capital from subsidiaries	91,700			—			—		(91,700		)	—
Distributions of capital and repayment of advances from unconsolidated joint ventures	—			4,928			—		—			4,928
Net cash provided by investing activities	$	25,124		$	801		$	—	$	(25,125	)	$	800
Financing activities:
Borrowings from credit facility	40,000			—			—		—			40,000
Repayments of credit facility	(41,500		)	—			—		—			(41,500		)
Repurchase of senior notes	(10,856		)	—			—		—			(10,856		)
Contributions to subsidiaries from corporate	—			66,575			—		(66,575		)	—
Distributions to corporate from subsidiaries	—			(91,700		)	—		91,700			—
Repurchases of common stock	(1,042		)	—			—		—			(1,042		)
Tax withholding paid on behalf of employees for stock awards	(488		)	—			—		—			(488		)
Net cash used in financing activities	$	(13,886	)	$	(25,125	)	$	—	$	25,125		$	(13,886	)
Net (decrease) increase in cash, cash equivalents and restricted cash	(24,872		)	30,646			32		—			5,806
Cash, cash equivalents and restricted cash – beginning of period	28,877			13,518			147		—			42,542
Cash, cash equivalents and restricted cash – end of period	$	4,005		$	44,164		$	179	$	—		$	48,348

	Six Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Net cash used in operating activities	$	(39,156	)	$	(22,349	)	$	(5	)	$	—		$	(61,510	)
Investing activities:
Purchases of property and equipment	(22		)	(162		)	—			—			(184		)
Contributions and advances to unconsolidated joint ventures	—			(8,954		)	—			—			(8,954		)
Contributions to subsidiaries from corporate	(103,885		)	—			—			103,885			—
Distributions of capital from subsidiaries	49,975			—			—			(49,975		)	—
Distributions of capital and repayment of advances from unconsolidated joint ventures	—			5,874			—			—			5,874
Interest collected on advances to unconsolidated joint ventures	—			178			—			—			178
Net cash used in investing activities	$	(53,932	)	$	(3,064	)	$	—		$	53,910		$	(3,086	)
Financing activities:
Borrowings from credit facility	35,000			—			—			—			35,000
Contributions to subsidiaries from corporate	—			103,885			—			(103,885		)	—
Distributions to corporate from subsidiaries	—			(49,975		)	—			49,975			—
Repurchases of common stock	(2,072		)	—			—			—			(2,072		)
Tax withholding paid on behalf of employees for stock awards	(977		)	—			—			—			(977		)
Net cash provided by financing activities	$	31,951		$	53,910		$	—		$	(53,910	)	$	31,951
Net (decrease) increase in cash, cash equivalents and restricted cash	(61,137		)	28,497			(5		)	—			(32,645		)
Cash, cash equivalents and restricted cash – beginning of period	99,586			24,196			188			—			123,970
Cash, cash equivalents and restricted cash – end of period	$	38,449		$	52,693		$	183		$	—		$	91,325

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts have been eliminated upon consolidation.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. The accompanying unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring entries) necessary for the fair presentation of our results for the interim period presented. Results for the interim periods are not necessarily indicative of the results to be expected for the full year.

Unless the context otherwise requires, the terms "we", "us", "our" and "the Company" refer to the Company and its wholly owned subsidiaries, on a consolidated basis.

Use of Estimates

Use of Estimates

The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and notes. Accordingly, actual results could differ materially from these estimates.

Reclassifications

Reclassification

The Company updated its reportable segments effective for the 2019 first quarter. Please refer to Note 15 for more information. Prior year comparative data has been reclassified to align with the composition of the current year reportable segments.

Segment Reporting

Segment Reporting

Accounting Standards Codification ("ASC") 280, Segment Reporting ("ASC 280") established standards for the manner in which public enterprises report information about operating segments. The Company's reportable segments are Arizona homebuilding, California homebuilding, and fee building. In accordance with ASC 280, our California homebuilding reportable segment aggregates the Northern California and Southern California homebuilding operating segments based on the similarities in long-term economic characteristics.

Cash and Cash Equivalents

Cash and Cash Equivalents

We define cash and cash equivalents as cash on hand, demand deposits with financial institutions, and short term liquid investments with a maturity date of less than three months from the date of purchase.

Restricted Cash

Restricted Cash

Restricted cash of $0.1 million and $0.3 million as of June 30, 2019 and December 31, 2018, respectively, is held in accounts for payments of subcontractor costs incurred in connection with various fee building projects.

Real Estate Inventories and Cost of Sales

Real Estate Inventories and Cost of Sales

We capitalize pre-acquisition, land, development and other allocated costs, including interest, property taxes and indirect construction costs. Pre-acquisition costs, including nonrefundable land deposits, are expensed to other income (expense), net if we determine continuation of the prospective project is not probable.

Land, development and other common costs are typically allocated to real estate inventories using a methodology that approximates the relative-sales-value method. Home construction costs per production phase are recorded using the specific identification method. Cost of sales for homes closed includes the estimated total construction costs of each home at completion and an allocation of all applicable land acquisition, land development and related common costs (both incurred and estimated to be incurred) based upon the relative-sales-value of the home within each project. Changes in estimated development and common costs are allocated prospectively to remaining homes in the project.

In accordance with ASC 360, Property, Plant and Equipment ("ASC 360"), inventory is stated at cost, unless the carrying amount is determined not to be recoverable, in which case inventory is written down to its fair value. We review each real estate asset on a quarterly basis or whenever indicators of impairment exist. Real estate assets include projects actively selling and projects under development or held for future development. Indicators of impairment include, but are not limited to, significant decreases in local housing market values and selling prices of comparable homes, significant decreases in gross margins or sales absorption rates, costs significantly in excess of budget, and actual or projected cash flow losses.

If there are indicators of impairment, we perform a detailed budget and cash flow review of the applicable real estate inventories to determine whether the estimated future undiscounted cash flows of the project are more or less than the asset’s carrying value. If the estimated future undiscounted cash flows exceed the asset’s carrying value, no impairment adjustment is required. However, if the estimated future undiscounted cash flows are less than the asset’s carrying value then the asset is impaired. If the asset is deemed impaired, it is written down to its fair value in accordance with ASC 820, Fair Value Measurements and Disclosures ("ASC 820").

When estimating undiscounted future cash flows of a project, we make various assumptions, including: (i) expected sales prices and sales incentives to be offered, including the number of homes available, pricing and incentives being offered by us or other builders in other projects, and future sales price adjustments based on market and economic trends; (ii) expected sales pace and cancellation rates based on local housing market conditions, competition and historical trends; (iii) costs expended to date and expected to be incurred including, but not limited to, land and land development costs, home construction costs, interest costs, indirect construction and overhead costs, and selling and marketing costs; (iv) alternative product offerings that may be offered that could have an impact on sales pace, sales price and/or building costs; and (v) alternative uses for the property.

Many assumptions are interdependent and a change in one may require a corresponding change to other assumptions. For example, increasing or decreasing sales absorption rates has a direct impact on the estimated per unit sales price of a home, and the level of time sensitive costs (such as indirect construction, overhead and carrying costs). Depending on the underlying objective of the project, assumptions could have a significant impact on the projected cash flow analysis. For example, if our objective is to preserve operating margins, our cash flow analysis will be different than if the objective is to increase the velocity of sales. These objectives may vary significantly from project to project and change over time.

If a real estate asset is deemed impaired, the impairment is calculated by determining the amount the asset's carrying value exceeds its fair value in accordance with ASC 820. We calculate the fair value of real estate inventories considering a land residual value analysis and a discounted cash flow analysis. Under the discounted cash flow method, the fair value is determined by calculating the present value of future cash flows using a risk adjusted discount rate. Some of the critical assumptions involved with measuring the asset's fair value include estimating future revenues, sales absorption rates,

development and construction costs, and other applicable project costs. This evaluation and the assumptions used by management to determine future estimated cash flows and fair value require a substantial degree of judgment, especially with respect to real estate projects that have a substantial amount of development to be completed, have not started selling or are in the early stages of sales, or are longer in duration. Actual revenues, costs and time to complete and sell a community could vary from these estimates which could impact the calculation of fair value of the asset and the corresponding amount of impairment that is recorded in our results of operations. For the three and six months ended June 30, 2019 and 2018, no real estate impairments were recorded.

Capitalization of Interest

Capitalization of Interest

We follow the practice of capitalizing interest to real estate inventories during the period of development and to investments in unconsolidated joint ventures, when applicable, in accordance with ASC 835, Interest ("ASC 835"). Interest capitalized as a cost component of real estate inventories is included in cost of home sales as related homes or lots are sold. To the extent interest is capitalized to investment in unconsolidated joint ventures, it is included as a reduction of income from unconsolidated joint ventures when the related homes or lots are sold to third parties. In instances where the Company purchases land from an unconsolidated joint venture, the pro rata share of interest capitalized to investment in unconsolidated joint ventures is added to the basis of the land acquired and recognized as a cost of sale upon the delivery of the related homes or land to a third-party buyer. To the extent our debt exceeds our qualified assets as defined in ASC 835, we expense a portion of the interest incurred by us. Qualified assets represent projects that are actively selling or under development as well as investments in unconsolidated joint ventures accounted for under the equity method until such equity investees begin their principal operations.

Revenue Recognition

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers ("ASC 606"). Under ASC 606, we recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To do this, the Company performs the following five steps as outlined in ASC 606: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

Home Sales and Profit Recognition

In accordance with ASC 606, home sales revenue is recognized when our performance obligations within the underlying sales contracts are fulfilled. We consider our obligations fulfilled when closing conditions are complete, title has transferred to the homebuyer, and collection of the purchase price is reasonably assured. Sales incentives are recorded as a reduction of revenues when the respective home is closed. The profit we record is based on the calculation of cost of sales, which is dependent on our allocation of costs, as described in more detail above in the section entitled "Real Estate Inventories and Cost of Sales." When it is determined that the earnings process is not complete, the related revenue and profit are deferred for recognition in future periods.

Fee Building

The Company enters into fee building agreements to provide services whereby it builds homes on behalf of third-party property owners. The third-party property owner funds all project costs incurred by the Company to build and sell the homes. The Company primarily enters into cost plus fee contracts where it charges third-party property owners for all direct and indirect costs plus a fee. The fee is typically a per-unit fixed fee or based on a percentage of the cost or home sales revenue of the project, depending on the terms of the agreement with the third-party property owner. For these types of contracts, the Company recognizes revenue based on the actual total costs it has incurred plus the applicable fee. In accordance with ASC 606, we apply the percentage-of-completion method, using the cost-to-cost approach, as it most accurately measures the progress of our efforts in satisfying our obligations within the fee building agreements. Under this approach, revenue is earned in proportion to total costs incurred divided by total costs expected to be incurred. In the course of providing fee building services, the Company routinely subcontracts for services and incurs other direct costs on behalf of the property owners. These costs are passed through to the property owners and, in accordance with GAAP, are included in the Company’s revenues and cost of sales.

The Company also provides construction management and coordination services and sales and marketing services as part of agreements with third parties and its unconsolidated joint ventures. In certain contracts, the Company also provides project

management and administrative services. For most services provided, the Company fulfills its related obligations as time-based measures, according to the input method guidance described in ASC 606. Accordingly, revenue is recognized on a straight-line basis as the Company's efforts are expended evenly throughout the performance period. The Company may also have an obligation to manage the home or lot sales process as part of providing sales and marketing services. This obligation is considered fulfilled when related homes or lots close escrow, as these events represent milestones reached according to the output method guidance described in ASC 606. Accordingly, revenue is recognized in the period that the corresponding lots or homes close escrow. Costs associated with these services are recognized as incurred.

Variable Interest Entities

Variable Interest Entities

The Company accounts for variable interest entities in accordance with ASC 810, Consolidation ("ASC 810"). Under ASC 810, a variable interest entity ("VIE") is created when: (a) the equity investment at risk in the entity is not sufficient to permit the entity to finance its activities without additional subordinated financial support provided by other parties, including the equity holders; (b) the entity’s equity holders as a group either (i) lack the direct or indirect ability to make decisions about the entity, (ii) are not obligated to absorb expected losses of the entity or (iii) do not have the right to receive expected residual returns of the entity; or (c) the entity’s equity holders have voting rights that are not proportionate to their economic interests, and the activities of the entity involve or are conducted on behalf of the equity holder with disproportionately few voting rights.

Once we consider the sufficiency of equity and voting rights of each legal entity, we then evaluate the characteristics of the equity holders' interests, as a group, to see if they qualify as controlling financial interests. Our real estate joint ventures consist of limited partnerships and limited liability companies. For entities structured as limited partnerships or limited liability companies, our evaluation of whether the equity holders (equity partners other than us in each our joint ventures) lack the characteristics of a controlling financial interest includes the evaluation of whether the limited partners or non-managing members (the non-controlling equity holders) lack both substantive participating rights and substantive kick-out rights, defined as follows:

• Participating rights - provide the non-controlling equity holders the ability to direct significant financial and operational decision made in the ordinary course of business that most significantly influence the entity's economic performance.

• Kick-out rights - allow the non-controlling equity holders to remove the general partner or managing member without cause.

If we conclude that any of the three characteristics of a VIE are met, including if equity holders lack the characteristics of a controlling financial interest because they lack both substantive participating rights and substantive kick-out rights, we conclude that the entity is a VIE and evaluate it for consolidation under the variable interest model.

