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, 2018
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 1-35796
_____________________________________________________________________________________________ 

TRI Pointe Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
 _____________________________________________________________________________________________ 

	
			
Delaware	 	61-1763235	
(State or other Jurisdiction of
Incorporation or Organization)	 	(I.R.S. Employer
Identification No.)	

_____________________________________________________________________________________________ 
19540 Jamboree Road, Suite 300
Irvine, California 92612
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (949) 438-1400
_____________________________________________________________________________________________ 
 
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   ☒     No   ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes   ☒     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	☐   (Do not check if a smaller reporting company)	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   ☒
152,037,568 shares of common stock were issued and outstanding as of July 16, 2018.

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EXPLANATORY NOTE
As used in this Quarterly Report on Form 10-Q, references to “TRI Pointe”, the “Company”, “we”, “us”, or “our” (including in the consolidated financial statements and related notes thereto in this report) refer to TRI Pointe Group, Inc., a Delaware corporation (“TRI Pointe Group”) and its subsidiaries.

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TRI POINTE GROUP, INC.
FORM 10-Q
INDEX
June 30, 2018

	
			
 	 	Page
Number	
PART I.  FINANCIAL INFORMATION	
 	 	 	
Item 1.	Financial Statements	3	
 	 	 	
 	Consolidated Balance Sheets as of June 30, 2018 (unaudited) and December 31, 2017	3	
 	 	 	
 	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and 2017 (unaudited)	4	
 	 	 	
 	Consolidated Statements of Equity for the Year Ended December 31, 2017 and the Six Months Ended June 30, 2018 (unaudited)	5	
 	 	 	
 	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 (unaudited)	6	
 	 	 	
 	Condensed Notes to Consolidated Financial Statements (unaudited)	7	
 	 	 	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58	
 	 	 	
Item 4.	Controls and Procedures	58	
 	
Part II.  OTHER INFORMATION	
 	 	 	
Item 1.	Legal Proceedings	60	
 	 	 	
Item 1A.	Risk Factors	60	
 	 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60	
 	 	 	
Item 6.	Exhibits	61	
 	 	 	
SIGNATURES	62	

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PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	

TRI POINTE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

	
								
 	June 30, 2018	 	December 31, 2017	
 	(unaudited)	 	 	
Assets	 	 	 	
Cash and cash equivalents	$	239,906		 	$	282,914		
Receivables	59,611		 	125,600		
Real estate inventories	3,247,786		 	3,105,553		
Investments in unconsolidated entities	4,169		 	5,870		
Goodwill and other intangible assets, net	160,694		 	160,961		
Deferred tax assets, net	66,414		 	76,413		
Other assets	94,105		 	48,070		
Total assets	$	3,872,685		 	$	3,805,381		
Liabilities	 	 	 	
Accounts payable	$	88,936		 	$	72,870		
Accrued expenses and other liabilities	298,077		 	330,882		
Senior notes, net	1,453,366		 	1,471,302		
Total liabilities	1,840,379		 	1,875,054		
 	 	 	 	
Commitments and contingencies (Note 13)		 		
 	 	 	 	
Equity	 	 	 	
Stockholders’ Equity:	 	 	 	
Preferred stock, $0.01 par value, 50,000,000 shares authorized; no
   shares issued and outstanding as of June 30, 2018 and
   December 31, 2017, respectively	—		 	—		
Common stock, $0.01 par value, 500,000,000 shares authorized;
   152,027,014 and 151,162,999 shares issued and outstanding at
   June 30, 2018 and December 31, 2017, respectively	1,520		 	1,512		
Additional paid-in capital	796,746		 	793,980		
Retained earnings	1,233,436		 	1,134,230		
Total stockholders’ equity	2,031,702		 	1,929,722		
Noncontrolling interests	604		 	605		
Total equity	2,032,306		 	1,930,327		
Total liabilities and equity	$	3,872,685		 	$	3,805,381		
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except share and per share amounts)

