Warranties

9 Months Ended

Sep. 30, 2022

Warranties [Abstract]

Warranties

7. Warranties

Estimated future direct warranty costs are accrued and charged to cost of home sales revenues in the period when the related home sales revenues are recognized. Amounts accrued, which are included in accrued expenses and other liabilities on the condensed consolidated balance sheets, are based upon historical experience rates. We subsequently assess the adequacy of our warranty accrual on a quarterly basis through a model that incorporates historical payment trends and adjust the amounts recorded, if necessary. Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $0.1 million and $2.5 million during the three months ended September 30, 2022 and 2021 and we reduced our warranty reserve by $0.6 million and $4.7 million during the nine months ended September 30, 2022 and 2021, respectively. These adjustments are included in cost of home sales revenues on our condensed consolidated statements of operations.  Changes in our warranty accrual for the three and nine months ended September 30, 2022 and 2021 are detailed in the table below (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Beginning balance	$	14,127	$	13,862	$	13,343	$	13,824
Warranty expense provisions		3,498		2,459		7,645		7,139
Payments		(2,179)		(1,494)		(5,046)		(3,938)
Warranty adjustment		(110)		(2,512)		(606)		(4,710)
Ending balance	$	15,336	$	12,315	$	15,336	$	12,315