If an entity is deemed to be a VIE pursuant to ASC 810, the enterprise that has both (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (ii) the obligation to absorb the expected losses of the entity or right to receive benefits from the entity that could be potentially significant to the VIE is considered the primary beneficiary and must consolidate the VIE.

Under ASC 810, a nonrefundable deposit paid to an entity may be deemed to be a variable interest that will absorb some or all of the entity’s expected losses if they occur. Our land purchase and lot option deposits generally represent our maximum exposure to the land seller if we elect not to purchase the optioned property. In some instances, we may also expend funds for due diligence, development and construction activities with respect to optioned land prior to takedown. Such costs are classified as real estate inventories, which we would have to write off should we not exercise the option. Therefore, whenever we enter into a land option or purchase contract with an entity and make a nonrefundable deposit, a VIE may have been created. At June 30, 2019, the Company had outstanding nonrefundable cash deposits of $15.3 million pertaining to land option contracts and purchase contracts.

As of June 30, 2019 and December 31, 2018, the Company was not required to consolidate any VIEs. In accordance with ASC 810, we perform ongoing reassessments of whether we are the primary beneficiary of a VIE.

Non-controlling Interest

Non-controlling Interest

During 2013, the Company entered into a joint venture agreement with a third-party property owner. In accordance with ASC 810, the Company analyzed this arrangement and determined that it was not a VIE; however, the Company determined it was required to consolidate the joint venture as the Company has a controlling financial interest with the powers to direct the major decisions of the entity.

Investments in and Advances to Unconsolidated Joint Ventures

Investments in and Advances to Unconsolidated Joint Ventures

We use the equity method to account for investments in homebuilding and land development joint ventures when any of the following situations exist: 1) the joint venture qualifies as a VIE and we are not the primary beneficiary, 2) we do not control the joint venture but have the ability to exercise significant influence over its operating and financial policies, or 3) we function as the managing member or general partner of the joint venture and our joint venture partner has substantive participating rights or can replace us as managing member or general partner without cause.

As of June 30, 2019, the Company concluded that none of its joint ventures were VIEs and accounted for these entities under the equity method of accounting.

Under the equity method, we recognize our proportionate share of earnings and losses generated by the joint venture upon the delivery of lots or homes to third parties. Our proportionate share of intra-entity profits and losses are eliminated until the related asset has been sold by the unconsolidated joint venture to third parties. We classify cash distributions received from equity method investees using the cumulative earnings approach consistent with ASC 230, Statement of Cash Flows ("ASC 230"). Under the cumulative earnings approach, distributions received are considered returns on investment and is classified as cash inflows from operating activities unless the cumulative distributions received exceed cumulative equity in earnings. When such an excess occurs, the current-period distribution up to this excess is considered a return of investment and is classified as cash inflows from investing activities. Our ownership interests in our unconsolidated joint ventures vary, but are generally less than or equal to 35%. The accounting policies of our joint ventures are generally consistent with those of the Company.

We review real estate inventory held by our unconsolidated joint ventures for impairment on a quarterly basis, consistent with how we review our real estate inventories as described in more detail above in the section entitled "Real Estate Inventories and Cost of Sales." We also review our investments in and advances to unconsolidated joint ventures for evidence of other-than-temporary declines in value in accordance with ASC 820. To the extent we deem any portion of our investment in and advances to unconsolidated joint ventures as not recoverable, we impair our investment accordingly. For the three and six months ended June 30, 2019 and 2018, no impairments related to investment in and advances to unconsolidated joint ventures were recorded.

Selling and Marketing Expense

Selling and Marketing Expense

Costs incurred for tangible assets directly used in the sales process such as our sales offices, design studios and model landscaping and furnishings are capitalized to other assets in the accompanying condensed consolidated balance sheets under ASC 340, Other Assets and Deferred Costs ("ASC 340"). These costs are depreciated to selling and marketing expenses generally over the shorter of 30 months or the actual estimated life of the selling community. All other selling and marketing costs, such as commissions and advertising, are expensed as incurred.

Warranty Accrual

Warranty Accrual

We offer warranties on our homes that generally cover various defects in workmanship or materials, or structural construction defects for one year. In addition, we provide a more limited warranty, which generally ranges from a minimum of two years up to the period covered by the applicable statute of repose, that covers certain defined construction defects. Estimated future direct warranty costs are accrued and charged to cost of sales in the period when the related homebuilding revenues are recognized. Amounts are accrued based upon the Company’s historical rates. In addition, the Company has received warranty payments from third-party property owners for certain of its fee building projects that have since closed-out where the Company has the contractual risk of construction. These payments are recorded as warranty accruals. We assess the adequacy of our warranty accrual on a quarterly basis and adjust the amounts recorded if necessary. Our warranty accrual is included in accrued expenses and other liabilities in the accompanying condensed consolidated balance sheets and adjustments to our warranty accrual are recorded through cost of sales.

Contracts and Accounts Receivable

Contracts and Accounts Receivable

Contracts and accounts receivable primarily represent the fees earned, but not collected, and reimbursable project costs incurred in connection with fee building agreements. The Company periodically evaluates the collectability of its contracts receivable, and, if it is determined that a receivable might not be fully collectible, an allowance is recorded for the amount deemed uncollectible. This allowance for doubtful accounts is estimated based on management’s evaluation of the contracts involved and the financial condition of its customers. Factors considered in such evaluations include, but are not limited to: (i) customer type; (ii) historical contract performance; (iii) historical collection and delinquency trends; (iv) customer credit worthiness; and (v) general economic conditions. In addition to contracts receivable, escrow receivables are included in contracts and accounts receivable in the accompanying condensed consolidated balance sheets.

Property, Equipment and Capitalized Selling and Marketing Costs

Property, Equipment and Capitalized Selling and Marketing Costs

Property, equipment and capitalized selling and marketing costs are recorded at cost and included in other assets in the accompanying condensed consolidated balance sheets. Property and equipment are depreciated to general and administrative expenses using the straight-line method over their estimated useful lives ranging from three to five years. Leasehold improvements are stated at cost and are amortized to general and administrative expenses using the straight-line method generally over the shorter of either their estimated useful lives or the term of the lease. Capitalized selling and marketing costs are depreciated using the straight-line method to selling and marketing expenses over the shorter of either 30 months or the actual estimated life of the selling community.

Income Taxes

Income Taxes

Income taxes are accounted for in accordance with ASC 740, Income Taxes ("ASC 740"). The consolidated provision for, or benefit from, income taxes is calculated using the asset and liability method, under which deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not (defined as a likelihood of more than 50%) unrealizable under ASC 740. We are required to establish a valuation allowance for any portion of the tax asset we conclude is more likely than not unrealizable. Our assessment considers, among other things, the nature, frequency and severity of prior cumulative losses, forecasts of future taxable income, the duration of statutory carryforward periods, our utilization experience with net operating losses and tax credit carryforwards and available tax planning alternatives, to the extent these items are applicable. The ultimate realization of deferred tax assets depends primarily on the generation of future taxable income during the periods in which the differences become deductible. The value of our deferred tax assets will depend on applicable income tax rates. Judgment is required in determining the future tax consequences of events that have been recognized in our consolidated financial statements and/or tax returns. Differences between anticipated and actual outcomes of these future tax consequences could have a material impact on our consolidated financial statements. At June 30, 2019 and December 31, 2018, no valuation allowance was recorded.

ASC 740 defines the methodology for recognizing the benefits of uncertain tax return positions as well as guidance regarding the measurement of the resulting tax benefits.  These provisions require an enterprise to recognize the financial statement effects of a tax position when it is more likely than not, based on the technical merits, that the position will be sustained upon examination.  In addition, these provisions provide guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.  The evaluation of whether a tax position meets the more-likely-than-not recognition threshold requires a substantial degree of judgment by management based on the individual facts and circumstances. At June 30, 2019, the Company has concluded that there were no significant uncertain tax positions requiring recognition in its financial statements.

The Company classifies any interest and penalties related to income taxes assessed as part of income tax expense. As of June 30, 2019, the Company has not been assessed interest or penalties by any major tax jurisdictions related to any open tax periods.

Stock-Based Compensation

Stock-Based Compensation

We account for share-based awards in accordance with ASC 718, Compensation – Stock Compensation ("ASC 718") and ASC 505-50, Equity – Equity Based Payments to Non-Employees ("ASC 505-50").

ASC 718 requires that the cost resulting from all share-based payment transactions be recognized in a company's financial statements. ASC 718 requires all entities to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees except for equity instruments held by employee share ownership plans.

On February 16, 2017, the Company entered into an agreement that transitioned Wayne Stelmar's role within the Company from Chief Investment Officer to a non-employee consultant and non-employee director. Per the agreement, Mr. Stelmar's outstanding equity awards continued to vest in accordance with their original terms. Under ASC 505-50, if an employee becomes a non-employee and continues to vest in an award pursuant to the award's original terms, that award will be treated as an award to a non-employee prospectively, provided the individual is required to continue providing services to the employer (such as consulting services). Based on the terms and conditions of Mr. Stelmar's consulting agreement noted above, we accounted for his share-based awards in accordance with ASC 505-50 through March 31, 2018. ASC 505-50 required that these awards be accounted for prospectively, such that the fair value of the awards was re-measured at each reporting date until the earlier of (a) the performance commitment date or (b) the date the services required under the transition agreement with Mr. Stelmar have been completed. ASC 505-50 required that compensation cost ultimately recognized in the Company's financial statements be the sum of (a) the compensation cost recognized during the period of time the individual was an employee (based on the grant-date fair value) plus (b) the fair value of the award determined on the measurement date determined in accordance with ASC 505-50 for the pro-rata portion of the vesting period in which the individual was a non-employee.

In June of 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") which expanded the scope of ASC 718 to include share-based payments for acquiring goods and services from nonemployees, with certain exceptions. Under ASC 718, the measurement date for equity-classified, share-based awards is generally the grant date of the award. The Company early adopted ASU 2018-07 on April 1, 2018, at which time Mr. Stelmar's award was the only nonemployee award outstanding. In accordance with the transition guidance, the Company assessed Mr. Stelmar's award for which a measurement date had not been established. The outstanding award was re-measured to fair value as of the April 1, 2018 adoption date. The adoption of ASU 2018-07 provided administrative relief by fixing the remaining unamortized expense of the award and eliminating the requirement to quarterly re-measure the Company's one remaining nonemployee award. The Company adopted this standard on a modified retrospective basis booking a cumulative-effect adjustment of an $18,000 increase to retained earnings and equal decrease to additional paid-in capital as of the beginning of the 2018 fiscal year. Mr. Stelmar's award was fully expensed as of March 31, 2019.

Share Repurchase and Retirement

Share Repurchase and Retirement

When shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired to both retained earnings and additional paid-in capital. The portion allocated to additional paid-in capital is determined by applying a percentage, which is determined by dividing the number of shares to be retired by the number of shares issued, to the balance of additional paid-in capital as of the retirement date. The residual, if any, is allocated to retained earnings as of the retirement date.

Dividends

Dividends

No dividends were paid on our common stock during the three and six months ended June 30, 2019 and 2018. We currently intend to retain our future earnings to finance the development and expansion of our business and, therefore, do not intend to pay cash dividends on our common stock for the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, compliance with Delaware law, restrictions contained in any financing instruments, including but not limited to, our unsecured credit facility and senior notes indenture, and such other factors as our board of directors deem relevant.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

The Company currently qualifies as an "emerging growth company" pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). Section 102 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the "Securities Act"), for complying with new or revised accounting standards. As previously disclosed, the Company has chosen, irrevocably, to "opt out" of such extended transition period, and as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASC 842"). ASC 842 requires organizations that lease assets (referred to as "lessees") to present lease assets and lease liabilities on the balance sheet at their gross value based on the rights and obligations created by those leases. Under ASC 842, a lessee is required to recognize assets and liabilities for leases with greater than 12 month terms. Lessor accounting remains substantially similar to prior GAAP. The Company's lease agreements impacted by ASC 842 primarily relate to our corporate headquarters, other office locations and office or construction equipment where we are the lessee and are all classified as operating leases.

The Company adopted ASC 842 on January 1, 2019 under the modified retrospective approach. Under the modified retrospective approach, the Company applied the requirements of ASC 842 to its leases as of the adoption date and recognized a $3.1 million right-of-use asset and a related $3.5 million liability. The comparative information has not been restated and continues to be reported as it was previously, under the appropriate accounting standards in effect for those periods. For additional information on our operating leases, please see Note 11.

For leases that commenced before the January 1, 2019 adoption date, the Company has elected the practical expedient package outlined in ASC 842-10-65-1(f) which prescribes the following:

1.An entity need not reassess whether any expired or existing contracts contain leases.

2. An entity need not reassess the lease classification for any expired or existing leases (for example, all existing leases that were classified as operating leases in accordance with ASC 840, Leases, will be classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC 840 will be classified as finance leases).

3.An entity need not reassess initial direct costs for any existing lease.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), which changes the impairment model for most financial assets and certain other instruments from an "incurred loss" approach to a new "expected credit loss" methodology. The FASB followed up with ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments, in April 2019 and ASU 2019-05, Financial Instruments - Credit Losses (Topic 326), in May 2019 to provide further clarification on this topic. The standard is effective for annual and interim periods beginning January 1, 2020, with early adoption permitted, and requires full retrospective application upon adoption. The Company is currently evaluating the impact of ASU 2016-13 and does not anticipate a material impact to its consolidated financial statements as a result of adoption.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"). The amendments in ASU 2018-13 modify certain disclosure requirements of fair value measurements and are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-13 and does not anticipate a material impact to the consolidated financial statements as a result of adoption.