	
																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	768,795		 	$	568,816		 	$	1,351,367		 	$	960,820		
Land and lot sales revenue	1,518		 	865		 	1,741		 	1,443		
Other operations revenue	599		 	600		 	1,197		 	1,168		
Total revenues	770,912		 	570,281		 	1,354,305		 	963,431		
Cost of home sales	604,096		 	454,241		 	1,054,598		 	772,645		
Cost of land and lot sales	1,426		 	644		 	1,929		 	1,298		
Other operations expense	589		 	591		 	1,191		 	1,151		
Sales and marketing	45,744		 	32,330		 	84,027		 	59,030		
General and administrative	36,483		 	33,688		 	73,297		 	68,337		
Homebuilding income from operations	82,574		 	48,787		 	139,263		 	60,970		
Equity in income (loss) of unconsolidated entities	69		 	1,508		 	(399	)	 	1,646		
Other (expense) income, net	(73	)	 	44		 	98		 	121		
Homebuilding income before income taxes	82,570		 	50,339		 	138,962		 	62,737		
Financial Services:	 	 	 	 	 	 	 	
Revenues	391		 	345		 	674		 	586		
Expenses	129		 	77		 	266		 	151		
Equity in income of unconsolidated entities	1,984		 	1,294		 	2,986		 	1,560		
Financial services income before income taxes	2,246		 	1,562		 	3,394		 	1,995		
Income before income taxes	84,816		 	51,901		 	142,356		 	64,732		
Provision for income taxes	(21,136	)	 	(19,098	)	 	(35,796	)	 	(23,712	)	
Net income	63,680		 	32,803		 	106,560		 	41,020		
Net income attributable to noncontrolling interests	—		 	(89	)	 	—		 	(113	)	
Net income available to common stockholders	$	63,680		 	$	32,714		 	$	106,560		 	$	40,907		
Earnings per share	 		 	 		 	 	 	 	
Basic	$	0.42		 	$	0.21		 	$	0.70		 	$	0.26		
Diluted	$	0.42		 	$	0.21		 	$	0.70		 	$	0.26		
Weighted average shares outstanding	 	 	 	 	 	 	 	
Basic	151,983,886		 	155,603,699		 	151,725,651		 	157,335,296		
Diluted	153,355,965		 	156,140,543		 	153,067,342		 	157,924,561		
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(in thousands, except share amounts)

	
																											
 	Number of
Shares of Common
Stock	 	Common
Stock	 	Additional
Paid-in
Capital	 	Retained
Earnings	 	Total
Stockholders'
Equity	 	Noncontrolling
Interests	 	Total
Equity	
Balance at December 31, 2016	158,626,229		 	$	1,586		 	$	880,822		 	$	947,039		 	$	1,829,447		 	$	19,063		 	$	1,848,510		
Net income	—		 	—		 	—		 	187,191		 	187,191		 	360		 	187,551		
Shares issued under share-based awards	1,531,475		 	16		 	12,275		 	—		 	12,291		 	—		 	12,291		
Minimum tax withholding paid on behalf of employees for restricted stock units	—		 	—		 	(2,896	)	 	—		 	(2,896	)	 	—		 	(2,896	)	
Stock-based compensation expense	—		 	—		 	15,906		 	—		 	15,906		 	—		 	15,906		
Share repurchases	(8,994,705	)	 	(90	)	 	(112,127	)	 	—		 	(112,217	)	 	—		 	(112,217	)	
Distributions to noncontrolling interests, net	—		 	—		 	—		 	—		 	—		 	(1,333	)	 	(1,333	)	
Net effect of consolidations, de-consolidations and other transactions	—		 	—		 	—		 	—		 	—		 	(17,485	)	 	(17,485	)	
Balance at December 31, 2017	151,162,999		 	1,512		 	793,980		 	1,134,230		 	1,929,722		 	605		 	1,930,327		
Cumulative effect of accounting change   (Note 1)	—		 	—		 	—		 	(7,354	)	 	(7,354	)	 	—		 	(7,354	)	
Net income	—		 	—		 	—		 	106,560		 	106,560		 	—		 	106,560		
Shares issued under share-based awards	864,015		 	8		 	1,625		 	—		 	1,633		 	—		 	1,633		
Minimum tax withholding paid on behalf of employees for restricted stock units	—		 	—		 	(6,049	)	 	—		 	(6,049	)	 	—		 	(6,049	)	
Stock-based compensation expense	—		 	—		 	7,190		 	—		 	7,190		 	—		 	7,190		
Distributions to noncontrolling interests, net	—		 	—		 	—		 	—		 	—		 	(1	)	 	(1	)	
Balance at June 30, 2018	152,027,014		 	$	1,520		 	$	796,746		 	$	1,233,436		 	$	2,031,702		 	$	604		 	$	2,032,306		
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

	
								
