Note 21 - Fair Value of Financial Instruments

12 Months Ended

Oct. 31, 2025

Fair Value of Financial Instruments

Fair Value of Financial Instruments

21. Fair Value of Financial Instruments

We use a fair-value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1: Fair value determined based on quoted prices in active markets for identical assets.

Level 2: Fair value determined using significant other observable inputs.

Level 3: Fair value determined using significant unobservable inputs.

Our financial instruments measured at fair value on a recurring basis are summarized below:

		Fair Value at		Fair Value at
	Fair Value	October 31,		October 31,
(In thousands)	Hierarchy	2025		2024
Mortgage loans held for sale (1)	Level 2	$	111,631	$	148,925

(1) The aggregate unpaid principal balance was $112.1 million and $149.4 million at October 31, 2025 and 2024, respectively.

Fair value of mortgage loans held for sale is based on independent quoted market prices, where available, or the prices for other mortgage loans with similar characteristics.

The financial services segment had a pipeline of loan applications in process of $404.4 million at October 31, 2025. Loans in process for which interest rates were committed to the borrowers totaled $50.2 million as of October 31, 2025. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments is expected to expire without being exercised by the borrowers, the total commitments do not necessarily represent future cash requirements.

In addition, the financial services segment uses investor commitments and forward sales of mandatory MBS to hedge its mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk is managed by entering into MBS forward commitments, option contracts with investment banks, federally regulated bank affiliates and loan sales transactions with permanent investors meeting the segment’s credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At October 31, 2025, we had no open mandatory investor commitments to sell MBS.

Changes in fair value that are included in income are shown by financial instrument and financial statement line item, below:

	Year Ended October 31, 2025
	Mortgage			Interest Rate
	Loans Held			Lock		Forward
(In thousands)	for Sale			Commitments		Contracts
Change in fair value included in financial services revenue	$	(686	)	$	-	$	-

	Year Ended October 31, 2024
	Mortgage			Interest Rate
	Loans Held			Lock		Forward
(In thousands)	for Sale			Commitments		Contracts
Change in fair value included in financial services revenue	$	(497	)	$	-	$	-

	Year Ended October 31, 2023
	Mortgage			Interest Rate
	Loans Held			Lock		Forward
(In thousands)	for Sale			Commitments		Contracts
Change in fair value included in financial services revenue	$	(177	)	$	-	$	-

Assets measured at fair value on a nonrecurring basis are those assets for which we have recorded valuation adjustments and write-offs during the years ended October 31, 2025 and 2024, respectively. The assets measured at fair value on a nonrecurring basis are all within our homebuilding operations and are summarized below:

	Year Ended
	October 31, 2025
(In thousands)	Fair	Pre-
	Value	Impairment
	Hierarchy	Amount		Total Losses			Fair Value
Land and land options held for future development or sale	Level 3	$	75,411	$	(21,413	)	$	53,998

	Year Ended
	October 31, 2024
(In thousands)	Fair	Pre-
	Value	Impairment
	Hierarchy	Amount		Total Losses			Fair Value
Land and land options held for future development or sale	Level 3	$	41,061	$	(9,992	)	$	31,069

We estimate the fair value of each impaired community by determining the present value of the estimated future cash flows at a discount rate commensurate with the risk of the respective community. For the year ended October 31, 2025, our discount rates used to determine the fair value ranged from 16.5% to 20.0%. We recorded inventory impairments, which are included in the Consolidated Statements of Operations as “Inventory impairments and land option write-offs” and deducted from inventory of $21.4 million and $10.0 million for the years ended October 31, 2025 and 2024, respectively. We did not have any assets measured at fair value on a nonrecurring basis during the year ended October 31, 2023 (see Note 12).

The fair value of our cash equivalents, restricted cash and cash equivalents and customers’ deposits approximates their carrying amount, based on Level 1 inputs.

The fair value of each series of our notes and credit facilities are listed below. Level 2 measurements are estimated based on recent trades or quoted market prices for the same issues or based on recent trades or quoted market prices for our debt of similar security and maturity to achieve comparable yields. Level 3 measurements are estimated based on third-party broker quotes or management’s estimate of the fair value based on available trades for similar debt instruments. As shown in the table below, our 8.0% Senior Notes due 2031, 8.375% Senior Notes due 2033 and 5.0% Senior Notes due 2040 were a Level 2 measurement at October 31, 2025 due to recent trades for the same notes.

Fair Value as of October 31, 2025
(In thousands)	Level 1		Level 2		Level 3		Total
Senior Notes:
8.0% Senior Notes due April 1, 2031		-		459,972		-		459,972
8.375% Senior Notes due October 1, 2033		-		461,192		-		461,192
5.0% Senior Notes due February 1, 2040		-		16,492		-		16,492
Total fair value	$	-	$	937,656	$	-	$	937,656

Fair Value as of October 31, 2024
(In thousands)	Level 1		Level 2		Level 3		Total
Senior Secured Notes:
8.0% Senior Secured 1.125 Lien Notes due September 30, 2028		-		231,068		-		231,068
11.75% Senior Secured 1.25 Lien Notes due September 30, 2029		-		474,561		-		474,561
Senior Notes:
13.5% Senior Notes due February 1, 2026		-		-		27,020		27,020
5.0% Senior Notes due February 1, 2040		-		11,485		-		11,485
Senior Credit Facilities:
Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028		-		-		190,041		190,041
Total fair value	$	-	$	717,114	$	217,061	$	934,175

The Senior Secured Revolving Credit Facility is not included in the above tables because there were no borrowings outstanding thereunder as of October 31, 2025 and 2024.