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Organization and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Cash and Cash Equivalents

The table below shows the line items and amounts of cash and cash equivalents and restricted cash as reported within the Company's condensed consolidated balance sheets for each period shown that sum to the total of the same such amounts at the end of the periods shown in the accompanying condensed consolidated statements of cash flows.

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Cash and cash equivalents	$	48,224	$	90,758
Restricted cash	124		567
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	48,348	$	91,325

Restrictions on Cash and Cash Equivalents

The table below shows the line items and amounts of cash and cash equivalents and restricted cash as reported within the Company's condensed consolidated balance sheets for each period shown that sum to the total of the same such amounts at the end of the periods shown in the accompanying condensed consolidated statements of cash flows.

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Cash and cash equivalents	$	48,224	$	90,758
Restricted cash	124		567
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	48,348	$	91,325

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Computation of Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2019

Earnings Per Share [Abstract]

Schedule of components used in the computation of basic and diluted earnings per share

The following table sets forth the components used in the computation of basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019			2018
	(Dollars in thousands, except per share amounts)
Numerator:
Net income (loss) attributable to The New Home Company Inc.	$	1,572	$	115	$	(415	)	$	(525	)
Denominator:
Basic weighted-average shares outstanding	20,070,914		20,958,991		20,028,600			20,942,601
Effect of dilutive shares:
Stock options and unvested restricted stock units	24,619		65,778		—			—
Diluted weighted-average shares outstanding	20,095,533		21,024,769		20,028,600			20,942,601
Basic income (loss) per share attributable to The New Home Company Inc.	$	0.08	$	0.01	$	(0.02	)	$	(0.03	)
Diluted income (loss) per share attributable to The New Home Company Inc.	$	0.08	$	0.01	$	(0.02	)	$	(0.03	)
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	1,349,106		952,882		1,292,726			1,333,106

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Contracts and Accounts Receivable (Tables)

6 Months Ended

Jun. 30, 2019

Receivables [Abstract]

Schedule of contracts and accounts receivables

Contracts and accounts receivable consist of the following:

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Contracts receivable:
Costs incurred on fee building projects	$	41,038		$	159,136
Estimated earnings	909			4,401
	41,947			163,537
Less: amounts collected during the period	(35,642		)	(154,743		)
Contracts receivable	$	6,305		$	8,794
Contracts receivable:
Billed	$	—		$	—
Unbilled	6,305			8,794
	6,305			8,794
Accounts receivable:
Escrow receivables	9,530			8,787
Other receivables	278			684
Contracts and accounts receivable	$	16,113		$	18,265

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Real Estate Inventories (Tables)

6 Months Ended

Jun. 30, 2019

Real Estate [Abstract]

Summary of real estate inventories

Real estate inventories are summarized as follows:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Deposits and pre-acquisition costs	$	17,485	$	20,726
Land held and land under development	122,392		115,987
Homes completed or under construction	352,535		380,956
Model homes	49,542		48,621
	$	541,954	$	566,290

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Capitalized Interest (Tables)

6 Months Ended

Jun. 30, 2019

Capitalized Interest [Abstract]

Summary of interest incurred, capitalized, and expensed

For the three and six months ended June 30, 2019 and 2018 interest incurred, capitalized and expensed was as follows:

	Three months ended June 30,						Six months ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Interest incurred	$	7,606		$	6,612		$	15,367		$	13,328
Interest capitalized to inventory	(7,606		)	(6,149		)	(15,367		)	(12,344		)
Interest capitalized to investment in unconsolidated joint ventures	—			(463		)	—			(984		)
Interest expensed	$	—		$	—		$	—		$	—
Capitalized interest in beginning inventory	$	28,600		$	19,884		$	25,681		$	16,453
Interest capitalized as a cost of inventory	7,606			6,149			15,367			12,344
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	3			5			13			5
Previously capitalized interest included in cost of home sales	(6,301		)	(3,750		)	(11,153		)	(6,514		)
Capitalized interest in ending inventory	$	29,908		$	22,288		29,908			22,288
Capitalized interest in beginning investment in unconsolidated joint ventures	$	672		$	1,962		$	713		$	1,472
Interest capitalized to investment in unconsolidated joint ventures	—			463			—			984
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	(3		)	(5		)	(13		)	(5		)
Previously capitalized interest included in equity in net income (loss) of unconsolidated joint ventures	(48		)	(18		)	(79		)	(49		)
Capitalized interest in ending investment in unconsolidated joint ventures	621			2,402			621			2,402
Total capitalized interest in ending inventory and investments in unconsolidated joint ventures	$	30,529		$	24,690		$	30,529		$	24,690
Capitalized interest as a percentage of inventory	5.5		%	4.7		%	5.5		%	4.7		%
Interest included in cost of home sales as a percentage of home sales revenue	4.4		%	3.2		%	4.7		%	3.3		%
Capitalized interest as a percentage of investment in and advances to unconsolidated joint ventures	1.8		%	4.1		%	1.8		%	4.1		%

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Investments in and advances to unconsolidated joint ventures (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Equity Method Investments [Line Items]

Schedule of summarized financial information of unconsolidated joint ventures

The condensed combined statements of operations for our unconsolidated joint ventures accounted for under the equity method were as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2019		2018			2019		2018
	(Dollars in thousands)
Revenues	$	59,078	$	33,879		$	101,365	$	65,892
Cost of sales and expenses	57,288		34,165			99,062		65,374
Net income (loss) of unconsolidated joint ventures	$	1,790	$	(286	)	$	2,303	$	518
Equity in net income (loss) of unconsolidated joint ventures reflected in the accompanying condensed consolidated statements of operations	$	185	$	(120	)	$	369	$	215

As a smaller reporting company, the Company is subject to the provisions of Rule 8-03(b)(3) of Regulation S-X which requires the disclosure of certain financial information for equity investees that constitute 20% of more of the Company's consolidated net income (loss). For the six months ended June 30, 2019, income allocations from two of the Company's unconsolidated joint ventures accounted for under the equity method each exceeded 20% of the Company's consolidated net income (loss). The table below presents select combined financial information for these joint ventures:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Revenues	$	44,358	$	23,798	$	76,395	$	53,439
Cost of home sales	40,548		21,910		69,624		47,544
Gross margin	$	3,810	$	1,888	$	6,771	$	5,895
Expenses	1,983		1,779		3,840		4,193
Net income	$	1,827	$	109	$	2,931	$	1,702
Equity in net income (loss) of unconsolidated joint ventures reflected in the accompanying consolidated statements of operations	$	261	$	11	$	488	$	452

The condensed combined balance sheets for our unconsolidated joint ventures accounted for under the equity method were as follows:

	June 30,			December 31,
	2019			2018
	(Dollars in thousands)
Cash and cash equivalents	$	35,145		$	45,945
Restricted cash	14,740			19,205
Real estate inventories	338,176			374,607
Other assets	5,950			4,231
Total assets	$	394,011		$	443,988
Accounts payable and accrued liabilities	$	36,191		$	43,158
Notes payable	40,564			71,299
Total liabilities	76,755			114,457
The New Home Company's equity	33,016			33,617
Other partners' equity	284,240			295,914
Total equity	317,256			329,531
Total liabilities and equity	$	394,011		$	443,988
Debt-to-capitalization ratio	11.3		%	17.8		%
Debt-to-equity ratio	12.8		%	21.6		%

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Other Assets (Tables)

6 Months Ended

Jun. 30, 2019

Other Assets [Abstract]

Schedule of other assets

Other assets consist of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Property, equipment and capitalized selling and marketing costs, net (1)	$	9,094	$	11,738
Deferred tax asset, net	13,937		13,937
Prepaid income taxes	443		514
Prepaid expenses	5,715		6,348
Warranty insurance receivable (2)	1,257		915
Right-of-use lease asset (3)	2,541		—
	$	32,987	$	33,452

(1) The Company depreciated $2.3 million, $4.9 million, $1.5 million and $2.4 million of capitalized selling and marketing costs to selling and marketing expenses during the three and six months ended June 30, 2019 and 2018, respectively. The Company depreciated $0.1 million, $0.2 million, $0.1 million and $0.2 million of property and equipment to general and administrative expenses during the three and six months ended June 30, 2019 and 2018, respectively.

(2) The Company adjusted its warranty insurance receivable by $0.6 million during the 2019 second quarter to true-up the receivable to align with actual reimbursement experience rates which resulted in pretax income of the same amount. The impact to net income was $0.4 million or $0.02 per diluted share.

(3) In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

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Accrued Expenses and Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2019

Payables and Accruals [Abstract]

Schedule of accrued liabilities and other liabilities

Accrued expenses and other liabilities consist of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Warranty accrual(1)	$	7,049	$	6,898
Accrued compensation and benefits	3,157		5,749
Accrued interest	6,236		6,497
Completion reserve	3,351		4,192
Lease liability(2)	2,902		—
Customer deposits	7,188		2,192
Other accrued expenses	2,492		3,500
	$	32,375	$	29,028

(1) Included in the amount at June 30, 2019 and December 31, 2018 is approximately $1.3 million and $0.9 million, respectively, of warranty liabilities estimated to be recovered by our insurance policies.

(2) In conjunction with the adoption of ASC 842, the Company established a $3.5 million lease liability on January 1, 2019. For more information, please refer to Note 1 and Note 11.

Schedule of changes in warranty accrual

Changes in our warranty accrual are detailed in the table set forth below:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Beginning warranty accrual for homebuilding projects	$	6,767		$	6,775		$	6,681		$	6,634
Warranty provision for homebuilding projects	627			470			1,054			986
Warranty payments for homebuilding projects	(581		)	(469		)	(922		)	(844		)
Adjustment to warranty accrual(1)	94			—			94			—
Ending warranty accrual for homebuilding projects	6,907			6,776			6,907			6,776
Beginning warranty accrual for fee building projects	178			223			217			225
Warranty provision for fee building projects	—			—			9			—
Warranty efforts for fee building projects	(18		)	(1		)	(66		)	(3		)
Adjustment to warranty accrual for fee building projects(1)	(18		)	—			(18		)	—
Ending warranty accrual for fee building projects	142			222			142			222
Total ending warranty accrual	$	7,049		$	6,998		$	7,049		$	6,998

(1) During the 2019 second quarter, we recorded an adjustment of $0.1 million to our warranty accrual for homebuilding projects due to higher expected warranty expenditures which is included in "Adjustment to warranty accrual" above and resulted in an increase of the same amount to cost of home sales in the accompanying condensed consolidated statement of operations. Also during the 2019 second quarter, the Company recorded an adjustment of $18,000 due to lower experience rate of expected warranty expenditures for fee building projects which is included in "Adjustment to warranty accrual for fee building projects" above and resulted in a reduction of the same amount to cost of fee building sales in the accompanying condensed consolidated statement of operations.

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Senior Notes and Unsecured Revolving Credit Facility (Tables)

6 Months Ended

Jun. 30, 2019

Debt Disclosure [Abstract]

Schedule of notes payable

Indebtedness consisted of the following:

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
7.25% Senior Notes due 2022, net	$	309,060	$	320,148
Unsecured revolving credit facility	66,000		67,500
Total Indebtedness	$	375,060	$	387,648

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Fair Value Disclosures Fair Value Disclosure (Tables)

6 Months Ended

Jun. 30, 2019

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments [Table Text Block]

The following table presents an estimated fair value of the Company's Notes and Credit Facility. The Notes are classified as Level 2 and primarily reflect estimated prices obtained from outside pricing sources. The Company's Credit Facility is classified as Level 3 within the fair value hierarchy. The Company had an outstanding balance of $66.0 million under its Credit Facility at June 30, 2019, and the estimated fair value of the outstanding balance approximated the carrying value due to the short-term nature of LIBOR contracts.

	June 30, 2019				December 31, 2018
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(Dollars in thousands)
7.25% Senior Notes due 2022, net (1)	$	309,060	$	294,234	$	320,148	$	292,500
Unsecured revolving credit facility	$	66,000	$	66,000	$	67,500	$	67,500

(1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.    

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Commitments and Contingencies Lease Cost (Tables)

6 Months Ended

Jun. 30, 2019

Lease, Cost [Abstract]

Lease Cost and Cash Flow

For the three and six months ended June 30, 2019, lease costs and cash flow information for leases with terms in excess of one year was as follows:

	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
	(Dollars in thousands)
Lease cost:
Lease costs included in general and administrative expenses	$	265	$	620
Lease costs included in real estate inventories	207		369
Lease costs included in selling and marketing expenses	17		34
Net lease cost (1)	$	489	$	1,023
Other Information:
Lease cash flows (included in operating cash flows)(1)	$	563	$	1,053

(1) Does not include the cost of short-term leases with terms of less than one year which totaled approximately $0.2 million and $0.5 million for the three and six months ended June 30, 2019, respectively, or the benefit from a sublease agreement of one of our office spaces which totaled approximately $49,000 and $98,000 for the three and six months ended June 30, 2019, respectively.

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Commitments and Contingencies Schedule of Future Minimum Lease Payments (Tables)

6 Months Ended

Jun. 30, 2019

Schedule of Future Minimum Lease Payments [Abstract]

Schedule of Future Minimum Lease Payments

Future minimum lease payments under our operating leases are as follows (dollars in thousands):

Remaining for 2019	$	971
2020	1,615
2021	444
2022	10
2023	2
Thereafter	—
Total lease payments(1)	$	3,042
Less: Interest(2)	140
Present value of lease liabilities(3)	$	2,902

(1)    Lease payments include options to extend lease terms that are reasonably certain of being exercised.

(2) Our leases do not provide a readily determinable implicit rate. Therefore, we utilized our incremental borrowing rate for such leases to determine the present value of lease payments at the lease commencement date. There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2019.

(3) The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of common stock option activity

A summary of the Company’s common stock option activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Exercise Price per Share		Number of Shares		Weighted-Average Exercise Price per Share
Outstanding Stock Option Activity
Outstanding, beginning of period	821,470		$	11.00	826,498		$	11.00
Granted	249,283		$	5.76	—		$	—
Exercised	—		$	—	—		$	—
Forfeited	(2,736	)	$	11.00	(5,028	)	$	11.00
Outstanding, end of period	1,068,017		$	9.78	821,470		$	11.00
Exercisable, end of period	818,734		$	11.00	821,470		$	11.00

Summary of restricted stock units

A summary of the Company’s restricted stock unit activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Grant-Date Fair Value per Share		Number of Shares		Weighted-Average Grant-Date Fair Value per Share
Restricted Stock Unit Activity
Outstanding, beginning of period	469,227		$	10.75	562,082		$	10.72
Granted	230,774		$	5.28	179,268		$	11.24
Vested	(277,401	)	$	10.50	(270,363	)	$	11.02
Forfeited	(48,178	)	$	10.91	—		$	—
Outstanding, end of period	374,422		$	7.54	470,987		$	10.74

Summary of performance share unit awards

A summary of the Company’s performance share unit activity as of and for the six months ended June 30, 2019 and 2018 is presented below:

	Six Months Ended June 30,
	2019				2018
	Number of Shares		Weighted-Average Grant-Date Fair Value per Share		Number of Shares	Weighted-Average Grant-Date Fair Value per Share
Performance Share Unit Activity
Outstanding, beginning of period	125,422		$	11.68	—	$	—
Granted (at target)	—		$	—	125,422	$	11.68
Vested	—		$	—	—	$	—
Forfeited	(26,882	)	$	11.68	—	$	—
Outstanding, end of period (at target)	98,540		$	11.68	125,422	$	11.68

Summary of stock-based compensation expense

The expense related to the Company's stock-based compensation programs, included in general and administrative expense in the accompanying condensed consolidated statements of operations, was as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
	(Dollars in thousands)
Expense related to:
Stock options	$	50	$	—	$	72	$	—
Restricted stock units and performance share units	473		862		1,017		1,704
	$	523	$	862	$	1,089	$	1,704

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

The following table presents details of the assumptions used to calculate the weighted-average grant date fair value of common stock options granted by the Company:

	Six Months Ended June 30,
	2019	2018
Expected term (in years)	6.0	0
Expected volatility	39.9%	—
Risk-free interest rate	2.5%	—
Expected dividends	—	—
Weighted-average grant date fair value	$2.43	$0

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2019

Segment Reporting [Abstract]

Schedule of financial information related to reportable segments

Financial information relating to reportable segments was as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
	(Dollars in thousands)
Homebuilding revenues:
California	$	132,830		$	117,460		$	216,162		$	196,897
Arizona	7,634			—			23,488			—
Total homebuilding revenues	140,464			117,460			239,650			196,897
Fee building revenues, including management fees	22,285			38,095			41,947			81,889
Total revenues	$	162,749		$	155,555		$	281,597		$	278,786
Homebuilding pretax income (loss):
California	$	2,846		$	83		$	279		$	(1,818	)
Arizona	(796		)	(958		)	(1,274		)	(1,663		)
Total homebuilding pretax income (loss)	2,050			(875		)	(995		)	(3,481		)
Fee building pretax income, including management fees	515			1,057			909			2,152
Total pretax income (loss)	$	2,565		$	182		$	(86	)	$	(1,329	)

	June 30,		December 31,
	2019		2018
	(Dollars in thousands)
Homebuilding assets:
California	$	548,223	$	551,807
Arizona	95,370		86,205
Total homebuilding assets	643,593		638,012
Fee building assets	7,064		10,879
Corporate unallocated assets	22,600		47,206
Total assets	$	673,257	$	696,097

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Supplemental Disclosure of Cash Flow Information (Tables)

6 Months Ended

Jun. 30, 2019

Supplemental Cash Flow Elements [Abstract]

Schedule of Cash Flow, Supplemental Disclosures [Table Text Block]

The following table presents certain supplemental cash flow information:

	Six Months Ended June 30,
	2019		2018
	(Dollars in thousands)
Supplemental disclosures of cash flow information
Interest paid, net of amounts capitalized	$	—	$	—
Income taxes paid	$	240	$	7,000

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Supplemental Guarantor Information (Tables)

6 Months Ended

Jun. 30, 2019

Supplemental Guarantor Information [Abstract]

Supplemental Condensed Consolidating Balance Sheet [Table Text Block]

	June 30, 2019
	NWHM		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	4,005	$	44,040	$	179	$	—		$	48,224
Restricted cash	—		124		—		—			124
Contracts and accounts receivable	8		16,518		—		(413		)	16,113
Intercompany receivables	228,506		—		—		(228,506		)	—
Due from affiliates	—		218		—		—			218
Real estate inventories	—		541,954		—		—			541,954
Investment in and advances to unconsolidated joint ventures	—		33,637		—		—			33,637
Investment in subsidiaries	370,716		—		—		(370,716		)	—
Other assets	18,975		14,003		12		(3		)	32,987
Total assets	$	622,210	$	650,494	$	191	$	(599,638	)	$	673,257
Liabilities and equity
Accounts payable	$	329	$	26,300	$	—	$	—		$	26,629
Accrued expenses and other liabilities	7,723		25,001		59		(408		)	32,375
Intercompany payables	—		228,506		—		(228,506		)	—
Due to affiliates	—		8		—		(8		)	—
Unsecured revolving credit facility	66,000		—		—		—			66,000
Senior notes, net	309,060		—		—		—			309,060
Total liabilities	383,112		279,815		59		(228,922		)	434,064
Stockholders' equity	239,098		370,679		37		(370,716		)	239,098
Non-controlling interest in subsidiary	—		—		95		—			95
Total equity	239,098		370,679		132		(370,716		)	239,193
Total liabilities and equity	$	622,210	$	650,494	$	191	$	(599,638	)	$	673,257

	December 31, 2018
	NWHM		Guarantor Subsidiaries		Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	28,877	$	13,249	$	147	$	—		$	42,273
Restricted cash	—		269		—		—			269
Contracts and accounts receivable	7		18,926		—		(668		)	18,265
Intercompany receivables	192,341		—		—		(192,341		)	—
Due from affiliates	—		1,218		—		—			1,218
Real estate inventories	—		566,290		—		—			566,290
Investment in and advances to unconsolidated joint ventures	—		34,330		—		—			34,330
Investment in subsidiaries	396,466		—		—		(396,466		)	—
Other assets	18,643		14,812		—		(3		)	33,452
Total assets	$	636,334	$	649,094	$	147	$	(589,478	)	$	696,097
Liabilities and equity
Accounts payable	$	240	$	39,151	$	—	$	—		$	39,391
Accrued expenses and other liabilities	8,492		21,129		71		(664		)	29,028
Intercompany payables	—		192,341		—		(192,341		)	—
Due to affiliates	—		7		—		(7		)	—
Unsecured revolving credit facility	67,500		—		—		—			67,500
Senior notes, net	320,148		—		—		—			320,148
Total liabilities	396,380		252,628		71		(193,012		)	456,067
Stockholders' equity	239,954		396,466		—		(396,466		)	239,954
Non-controlling interest in subsidiary	—		—		76		—			76
Total equity	239,954		396,466		$	76	(396,466		)	240,030
Total liabilities and equity	$	636,334	$	649,094	$	147	$	(589,478	)	$	696,097

Supplemental Condensed Consolidating Statement of Operations [Table Text Block]

	Three Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	140,464		$	—		$	—		$	140,464
Fee building	—			22,285			—			—			22,285
	—			162,749			—			—			162,749
Cost of Sales:
Home sales	—			123,582			(57		)	—			123,525
Fee building	—			21,770			—			—			21,770
	—			145,352			(57		)	—			145,295
Gross Margin:
Home sales	—			16,882			57			—			16,939
Fee building	—			515			—			—			515
	—			17,397			57			—			17,454
Selling and marketing expenses	—			(9,683		)	—			—			(9,683		)
General and administrative expenses	617			(6,458		)	—			—			(5,841		)
Equity in net income of unconsolidated joint ventures	—			185			—			—			185
Equity in net income of subsidiaries	1,087			—			—			(1,087		)	—
Gain on early extinguishment of debt	552			—			—			—			552
Other income (expense), net	(106		)	4			—			—			(102		)
Pretax income	2,150			1,445			57			(1,087		)	2,565
Provision for income taxes	(578		)	(396		)	—			—			(974		)
Net income	1,572			1,049			57			(1,087		)	1,591
Net income attributable to non-controlling interest in subsidiary	—			—			(19		)	—			(19		)
Net income attributable to The New Home Company Inc.	$	1,572		$	1,049		$	38		$	(1,087	)	$	1,572

	Three Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	117,460		$	—		$	—	$	117,460
Fee building	—			38,095			—			—		38,095
	—			155,555			—			—		155,555
Cost of Sales:
Home sales	—			102,680			(2		)	—		102,678
Fee building	—			37,038			—			—		37,038
	—			139,718			(2		)	—		139,716
Gross Margin:
Home sales	—			14,780			2			—		14,782
Fee building	—			1,057			—			—		1,057
	—			15,837			2			—		15,839
Selling and marketing expenses	—			(9,466		)	—			—		(9,466		)
General and administrative expenses	305			(6,281		)	(3		)	—		(5,979		)
Equity in net loss of unconsolidated joint ventures	—			(120		)	—			—		(120		)
Equity in net loss of subsidiaries	(58		)	—			—			58		—
Other income (expense), net	(35		)	(57		)	—			—		(92		)
Pretax income (loss)	212			(87		)	(1		)	58		182
(Provision) benefit for income taxes	(97		)	30			—			—		(67		)
Net income (loss)	115			(57		)	(1		)	58		115
Net loss attributable to non-controlling interest in subsidiary	—			—			—			—		—
Net income (loss) attributable to The New Home Company Inc.	$	115		$	(57	)	$	(1	)	$	58	$	115

	Six Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	239,650		$	—		$	—	$	239,650
Fee building	—			41,947			—			—		41,947
	—			281,597			—			—		281,597
Cost of Sales:
Home sales	—			210,151			(57		)	—		210,094
Fee building	—			41,038			—			—		41,038
	—			251,189			(57		)	—		251,132
Gross Margin:
Home sales	—			29,499			57			—		29,556
Fee building	—			909			—			—		909
	—			30,408			57			—		30,465
Selling and marketing expenses	—			(18,362		)	—			—		(18,362		)
General and administrative expenses	51			(13,283		)	—			—		(13,232		)
Equity in net income of unconsolidated joint ventures	—			369			—			—		369
Equity in net loss of subsidiaries	(625		)	—			—			625		—
Gain on early extinguishment of debt	969			—			—			—		969
Other income (expense), net	(168		)	(127		)	—			—		(295		)
Pretax income (loss)	227			(995		)	57			625		(86		)
(Provision) benefit for income taxes	(642		)	332			—			—		(310		)
Net income (loss)	(415		)	(663		)	57			625		(396		)
Net income attributable to non-controlling interest in subsidiary	—			—			(19		)	—		(19		)
Net income (loss) attributable to The New Home Company Inc.	$	(415	)	$	(663	)	$	38		$	625	$	(415	)

	Six Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments		Consolidated NWHM
	(Dollars in thousands)
Revenues:
Home sales	$	—		$	196,897		$	—		$	—	$	196,897
Fee building	—			81,889			—			—		81,889
	—			278,786			—			—		278,786
Cost of Sales:
Home sales	—			172,350			22			—		172,372
Fee building	—			79,737			—			—		79,737
	—			252,087			22			—		252,109
Gross Margin:
Home sales	—			24,547			(22		)	—		24,525
Fee building	—			2,152			—			—		2,152
	—			26,699			(22		)	—		26,677
Selling and marketing expenses	—			(16,105		)	—			—		(16,105		)
General and administrative expenses	(801		)	(11,194		)	(3		)	—		(11,998		)
Equity in net income of unconsolidated joint ventures	—			215			—			—		215
Equity in net loss of subsidiaries	(176		)	—			—			176		—
Other income (expense), net	76			(194		)	—			—		(118		)
Pretax loss	(901		)	(579		)	(25		)	176		(1,329		)
Benefit for income taxes	376			417			—			—		793
Net loss	(525		)	(162		)	(25		)	176		(536		)
Net loss attributable to non-controlling interest in subsidiary	—			—			11			—		11
Net loss attributable to The New Home Company Inc.	$	(525	)	$	(162	)	$	(14	)	$	176	$	(525	)

Supplemental Condensed Consolidated Statement of Cash Flows [Table Text Block]

	Six Months Ended June 30, 2019
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries		Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Net cash (used in) provided by operating activities	$	(36,110	)	$	54,970		$	32	$	—		$	18,892
Investing activities:
Purchases of property and equipment	(1		)	(7		)	—		—			(8		)
Contributions and advances to unconsolidated joint ventures	—			(4,120		)	—		—			(4,120		)
Contributions to subsidiaries from corporate	(66,575		)	—			—		66,575			—
Distributions of capital from subsidiaries	91,700			—			—		(91,700		)	—
Distributions of capital and repayment of advances from unconsolidated joint ventures	—			4,928			—		—			4,928
Net cash provided by investing activities	$	25,124		$	801		$	—	$	(25,125	)	$	800
Financing activities:
Borrowings from credit facility	40,000			—			—		—			40,000
Repayments of credit facility	(41,500		)	—			—		—			(41,500		)
Repurchase of senior notes	(10,856		)	—			—		—			(10,856		)
Contributions to subsidiaries from corporate	—			66,575			—		(66,575		)	—
Distributions to corporate from subsidiaries	—			(91,700		)	—		91,700			—
Repurchases of common stock	(1,042		)	—			—		—			(1,042		)
Tax withholding paid on behalf of employees for stock awards	(488		)	—			—		—			(488		)
Net cash used in financing activities	$	(13,886	)	$	(25,125	)	$	—	$	25,125		$	(13,886	)
Net (decrease) increase in cash, cash equivalents and restricted cash	(24,872		)	30,646			32		—			5,806
Cash, cash equivalents and restricted cash – beginning of period	28,877			13,518			147		—			42,542
Cash, cash equivalents and restricted cash – end of period	$	4,005		$	44,164		$	179	$	—		$	48,348

	Six Months Ended June 30, 2018
	NWHM			Guarantor Subsidiaries			Non-Guarantor Subsidiaries			Consolidating Adjustments			Consolidated NWHM
	(Dollars in thousands)
Net cash used in operating activities	$	(39,156	)	$	(22,349	)	$	(5	)	$	—		$	(61,510	)
Investing activities:
Purchases of property and equipment	(22		)	(162		)	—			—			(184		)
Contributions and advances to unconsolidated joint ventures	—			(8,954		)	—			—			(8,954		)
Contributions to subsidiaries from corporate	(103,885		)	—			—			103,885			—
Distributions of capital from subsidiaries	49,975			—			—			(49,975		)	—
Distributions of capital and repayment of advances from unconsolidated joint ventures	—			5,874			—			—			5,874
Interest collected on advances to unconsolidated joint ventures	—			178			—			—			178
Net cash used in investing activities	$	(53,932	)	$	(3,064	)	$	—		$	53,910		$	(3,086	)
Financing activities:
Borrowings from credit facility	35,000			—			—			—			35,000
Contributions to subsidiaries from corporate	—			103,885			—			(103,885		)	—
Distributions to corporate from subsidiaries	—			(49,975		)	—			49,975			—
Repurchases of common stock	(2,072		)	—			—			—			(2,072		)
Tax withholding paid on behalf of employees for stock awards	(977		)	—			—			—			(977		)
Net cash provided by financing activities	$	31,951		$	53,910		$	—		$	(53,910	)	$	31,951
Net (decrease) increase in cash, cash equivalents and restricted cash	(61,137		)	28,497			(5		)	—			(32,645		)
Cash, cash equivalents and restricted cash – beginning of period	99,586			24,196			188			—			123,970
Cash, cash equivalents and restricted cash – end of period	$	38,449		$	52,693		$	183		$	—		$	91,325

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Organization and Summary of Significant Accounting Policies - Additional Disclosures (Details)	3 Months Ended			6 Months Ended
	Jun. 30, 2019 USD ($)		Jun. 30, 2018 USD ($) shares	Jun. 30, 2019 USD ($) shares		Jun. 30, 2018 USD ($) shares	Jan. 01, 2019 USD ($)	Dec. 31, 2018 USD ($)		Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Restricted cash	$ 124,000		$ 567,000	$ 124,000		$ 567,000		$ 269,000
Deposits Assets - Outstanding	15,300,000			$ 15,300,000
Number of Projects Impaired				0
Impairment of Real Estate	0					0
Cumulative Effect of New Accounting Principle in Period of Adoption										$ 0	$ (3,365,000)
Stock Repurchased During Period			2,072,000	$ 1,042,000		2,072,000
Right of use lease asset	2,541,000	[1]		2,541,000	[1]		$ 3,100,000	0	[1]
Operating Lease, Liability	2,902,000	[2]		$ 2,902,000	[2]		$ 3,500,000	0
Document Period End Date				Jun. 30, 2019
Non-controlling interest in subsidiary	95,000			$ 95,000				76,000
Impairments related to investment in unconsolidated joint ventures	0			0		0
Allowance for doubtful contracts and accounts receivable	$ 0			$ 0				0
Maximum [Member]
Equity Method Investment, Ownership Percentage	35.00%			35.00%
Additional Paid-in Capital [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption										(18,000)	(18,000)
Stock Repurchased During Period			$ 1,947,000	$ 1,040,000		$ 1,947,000
Common Stock [Member]
Stock Repurchased and Retired During Period, Shares | shares			205,240	153,916		205,240
Stock Repurchased During Period			$ 2,000	$ 2,000		$ 2,000
Stockholders' Equity Attributable to Parent [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption										$ 0	$ (3,365,000)
Stock Repurchased During Period			$ 2,072,000	$ 1,042,000		$ 2,072,000
Accounting Standards Update 2018-07 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption								$ 18,000

[1] In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

[2] The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

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Organization and Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018	Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents	$ 48,224	$ 42,273	$ 90,758
Restricted cash	124	269	567
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$ 48,348	$ 42,542	$ 91,325	$ 123,970

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Organization and Summary of Significant Accounting Policies - Major Customer Revenue (Details) - customer	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Concentration Risk [Line Items]
Document Period End Date			Jun. 30, 2019
Fee Building Segment [Member] | Customer Concentration Risk [Member] | Sales Revenue [Member]
Concentration Risk [Line Items]
Concentration risk, number of customers	1	1	1	1
Concentration Risk, Percentage	95.00%	95.00%	93.00%	96.00%
Fee Building Segment [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Concentration Risk [Line Items]
Concentration risk, number of customers			1		1
Concentration Risk, Percentage			39.00%		48.00%

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Computation of Earnings (Loss) Per Share - Computation of Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Numerator:
Net income (loss) attributable to The New Home Company Inc.	$ 1,572	$ 115	$ (415)	$ (525)
Denominator:
Basic weighted-average shares outstanding	20,070,914	20,958,991	20,028,600	20,942,601
Stock options and unvested restricted stock units	24,619	65,778	0	0
Diluted weighted-average shares outstanding	20,095,533	21,024,769	20,028,600	20,942,601
Basic income (loss) per share attributable to The New Home Company Inc.	$ 0.08	$ 0.01	$ (0.02)	$ (0.03)
Diluted income (loss) per share attributable to The New Home Company Inc.	$ 0.08	$ 0.01	$ (0.02)	$ (0.03)
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	1,349,106	952,882	1,292,726	1,333,106

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Contracts and Accounts Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Contracts Receivable:
Costs incurred on fee building projects	$ 41,038	$ 159,136
Estimated earnings	909	4,401
Contracts receivable, before collections	41,947	163,537
Less: amounts collected during the period	(35,642)	(154,743)
Total contracts receivable	6,305	8,794
Billed	0	0
Unbilled	6,305	8,794
Other receivables
Escrow receivables	9,530	8,787
Other receivables	278	684
Contracts and accounts receivable	16,113	18,265
Accounts payable related to costs incurred under fee building contracts	$ 5,600	$ 8,500

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Real Estate Inventories (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Real Estate [Abstract]
Deposits and pre-acquisition costs	$ 17,485	$ 20,726
Land held and land under development	122,392	115,987
Homes completed or under construction	352,535	380,956
Model homes	49,542	48,621
Real estate inventories	541,954	566,290
Deposits and pre-acquisition costs, refundable	$ 700	$ 900

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Real Estate Inventories Inventory Impairments (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019	Jun. 30, 2018 USD ($)
Inventory Disclosure [Abstract]
Inventory impairments	$ 0		$ 0
Number of Projects Impaired		0

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Capitalized Interest (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Capitalized Interest [Abstract]
Interest incurred	$ 7,606	$ 6,612	$ 15,367	$ 13,328
Interest expensed	0	0	0	0
Interest capitalized to inventory	(7,606)	(6,149)	(15,367)	(12,344)
Interest Capitalized to Investments in Unconsolidated Joint Ventures	0	(463)	0	(984)
Real Estate Inventory, Capitalized Interest Costs [Roll Forward]
Capitalized interest in beginning inventory	28,600	19,884	25,681	16,453
Interest capitalized as a cost of inventory	7,606	6,149	15,367	12,344
Capitalized interest transferred from investment in unconsolidated joint venture to inventory upon lot acquisition	3	5	13	5
Previously capitalized interest included in cost of home sales	(6,301)	(3,750)	(11,153)	(6,514)
Capitalized interest in ending inventory	29,908	22,288	29,908	22,288
Real Estate Inventory, Capitalized Interest Costs in Unconsolidated Joint Venture [Roll Forward]
Capitalized interest in beginning investment in unconsolidated joint ventures	672	1,962	713	1,472
Interest capitalized to investment in unconsolidated joint ventures	0	(463)	0	(984)
Capitalized interest transferred from investment in unconsolidated joint ventures to inventory upon lot acquisition	(3)	(5)	(13)	(5)
Previously capitalized interest included in equity in net income (loss) of unconsolidated joint ventures	(48)	(18)	(79)	(49)
Capitalized interest in ending investment in unconsolidated joint ventures	621	2,402	621	2,402
Total capitalized interest in ending inventory and investments in unconsolidated joint ventures	$ 30,529	$ 24,690	$ 30,529	$ 24,690
Capitalized interest as a percentage of inventory	5.50%	4.70%	5.50%	4.70%
Interest included in cost of home sales as a percentage of home sales revenue	4.40%	3.20%	4.70%	3.30%
Capitalized interest as a percentage of investment in and advances to unconsolidated joint ventures	1.80%	4.10%	1.80%	4.10%

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Investments in and advances to unconsolidated joint ventures - Additional Disclosures (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($) investment	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) investment	Jun. 30, 2018 USD ($)	Dec. 31, 2018 investment
Schedule of Equity Method Investments [Line Items]
Number of unconsolidated joint ventures with ownership interests | investment	10		10		10
Management Fee Revenue	$ 162,749	$ 155,555	$ 281,597	$ 278,786
Equity in net income of unconsolidated joint ventures	$ 185	(120)	$ 369	215
Minimum [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage	5.00%		5.00%
Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage	35.00%		35.00%
Management Service [Member]
Schedule of Equity Method Investments [Line Items]
Management Fee Revenue	$ 619	$ 672	$ 1,162	$ 1,652

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Investments in and advances to unconsolidated joint ventures - Balance Sheet (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Equity Method Investments and Joint Ventures [Abstract]
Cash and cash equivalents	$ 35,145	$ 45,945
Restricted cash	14,740	19,205
Real estate inventories	338,176	374,607
Other assets	5,950	4,231
Total assets	394,011	443,988
Accounts payable and accrued liabilities	36,191	43,158
Notes Payable	40,564	71,299
Liabilities	76,755	114,457
The Company's equity	33,016	33,617
Other partners' equity	284,240	295,914
Total equity	317,256	329,531
Total liabilities and equity	$ 394,011	$ 443,988
Debt-to-capitalization ratio	11.30%	17.80%
Debt-to-equity ratio	12.80%	21.60%

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Investments in and advances to unconsolidated joint ventures - Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Schedule of Equity Method Investments [Line Items]
Revenues	$ 59,078	$ 33,879	$ 101,365	$ 65,892
Cost of Sales and Expenses	57,288	34,165	99,062	65,374
Net income (loss) of unconsolidated joint ventures	1,790	(286)	2,303	518
Equity in net income (loss) of unconsolidated joint ventures	$ 185	$ (120)	$ 369	$ 215

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Investments in and advances to unconsolidated joint ventures Selected Financial Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Schedule of Equity Method Investments [Line Items]
Revenues	$ 59,078	$ 33,879	$ 101,365	$ 65,892
Cost of home sales	57,288	34,165	99,062	65,374
Net income	1,790	(286)	2,303	518
Equity in net income of unconsolidated joint ventures	185	(120)	369	215
Select Unconsolidated Joint Ventures [Member]
Schedule of Equity Method Investments [Line Items]
Revenues	44,358	23,798	76,395	53,439
Cost of home sales	40,548	21,910	69,624	47,544
Gross margin	3,810	1,888	6,771	5,895
Expenses	1,983	1,779	3,840	4,193
Net income	1,827	109	2,931	1,702
Equity in net income of unconsolidated joint ventures	$ 261	$ 11	$ 488	$ 452

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Other Assets - Schedule of Other Assets (Details) - USD ($) $ in Thousands		Jun. 30, 2019		Jan. 01, 2019	Dec. 31, 2018
Other Assets [Abstract]
Property, equipment and capitalized selling and marketing costs, net	[1]	$ 9,094			$ 11,738
Deferred tax asset, net		13,937			13,937
Prepaid income taxes		443			514
Prepaid expenses		5,715			6,348
Warranty insurance receivable	[2]	1,257			915
Right of use lease asset		2,541	[3]	$ 3,100	0	[3]
Other Assets		$ 32,987			$ 33,452

[1] The Company depreciated $2.3 million, $4.9 million, $1.5 million and $2.4 million of capitalized selling and marketing costs to selling and marketing expenses during the three and six months ended June 30, 2019 and 2018, respectively. The Company depreciated $0.1 million, $0.2 million, $0.1 million and $0.2 million of property and equipment to general and administrative expenses during the three and six months ended June 30, 2019 and 2018, respectively.

[2] The Company adjusted its warranty insurance receivable by $0.6 million during the 2019 second quarter to true-up the receivable to align with actual reimbursement experience rates which resulted in pretax income of the same amount. The impact to net income was $0.4 million or $0.02 per diluted share.

[3] In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

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Other Assets (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2019		Jun. 30, 2018	Jun. 30, 2019		Jun. 30, 2018	Jan. 01, 2019	Dec. 31, 2018	[1]
Capitalized Sales and Marketing Depreciated	$ 2,300		$ 1,500	$ 4,900		$ 2,400
Property and Equipment Depreciation	100		$ 100	200		$ 200
Standard Product Warranty Accrual, Increase for Warranties Issued	600
Impact to net income (loss)	$ 400
Impact to Diluted EPS	$ 0.02
Right of use lease asset	$ 2,541	[1]		$ 2,541	[1]		$ 3,100	$ 0

[1] In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

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Accrued Expenses and Other Liabilities - Schedule of Accrued Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands		Jun. 30, 2019		Jan. 01, 2019	Dec. 31, 2018		Jun. 30, 2018
Payables and Accruals [Abstract]
Warranty accrual(1)		$ 7,049	[1]		$ 6,898	[1]	$ 6,998
Accrued compensation and benefits		3,157			5,749
Accrued interest		6,236			6,497
Completion Reserve		3,351			4,192
Lease liability		2,902	[2]	$ 3,500	0
Customer Deposits, Current		7,188			2,192
Other accrued expenses		2,492			3,500
Total accrued expenses and other liabilities		32,375			29,028
Insurance Settlements Receivable	[3]	$ 1,257			$ 915

[1] (1) Included in the amount at June 30, 2019 and December 31, 2018 is approximately $1.3 million and $0.9 million, respectively, of warranty liabilities estimated to be recovered by our insurance policies.

[2] The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

[3] The Company adjusted its warranty insurance receivable by $0.6 million during the 2019 second quarter to true-up the receivable to align with actual reimbursement experience rates which resulted in pretax income of the same amount. The impact to net income was $0.4 million or $0.02 per diluted share.

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Accrued Expenses and Other Liabilities - Changes in Warranty Accrual (Details) - USD ($) $ in Thousands		3 Months Ended			6 Months Ended
		Jun. 30, 2019		Jun. 30, 2018	Jun. 30, 2019		Jun. 30, 2018
Product Warranty Accrual [Line Items]
Document Period End Date					Jun. 30, 2019
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning warranty liability	[1]				$ 6,898
Adjustment to warranty accrual	[2]			$ 0			$ 0
Ending warranty liability		$ 7,049	[1]	6,998	7,049	[1]	6,998
Homebuilding Segment [Member]
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning warranty liability		6,767		6,775	6,681		6,634
Warranty provision		627		470	1,054		986
Warranty payments		(581)		(469)	(922)		(844)
Adjustment to warranty accrual	[2]	94			94
Ending warranty liability		6,907		6,776	6,907		6,776
Fee Building Segment [Member]
Movement in Standard Product Warranty Accrual [Roll Forward]
Beginning warranty liability		178		223	217		225
Warranty provision		0		0	9		0
Warranty payments		(18)		(1)	(66)		(3)
Adjustment to warranty accrual	[2]	(18)			(18)
Ending warranty liability		$ 142		$ 222	$ 142		$ 222

[1] (1) Included in the amount at June 30, 2019 and December 31, 2018 is approximately $1.3 million and $0.9 million, respectively, of warranty liabilities estimated to be recovered by our insurance policies.

[2] (1) During the 2019 second quarter, we recorded an adjustment of $0.1 million to our warranty accrual for homebuilding projects due to higher expected warranty expenditures which is included in "Adjustment to warranty accrual" above and resulted in an increase of the same amount to cost of home sales in the accompanying condensed consolidated statement of operations. Also during the 2019 second quarter, the Company recorded an adjustment of $18,000 due to lower experience rate of expected warranty expenditures for fee building projects which is included in "Adjustment to warranty accrual for fee building projects" above and resulted in a reduction of the same amount to cost of fee building sales in the accompanying condensed consolidated statement of operations.

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Senior Notes and Unsecured Revolving Credit Facility - Schedule of Notes Payable (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
7.25% Senior Notes due 2022, net	[1]	$ 309,060	$ 320,148
Unsecured revolving credit facility		66,000	67,500
Total Notes Payable		$ 375,060	$ 387,648

[1] (1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.

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Senior Notes and Unsecured Revolving Credit Facility - Additional Disclosures (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	May 04, 2017	Mar. 17, 2017
Debt Instrument [Line Items]
Document Period End Date			Jun. 30, 2019
Unsecured revolving credit facility	$ 66,000,000		$ 66,000,000		$ 67,500,000
Long-term Debt	375,060,000		375,060,000		387,648,000
Debt Instrument, Unamortized Discount	1,400,000		1,400,000		1,700,000
Debt Instrument, Unamortized Premium	1,100,000		1,100,000		1,300,000
Debt Instrument, Unamortized Debt Issuance Costs	$ 3,700,000		$ 3,700,000		4,500,000
Interest rate	7.25%		7.25%
Percent of Debt Instrument Face Value Repurchased	90.82%		90.58%
Early Repayment of Senior Debt	$ 6,300,000		$ 10,856,000	$ 0
Gain on early extinguishment of debt	552,000	$ 0	969,000	$ 0
Write off of Deferred Debt Issuance Cost	90,000		160,000
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 200,000,000		$ 200,000,000
Interest rate at period end	5.40%		5.40%
Revolving Credit Facility [Member] | Minimum [Member] | Unsecured Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread on variable rate			2.25%
Revolving Credit Facility [Member] | Maximum [Member] | Unsecured Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread on variable rate			3.00%
Letter of Credit [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 25,000,000		$ 25,000,000
Letters of Credit Outstanding, Amount	2,300,000		2,300,000		$ 2,300,000
Accordion Feature Maximum Borrowing Capacity [Member] | Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity	300,000,000		300,000,000
Sr Notes Due 2022 [Member]
Debt Instrument [Line Items]
Face value of note							$ 250,000,000
Percent of Debt Instrument Par Value Issued							98.961%
Interest rate at period end							7.50%
Current Quarter [Member]
Debt Instrument [Line Items]
Debt Instrument, Repurchased Face Amount	7,000,000.0		7,000,000.0
Sr Notes Due 2022 Tack-on [Member]
Debt Instrument [Line Items]
Face value of note						$ 75,000,000
Percent of Debt Instrument Par Value Issued						102.75%
Interest rate at period end						6.438%
Year to Date [Member]
Debt Instrument [Line Items]
Debt Instrument, Repurchased Face Amount	12,000,000.0		12,000,000.0
Existing or future credit facility borrowings [Member] | Sr Notes Due 2022 [Member]
Debt Instrument [Line Items]
Maximum borrowing capacity	$ 260,000,000		$ 260,000,000
Basket limitation components [Member] | Sr Notes Due 2022 [Member] | Maximum [Member]
Debt Instrument [Line Items]
Percent of consolidated net income	50.00%		50.00%
Net Cash Proceeds from Qualified Equity Offerings	100.00%		100.00%
Consolidated tangible net assets	15.00%		15.00%
General Basket	$ 15,000,000		$ 15,000,000

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Fair Value Disclosures Fair Value Table (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Senior notes, net	[1]	$ 309,060	$ 320,148
Senior notes, fair value		294,234	292,500
Unsecured revolving credit facility		$ 66,000	$ 67,500

[1] (1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.

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Fair Value Disclosures (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)
Fair Value Disclosures [Abstract]
Unsecured revolving credit facility	$ 66,000	$ 67,500
Debt Instrument, Unamortized Discount	1,400	1,700
Debt Instrument, Unamortized Premium	1,100	1,300
Debt Instrument, Unamortized Debt Issuance Costs	$ 3,700	$ 4,500
Number of Projects Impaired	0

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019		Jan. 01, 2019	Dec. 31, 2018
Loss Contingencies [Line Items]
Document Period End Date	Jun. 30, 2019
Right of use lease asset	$ 2,541	[1]	$ 3,100	$ 0	[1]
Operating Lease, Liability	2,902	[2]	$ 3,500	0
Surety Bond [Member]
Loss Contingencies [Line Items]
Outstanding surety bonds	52,800			50,500
Surety bonds work remaining to complete	25,100			20,300
Corporate Joint Venture [Member] | Financial Guarantee [Member]
Loss Contingencies [Line Items]
Long-term Debt, Gross	24,400			41,300
Loans Payable [Member] | Corporate Joint Venture [Member]
Loss Contingencies [Line Items]
Related Party Transaction, Guarantor Obligations, Underlying Asset Class Guaranteed	$ 4,900			$ 7,300

[1] In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

[2] The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

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Commitments and Contingencies Lease Costs (Details) - USD ($)		3 Months Ended	6 Months Ended
		Jun. 30, 2019	Jun. 30, 2019
Lease Costs [Abstract]
Lease costs included in general and administrative expenses		$ 265	$ 620
Lease costs included in real estate inventories		207	369
Lease costs included in selling and marketing expenses		17	34
Lease, Cost	[1]	489	1,023
Lease cash flows	[1]	563	1,053
Short-term Lease, Cost		200,000	500,000
Sublease Income		$ 49,000	$ 98,000

[1] Does not include the cost of short-term leases with terms of less than one year which totaled approximately $0.2 million and $0.5 million for the three and six months ended June 30, 2019, respectively, or the benefit from a sublease agreement of one of our office spaces which totaled approximately $49,000 and $98,000 for the three and six months ended June 30, 2019, respectively.

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Commitments and Contingencies Future Minimum Lease Payments (Details) - USD ($) $ in Thousands		Jun. 30, 2019		Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Right of use lease asset		$ 2,541	[1]	$ 3,100	$ 0	[1]
Remaining for 2019		971
Lessee, Operating Lease, Liability, Payments, Due Year Two		1,615
Lessee, Operating Lease, Liability, Payments, Due Year Three		444
Lessee, Operating Lease, Liability, Payments, Due Year Four		10
Lessee, Operating Lease, Liability, Payments, Due Year Five		2
Lessee, Operating Lease, Liability, Payments, Due after Year Five		0
Lessee, Operating Lease, Liability, Payments, Due	[2]	3,042
Lessee, Operating Lease, Liability, Undiscounted Excess Amount	[3]	(140)
Operating Lease, Liability		$ 2,902	[4]	$ 3,500	$ 0
Operating Lease, Weighted Average Remaining Lease Term		1 year 10 months 24 days
Operating Lease, Weighted Average Discount Rate, Percent		5.20%

[1] In conjunction with the adoption of ASC 842, the Company established a right-of-use asset of $3.1 million on January 1, 2019. For more information, please refer to Note 1 and Note 11.

[2] Lease payments include options to extend lease terms that are reasonably certain of being exercised.

[3] Our leases do not provide a readily determinable implicit rate. Therefore, we utilized our incremental borrowing rate for such leases to determine the present value of lease payments at the lease commencement date. There were no legally binding minimum lease payments for leases signed but not yet commenced at June 30, 2019.

[4] The weighted average remaining lease term and weighted average incremental borrowing rate used in calculating our lease liabilities were 1.9 years and 5.2%, respectively at June 30, 2019.

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Related Party Transactions (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($) investment	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) investment	Jun. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2018 USD ($) investment
Related Party Transaction [Line Items]
Document Period End Date			Jun. 30, 2019
Due from affiliates	$ 218,000		$ 218,000			$ 1,218,000
Equity Method Investments, Number | investment	10		10			10
Investment in and advances to unconsolidated joint ventures	$ 33,637,000		$ 33,637,000			$ 34,330,000
Revenue	162,749,000	$ 155,555,000	281,597,000	$ 278,786,000
Cost of Goods and Services Sold	145,295,000	139,716,000	251,132,000	252,109,000
Due to Affiliate	0		0			0
Equity in net income of unconsolidated joint ventures	$ 185,000	(120,000)	$ 369,000	215,000
Debt Instrument, Interest Rate, Stated Percentage	7.25%		7.25%
Deposits Assets - Outstanding	$ 15,300,000		$ 15,300,000
Profit Participation [Member]
Related Party Transaction [Line Items]
Profit Participation				100,000
Interest Income on Note to Joint Venture [Member]
Related Party Transaction [Line Items]
Revenue from related party		$ 49,000		$ 100,000
Debt Instrument, Interest Rate, Stated Percentage		10.00%		10.00%
Builder Fees [Member]
Related Party Transaction [Line Items]
Due from affiliates	66,000		66,000			37,000
Corporate Joint Venture [Member] | Construction-related Costs [Member]
Related Party Transaction [Line Items]
Expenses from transactions with related party	1,500,000	$ 1,500,000	3,200,000	$ 3,600,000
Due from affiliates	200,000		200,000			400,000
Corporate Joint Venture [Member] | Management Fees [Member]
Related Party Transaction [Line Items]
Due from affiliates	0		0			200,000
Revenue from related party	$ 600,000	700,000	$ 1,200,000	1,700,000
Related Party [Member]
Related Party Transaction [Line Items]
The percentage of ownership of common stock entities with investments in Company’s unconsolidated joint ventures hold	10.00%		10.00%
10% Common Stock Affiliate [Member] | Northern CA Phased Takedown [Member]
Related Party Transaction [Line Items]
Total purchase price for lots under option contract	$ 16,100,000		$ 16,100,000
Master Marketing Fees			400,000
Deposit related to option contract	300,000		300,000
10% Common Stock Affiliate [Member] | Northern CA Rolling Option [Member]
Related Party Transaction [Line Items]
Deposit related to option contract	2,300,000		2,300,000
Estimated Purchase Price	8,400,000		56,700,000
Land owner fees reimbursed			100,000
Option Payment			3,000,000.0
Amounts Paid for Purchase of Lots			9,200,000
10% Common Stock Affiliate [Member] | Northern CA Finished Lots [Member]
Related Party Transaction [Line Items]
Total purchase price for lots under option contract	8,000,000.0		8,000,000.0
Master Marketing Fees			300,000
Reimbursed Costs			200,000
10% Common Stock Affiliate [Member] | Arizona Master Plan [Member]
Related Party Transaction [Line Items]
Total purchase price for lots under option contract	3,800,000		3,800,000
Deposit related to option contract	300,000		300,000
Consultant Stelmar [Member] | Monthly consulting fee [Member]
Related Party Transaction [Line Items]
Transaction amount			6,000
Accounts Payable, Related Parties	0		0
Consultant Redwitz [Member] | Monthly consulting fee [Member]
Related Party Transaction [Line Items]
Transaction amount			10,000
Accounts Payable, Related Parties	$ 0		$ 0
Board Member and 10% Beneficial Owner [Member]
Related Party Transaction [Line Items]
Equity Method Investments, Number | investment	2		2
Investment in and advances to unconsolidated joint ventures	$ 9,800,000		$ 9,800,000			6,500,000
Director [Member]
Related Party Transaction [Line Items]
Equity Method Investments, Number | investment	3		3
Investment in and advances to unconsolidated joint ventures	$ 10,900,000		$ 10,900,000			12,000,000.0
Consultant Davis [Member]
Related Party Transaction [Line Items]
Due from affiliates	0		0			600,000
Consultant Davis [Member] | Monthly consulting fee [Member]
Related Party Transaction [Line Items]
Transaction amount	1,000		5,000
Accounts Payable, Related Parties	0		0
Board Affiliate [Member] | Bedford [Member]
Related Party Transaction [Line Items]
Total purchase price for lots under option contract	10,000,000.0		10,000,000.0
Deposit related to option contract	1,500,000		1,500,000
Deposits Assets - Outstanding	700,000		700,000
Board Affiliate [Member] | Bedford 2 [Member]
Related Party Transaction [Line Items]
Total purchase price for lots under option contract	10,500,000		10,500,000
Deposit related to option contract	1,400,000		1,400,000
Deposits Assets - Outstanding	800,000		800,000
Joint Venture Land Sales [Member]
Related Party Transaction [Line Items]
Deferred Profit Contra WIP Balance	200,000		200,000			200,000
Wholly owned [Member] | TL Fab LP [Member] | Trade Payment [Member]
Related Party Transaction [Line Items]
Transaction amount	22,000	100,000	55,000	200,000
Accounts Payable, Related Parties	22,000		22,000			7,000
Unconsolidated Joint Ventures [Member] | TL Fab LP [Member] | Trade Payment [Member]
Related Party Transaction [Line Items]
Transaction amount	0	0	0	400,000
Accounts Payable, Related Parties	0		0			$ 8,000
Sponsor [Member] | FMR LLC [Member]
Related Party Transaction [Line Items]
Investment Income, Investment Expense		5,000		9,000
Participant [Member] | FMR LLC [Member]
Related Party Transaction [Line Items]
Investment Income, Investment Expense		2,000		4,000
General Contractor [Member] | Consultant Davis [Member]
Related Party Transaction [Line Items]
Revenue	0	17,000	15,000	17,100
Fee Building
Related Party Transaction [Line Items]
Revenue	22,285,000	38,095,000	41,947,000	81,889,000
Cost of Goods and Services Sold	21,770,000	37,038,000	41,038,000	79,737,000
Fee Building | Consultant Davis [Member]
Related Party Transaction [Line Items]
Revenue	10,000	600,000	500,000	700,000
Cost of Goods and Services Sold	$ 13,000	$ 600,000	$ 500,000	$ 600,000
Amendment [Member] | Board Affiliate [Member] | Bedford [Member]
Related Party Transaction [Line Items]
Total purchase price for lots under option contract					$ 9,300,000

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Stock-Based Compensation - Additional Disclosures (Details) $ in Millions	6 Months Ended
	Jun. 30, 2019 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Document Period End Date	Jun. 30, 2019
Award expiration period	10 years
Unearned stock-based compensation expense not yet recognized, recognition period	1 year 9 months 18 days
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	50.00%
Award vesting period	1 year
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	150.00%
Award vesting period	3 years
Stock Options and Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unearned stock-based compensation expense not yet recognized | $	$ 2.8
2014 Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares that may be issued under plan	1,644,875
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	61,443
2016 Incentive Plan [Member] [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares that may be issued under plan	800,000
2016 Incentive Plan Amended and Restated [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares that may be issued under plan	2,100,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant	1,053,811

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Stock-Based Compensation - Summary of Common Stock Option Activity (Details) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Number of Shares
Options outstanding at December 31 (shares)	821,470	826,498
Options granted (shares)	249,283	0
Options exercised (shares)	0	0
Options forfeited (shares)	(2,736)	(5,028)
Options outstanding at June 30 (shares)	1,068,017	821,470
Options exercisable at June 30 (shares)	818,734	821,470
Weighted-Average Exercise Price per share
Options outstanding at December 31 (in dollars per share)	$ 11.00	$ 11.00
Options granted (in dollars per share)	5.76	0
Options exercised (in dollars per share)	0	0
Options forfeited (in dollars per share)	11.00	11.00
Options outstanding at June 30 (in dollars per share)	9.78	11.00
Options exercisable at June 30 (in dollars per share)	$ 11.00	$ 11.00

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Stock-Based Compensation - Summary of Restricted Stock Units (Details) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Balance outstanding at December 31 (shares)	469,227	562,082
Units granted (shares)	230,774	179,268
Units vested (shares)	(277,401)	(270,363)
Units forfeited (shares)	(48,178)	0
Balance outstanding at June 30 (shares)	374,422	470,987
Weighted-Average Grant-Date Fair Value per Share
Balance outstanding at December 31 (in dollars per share)	$ 10.75	$ 10.72
Units granted (in dollars per share)	5.28	11.24
Units vested (in dollars per share)	10.50	11.02
Units forfeited (in dollars per share)	10.91	0
Balance outstanding at June 30 (in dollars per share)	$ 7.54	$ 10.74
Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Balance outstanding at December 31 (shares)	125,422	0
Units granted (shares)	0	125,422
Units vested (shares)	0	0
Units forfeited (shares)	(26,882)	0
Balance outstanding at June 30 (shares)	98,540	125,422
Weighted-Average Grant-Date Fair Value per Share
Balance outstanding at December 31 (in dollars per share)	$ 11.68	$ 0
Units granted (in dollars per share)	0	11.68
Units vested (in dollars per share)	0	0
Units forfeited (in dollars per share)	11.68	0
Balance outstanding at June 30 (in dollars per share)	$ 11.68	$ 11.68

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Stock-Based Compensation - Summary of Source of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense			$ 1,089	$ 1,704
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 50	$ 0	72	0
Restricted Stock Unit and Performance Share Unit Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 473	$ 862	$ 1,017	$ 1,704

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Stock-Based Compensation Schedule of Valuation Assumptions (Details) - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Summary of Performance Share Awards [Abstract]
Expected Term	6 years	0 years
Expected Volatility Rate	39.90%	0.00%
Risk Free Interest Rate	2.50%	0.00%
Expected Dividend Rate	0.00%	0.00%
Weighted Average Grant Date Fair Value	$ 2.43	$ 0

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Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Income Tax Disclosure [Abstract]
(Provision) benefit for income taxes	$ (974)	$ (67)	$ (310)	$ 793
Discrete tax items			$ 300	$ 400

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Segment Information (Details) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) segment	Jun. 30, 2018 USD ($)	Dec. 31, 2018 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | segment			3
Revenue	$ 162,749	$ 155,555	$ 281,597	$ 278,786
Income before income taxes	2,565	182	(86)	(1,329)
Total assets	673,257		673,257		$ 696,097
Homebuilding Segment [Member]
Segment Reporting Information [Line Items]
Income before income taxes	2,050	(875)	(995)	(3,481)
Total assets	643,593		643,593		638,012
Fee Building Segment [Member]
Segment Reporting Information [Line Items]
Income before income taxes	515	1,057	909	2,152
Total assets	7,064		7,064		10,879
Corporate Unallocated [Member]
Segment Reporting Information [Line Items]
Total assets	22,600		22,600		47,206
Home Sales
Segment Reporting Information [Line Items]
Revenue	140,464	117,460	239,650	196,897
Home Sales | Homebuilding Segment [Member]
Segment Reporting Information [Line Items]
Revenue	140,464	117,460	239,650	196,897
Fee Building
Segment Reporting Information [Line Items]
Revenue	22,285	38,095	41,947	81,889
Fee Building | Fee Building Segment [Member]
Segment Reporting Information [Line Items]
Revenue	22,285	38,095	41,947	81,889
Arizona | Homebuilding Segment [Member]
Segment Reporting Information [Line Items]
Income before income taxes	(796)	(958)	(1,274)	(1,663)
Total assets	95,370		95,370		86,205
Arizona | Home Sales | Homebuilding Segment [Member]
Segment Reporting Information [Line Items]
Revenue	7,634	0	23,488	0
California | Homebuilding Segment [Member]
Segment Reporting Information [Line Items]
Income before income taxes	2,846	83	279	(1,818)
Total assets	548,223		548,223		$ 551,807
California | Home Sales | Homebuilding Segment [Member]
Segment Reporting Information [Line Items]
Revenue	$ 132,830	$ 117,460	$ 216,162	$ 196,897

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Supplemental Disclosure of Cash Flow Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Supplemental Cash Flow Elements [Abstract]
Interest paid, net of amounts capitalized	$ 0	$ 0
Income Taxes Paid	$ 240	$ 7,000

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Supplemental Guarantor Information Supplemental Condensed Consolidating Balance Sheet (Details) - USD ($) $ in Thousands		Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Cash and cash equivalents		$ 48,224		$ 42,273	$ 90,758
Restricted cash		124		269
Contracts and accounts receivable		16,113		18,265
Intercompany Receivables		0		0
Due from affiliates		218		1,218
Real estate inventories		541,954		566,290
Investment in and advances to unconsolidated joint ventures		33,637		34,330
Investment in subsidiaries		0		0
Other assets		32,987		33,452
Total assets		673,257		696,097
Accounts payable		26,629		39,391
Accrued expenses and other liabilities		32,375		29,028
Intercompany Payables		0		0
Due to Affiliate		0		0
Unsecured revolving credit facility		66,000		67,500
Senior notes, net	[1]	309,060		320,148
Total liabilities		434,064		456,067
Stockholders' Equity Attributable to Parent		239,098		239,954
Non-controlling interest in subsidiary		95		76
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		239,193	$ 237,079	240,030	$ 258,834	$ 259,952	$ 264,080
Total liabilities and equity		673,257		696,097
Consolidation, Eliminations [Member]
Cash and cash equivalents		0		0
Restricted cash		0		0
Contracts and accounts receivable		(413)		(668)
Intercompany Receivables		(228,506)		(192,341)
Due from affiliates		0		0
Real estate inventories		0		0
Investment in and advances to unconsolidated joint ventures		0		0
Investment in subsidiaries		(370,716)		(396,466)
Other assets		(3)		(3)
Total assets		(599,638)		(589,478)
Accounts payable		0		0
Accrued expenses and other liabilities		(408)		(664)
Intercompany Payables		(228,506)		(192,341)
Due to Affiliate		(8)		(7)
Unsecured revolving credit facility		0		0
Senior notes, net		0		0
Total liabilities		(228,922)		(193,012)
Stockholders' Equity Attributable to Parent		(370,716)		(396,466)
Non-controlling interest in subsidiary		0		0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		(370,716)		(396,466)
Total liabilities and equity		(599,638)		(589,478)
Non-Guarantor Subsidiaries [Member]
Cash and cash equivalents		179		147
Restricted cash		0		0
Contracts and accounts receivable		0		0
Intercompany Receivables		0		0
Due from affiliates		0		0
Real estate inventories		0		0
Investment in and advances to unconsolidated joint ventures		0		0
Investment in subsidiaries		0		0
Other assets		12		0
Total assets		191		147
Accounts payable		0		0
Accrued expenses and other liabilities		59		71
Intercompany Payables		0		0
Due to Affiliate		0		0
Unsecured revolving credit facility		0		0
Senior notes, net		0		0
Total liabilities		59		71
Stockholders' Equity Attributable to Parent		37		0
Non-controlling interest in subsidiary		95		76
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		132		76
Total liabilities and equity		191		147
Guarantor Subsidiaries [Member]
Cash and cash equivalents		44,040		13,249
Restricted cash		124		269
Contracts and accounts receivable		16,518		18,926
Intercompany Receivables		0		0
Due from affiliates		218		1,218
Real estate inventories		541,954		566,290
Investment in and advances to unconsolidated joint ventures		33,637		34,330
Investment in subsidiaries		0		0
Other assets		14,003		14,812
Total assets		650,494		649,094
Accounts payable		26,300		39,151
Accrued expenses and other liabilities		25,001		21,129
Intercompany Payables		228,506		192,341
Due to Affiliate		8		7
Unsecured revolving credit facility		0		0
Senior notes, net		0		0
Total liabilities		279,815		252,628
Stockholders' Equity Attributable to Parent		370,679		396,466
Non-controlling interest in subsidiary		0		0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		370,679		396,466
Total liabilities and equity		650,494		649,094
Parent Company [Member]
Cash and cash equivalents		4,005		28,877
Restricted cash		0		0
Contracts and accounts receivable		8		7
Intercompany Receivables		228,506		192,341
Due from affiliates		0		0
Real estate inventories		0		0
Investment in and advances to unconsolidated joint ventures		0		0
Investment in subsidiaries		370,716		396,466
Other assets		18,975		18,643
Total assets		622,210		636,334
Accounts payable		329		240
Accrued expenses and other liabilities		7,723		8,492
Intercompany Payables		0		0
Due to Affiliate		0		0
Unsecured revolving credit facility		66,000		67,500
Senior notes, net		309,060		320,148
Total liabilities		383,112		396,380
Stockholders' Equity Attributable to Parent		239,098		239,954
Non-controlling interest in subsidiary		0		0
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		239,098		239,954
Total liabilities and equity		$ 622,210		$ 636,334

[1] (1) The carrying value for the Senior Notes, as presented at June 30, 2019, is net of the unamortized discount of $1.4 million, unamortized premium of $1.1 million, and unamortized debt issuance costs of $3.7 million. The carrying value for the Senior Notes, as presented at December 31, 2018, is net of the unamortized discount of $1.7 million, unamortized premium of $1.3 million, and unamortized debt issuance costs of $4.5 million. The unamortized discount, unamortized premium and debt issuance costs are not factored into the estimated fair value.

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Supplemental Guarantor Information Supplemental Condensed Consolidating Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Revenue	$ 162,749	$ 155,555	$ 281,597	$ 278,786
Cost of Goods and Services Sold	145,295	139,716	251,132	252,109
Gross Profit Home Sales	16,939	14,782	29,556	24,525
Gross Profit Fee Building	515	1,057	909	2,152
Other income (expense), net	(102)	(92)	(295)	(118)
Gross Profit	17,454	15,839	30,465	26,677
Selling and marketing expenses	(9,683)	(9,466)	(18,362)	(16,105)
General and administrative expenses	(5,841)	(5,979)	(13,232)	(11,998)
Equity in net income of unconsolidated joint ventures	185	(120)	369	215
Equity in net income (loss) from Subsidiaries	0	0	0	0
Gain on early extinguishment of debt	552	0	969	0
Pretax income (loss)	2,565	182	(86)	(1,329)
(Provision) benefit for income taxes	(974)	(67)	(310)	793
Net loss	1,591	115	(396)	(536)
Net (income) loss attributable to non-controlling interest	(19)	0	(19)	11
Net Income (Loss) Attributable to Parent	1,572	115	(415)	(525)
Guarantor Subsidiaries [Member]
Revenue	162,749	155,555	281,597	278,786
Cost of Goods and Services Sold	145,352	139,718	251,189	252,087
Gross Profit Home Sales	16,882	14,780	29,499	24,547
Gross Profit Fee Building	515	1,057	909	2,152
Other income (expense), net	4	(57)	(127)	(194)
Gross Profit	17,397	15,837	30,408	26,699
Selling and marketing expenses	(9,683)	(9,466)	18,362	(16,105)
General and administrative expenses	(6,458)	(6,281)	13,283	(11,194)
Equity in net income of unconsolidated joint ventures	185	(120)	369	215
Equity in net income (loss) from Subsidiaries	0	0	0	0
Gain on early extinguishment of debt	0		0
Pretax income (loss)	1,445	(87)	(995)	(579)
(Provision) benefit for income taxes	(396)	30	(332)	417
Net loss	1,049	(57)	(663)	(162)
Net (income) loss attributable to non-controlling interest	0	0	0	0
Net Income (Loss) Attributable to Parent	1,049	(57)	(663)	(162)
Non-Guarantor Subsidiaries [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	(57)	(2)	(57)	22
Gross Profit Home Sales	57	2	57	(22)
Gross Profit Fee Building	0	0	0	0
Other income (expense), net	0	0	0	0
Gross Profit	57	2	57	(22)
Selling and marketing expenses	0	0	0	0
General and administrative expenses	0	(3)	0	(3)
Equity in net income of unconsolidated joint ventures	0	0	0	0
Equity in net income (loss) from Subsidiaries	0	0	0	0
Gain on early extinguishment of debt	0		0
Pretax income (loss)	57	(1)	57	(25)
(Provision) benefit for income taxes	0	0	0	0
Net loss	57	(1)	57	(25)
Net (income) loss attributable to non-controlling interest	(19)	0	(19)	11
Net Income (Loss) Attributable to Parent	38	(1)	38	(14)
Parent Company [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	0	0	0	0
Gross Profit Home Sales	0	0	0	0
Gross Profit Fee Building	0	0	0	0
Other income (expense), net	(106)	(35)	(168)	76
Gross Profit	0	0	0	0
Selling and marketing expenses	0	0	0	0
General and administrative expenses	617	305	(51)	(801)
Equity in net income of unconsolidated joint ventures	0	0	0	0
Equity in net income (loss) from Subsidiaries	1,087	(58)	(625)	(176)
Gain on early extinguishment of debt	552		969
Pretax income (loss)	2,150	212	227	(901)
(Provision) benefit for income taxes	(578)	(97)	642	376
Net loss	1,572	115	(415)	(525)
Net (income) loss attributable to non-controlling interest	0	0	0	0
Net Income (Loss) Attributable to Parent	1,572	115	(415)	(525)
Consolidation, Eliminations [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	0	0	0	0
Gross Profit Home Sales	0	0	0	0
Gross Profit Fee Building	0	0	0	0
Other income (expense), net	0	0	0	0
Gross Profit	0	0	0	0
Selling and marketing expenses	0	0	0	0
General and administrative expenses	0	0	0	0
Equity in net income of unconsolidated joint ventures	0	0	0	0
Equity in net income (loss) from Subsidiaries	(1,087)	58	625	176
Gain on early extinguishment of debt	0		0
Pretax income (loss)	(1,087)	58	625	176
(Provision) benefit for income taxes	0	0	0	0
Net loss	(1,087)	58	625	176
Net (income) loss attributable to non-controlling interest	0	0	0	0
Net Income (Loss) Attributable to Parent	(1,087)	58	625	176
Home Sales
Revenue	140,464	117,460	239,650	196,897
Cost of Goods and Services Sold	123,525	102,678	210,094	172,372
Home Sales | Guarantor Subsidiaries [Member]
Revenue	140,464	117,460	239,650	196,897
Cost of Goods and Services Sold	123,582	102,680	210,151	172,350
Home Sales | Non-Guarantor Subsidiaries [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	(57)	(2)	(57)	22
Home Sales | Parent Company [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	0	0	0	0
Home Sales | Consolidation, Eliminations [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	0	0	0	0
Fee Building
Revenue	22,285	38,095	41,947	81,889
Cost of Goods and Services Sold	21,770	37,038	41,038	79,737
Fee Building | Guarantor Subsidiaries [Member]
Revenue	22,285	38,095	41,947	81,889
Cost of Goods and Services Sold	21,770	37,038	41,038	79,737
Fee Building | Non-Guarantor Subsidiaries [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	0	0	0	0
Fee Building | Parent Company [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	0	0	0	0
Fee Building | Consolidation, Eliminations [Member]
Revenue	0	0	0	0
Cost of Goods and Services Sold	$ 0	$ 0	$ 0	$ 0

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Supplemental Guarantor Information Supplemental Condensed Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018	Dec. 31, 2017
Net Cash Used in Operating Activities		$ 18,892	$ (61,510)
Purchases of property and equipment		(8)	(184)
Contributions and advances to unconsolidated joint ventures		(4,120)	(8,954)
Contributions to Subsidiaries from Corporate		0	0
Distributions of Capital from Subsidiaries		0	0
Distributions of capital and repayment of advances from unconsolidated joint ventures		4,928	5,874
Interest collected on advances to unconsolidated joint ventures			178
Net cash provided by (used in) investing activities		800	(3,086)
Borrowings from credit facility		40,000	35,000
Repayments of credit facility		(41,500)	0
Repurchase of senior notes	$ 6,300	10,856	0
Contributions to subsidiaries from corporate		0	0
Distributions to Corporate from Subsidiaries		0	0
Repurchases of common stock		(1,042)	(2,072)
Tax withholding paid on behalf of employees for stock awards		(488)	(977)
Net cash (used in) provided by financing activities		(13,886)	31,951
Net (decrease) increase in cash, cash equivalents and restricted cash		5,806	(32,645)
Cash, Cash Equivalents, and Restricted Cash	48,348	48,348	91,325	$ 42,542	$ 123,970
Guarantor Subsidiaries [Member]
Net Cash Used in Operating Activities		54,970	(22,349)
Purchases of property and equipment		(7)	(162)
Contributions and advances to unconsolidated joint ventures		(4,120)	(8,954)
Contributions to Subsidiaries from Corporate		0	0
Distributions of Capital from Subsidiaries		0	0
Distributions of capital and repayment of advances from unconsolidated joint ventures		4,928	5,874
Interest collected on advances to unconsolidated joint ventures			178
Net cash provided by (used in) investing activities		801	(3,064)
Borrowings from credit facility		0	0
Repayments of credit facility		0
Repurchase of senior notes		0
Contributions to subsidiaries from corporate		66,575	103,885
Distributions to Corporate from Subsidiaries		(91,700)	(49,975)
Repurchases of common stock		0	0
Tax withholding paid on behalf of employees for stock awards		0	0
Net cash (used in) provided by financing activities		(25,125)	53,910
Net (decrease) increase in cash, cash equivalents and restricted cash		30,646	28,497
Cash, Cash Equivalents, and Restricted Cash	44,164	44,164	52,693	13,518	24,196
Non-Guarantor Subsidiaries [Member]
Net Cash Used in Operating Activities		32	(5)
Purchases of property and equipment		0	0
Contributions and advances to unconsolidated joint ventures		0	0
Contributions to Subsidiaries from Corporate		0	0
Distributions of Capital from Subsidiaries		0	0
Distributions of capital and repayment of advances from unconsolidated joint ventures		0	0
Interest collected on advances to unconsolidated joint ventures			0
Net cash provided by (used in) investing activities		0	0
Borrowings from credit facility		0	0
Repayments of credit facility		0
Repurchase of senior notes		0
Contributions to subsidiaries from corporate		0	0
Distributions to Corporate from Subsidiaries		0	0
Repurchases of common stock		0	0
Tax withholding paid on behalf of employees for stock awards		0	0
Net cash (used in) provided by financing activities		0	0
Net (decrease) increase in cash, cash equivalents and restricted cash		32	(5)
Cash, Cash Equivalents, and Restricted Cash	179	179	183	147	188
Parent Company [Member]
Net Cash Used in Operating Activities		(36,110)	(39,156)
Purchases of property and equipment		(1)	(22)
Contributions and advances to unconsolidated joint ventures		0	0
Contributions to Subsidiaries from Corporate		(66,575)	(103,885)
Distributions of Capital from Subsidiaries		91,700	49,975
Distributions of capital and repayment of advances from unconsolidated joint ventures		0	0
Interest collected on advances to unconsolidated joint ventures			0
Net cash provided by (used in) investing activities		25,124	(53,932)
Borrowings from credit facility		40,000	35,000
Repayments of credit facility		(41,500)
Repurchase of senior notes		(10,856)
Contributions to subsidiaries from corporate		0	0
Distributions to Corporate from Subsidiaries		0	0
Repurchases of common stock		(1,042)	(2,072)
Tax withholding paid on behalf of employees for stock awards		(488)	(977)
Net cash (used in) provided by financing activities		(13,886)	31,951
Net (decrease) increase in cash, cash equivalents and restricted cash		(24,872)	(61,137)
Cash, Cash Equivalents, and Restricted Cash	4,005	4,005	38,449	28,877	99,586
Consolidation, Eliminations [Member]
Net Cash Used in Operating Activities		0	0
Purchases of property and equipment		0	0
Contributions and advances to unconsolidated joint ventures		0	0
Contributions to Subsidiaries from Corporate		66,575	103,885
Distributions of Capital from Subsidiaries		(91,700)	(49,975)
Distributions of capital and repayment of advances from unconsolidated joint ventures		0	0
Interest collected on advances to unconsolidated joint ventures			0
Net cash provided by (used in) investing activities		(25,125)	53,910
Borrowings from credit facility		0	0
Repayments of credit facility		0
Repurchase of senior notes		0
Contributions to subsidiaries from corporate		(66,575)	(103,885)
Distributions to Corporate from Subsidiaries		91,700	49,975
Repurchases of common stock		0	0
Tax withholding paid on behalf of employees for stock awards		0	0
Net cash (used in) provided by financing activities		25,125	(53,910)
Net (decrease) increase in cash, cash equivalents and restricted cash		0	0
Cash, Cash Equivalents, and Restricted Cash	$ 0	$ 0	$ 0	$ 0	$ 0

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Supplemental Guarantor Information Supplemental Guarantor Info (Details)	Jun. 30, 2019
Supplemental Guarantor Info [Abstract]
Interest rate	7.25%