 	Six Months Ended June 30,	
 	2018	 	2017	
Cash flows from operating activities:	 	 	 	
Net income	$	106,560		 	$	41,020		
Adjustments to reconcile net income to net cash used in operating activities:	 	 	 	
Depreciation and amortization	12,579		 	1,698		
Equity in income of unconsolidated entities, net	(2,587	)	 	(3,206	)	
Deferred income taxes, net	12,428		 	5,641		
Amortization of stock-based compensation	7,190		 	7,744		
Charges for impairments and lot option abandonments	857		 	828		
Changes in assets and liabilities:	 	 	 	
Real estate inventories	(188,407	)	 	(298,007	)	
Receivables	65,989		 	9,717		
Other assets	(2,792	)	 	4,638		
Accounts payable	16,066		 	(7,001	)	
Accrued expenses and other liabilities	(32,805	)	 	14,171		
Returns on investments in unconsolidated entities, net	4,873		 	2,057		
Net cash used in operating activities	(49	)	 	(220,700	)	
Cash flows from investing activities:	 	 	 	
Purchases of property and equipment	(15,682	)	 	(1,793	)	
Proceeds from sale of property and equipment	3		 	6		
Investments in unconsolidated entities	(1,178	)	 	(462	)	
Net cash used in investing activities	(16,857	)	 	(2,249	)	
Cash flows from financing activities:	 	 	 	
Borrowings from debt	—		 	450,000		
Repayment of debt	(21,685	)	 	(213,726	)	
Debt issuance costs	—		 	(5,906	)	
Distributions to noncontrolling interests	(1	)	 	(987	)	
Proceeds from issuance of common stock under share-based awards	1,633		 	2,449		
Minimum tax withholding paid on behalf of employees for share-based awards	(6,049	)	 	(2,896	)	
Share repurchases	—		 	(99,697	)	
Net cash (used in) provided by financing activities	(26,102	)	 	129,237		
Net decrease in cash and cash equivalents	(43,008	)	 	(93,712	)	
Cash and cash equivalents - beginning of period	282,914		 	208,657		
Cash and cash equivalents - end of period	$	239,906		 	$	114,945		
 
See accompanying condensed notes to the unaudited consolidated financial statements.

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TRI POINTE GROUP, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

		
1.	Organization, Basis of Presentation and Summary of Significant Accounting Policies	

Organization
TRI Pointe Group is engaged in the design, construction and sale of innovative single-family attached and detached homes through its portfolio of six quality brands across eight states, including Maracay in Arizona, Pardee Homes in California and Nevada, Quadrant Homes in Washington, Trendmaker Homes in Texas, TRI Pointe Homes in California and Colorado and Winchester Homes in Maryland and Virginia.
Basis of Presentation
The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. They should be read in conjunction with our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended  December 31, 2017 . In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The results for the three and six months ended June 30, 2018 are not necessarily indicative of the results to be expected for the full year due to seasonal variations and other factors.
The consolidated financial statements include the accounts of TRI Pointe Group and its wholly owned subsidiaries, as well as other entities in which TRI Pointe Group has a controlling interest and variable interest entities (“VIEs”) in which TRI Pointe Group is the primary beneficiary.  The noncontrolling interests as of June 30, 2018 and December 31, 2017 represent the outside owners’ interests in the Company’s consolidated entities.  All significant intercompany accounts have been eliminated upon consolidation.
Use of Estimates
Our financial statements have been prepared in accordance with GAAP. The preparation of these financial statements requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from our estimates.
Significant Accounting Policies Update
Revenue Recognition
In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Codified as “ASC 606”). ASC 606 supersedes the revenue-recognition requirements in ASC Topic 605, Revenue Recognition, most industry-specific guidance throughout the industry topics of the accounting standards codification, and some cost guidance related to construction-type and production-type contracts. The core principle of ASC 606 is that an entity should 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 achieve that core principle, an entity should apply the following steps: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; and recognize revenue when (or as) the entity satisfies a performance obligation. We have adopted and applied this updated revenue recognition policy as of January 1, 2018. See Adoption of New Accounting Standards below.
The majority of our revenue is related to fixed-price contracts to deliver completed homes to homebuyers, and to a much lesser degree, to deliver land or lots to other homebuilders or real estate developers. We generally deliver completed homes to homebuyers and land and lots to other homebuilders or real estate developers when all closing conditions are met, including the passage of title and the receipt of consideration, and the collection of associated receivables, if any, is reasonably assured. When it is determined that there are uncompleted performance obligations, the transaction price and the related profit for those uncompleted performance obligations are deferred for recognition in future periods based on the principles of ASC 606. The

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most common examples of uncompleted performance obligations are unfinished pools or outdoor landscaping features that are unable to be completed due to weather or other circumstances.
Following the adoption of ASC 606, the timing of revenue recognition for all of our contracts remained materially consistent with our historical revenue recognition policy due to the nature of our revenue generating activities, with the most common difference under ASC 606 relating to the deferral of revenue due to these uncompleted performance obligations at the time we deliver new homes to our homebuyers.
When we enter into a contract with a homebuyer, we sometimes receive a nonrefundable deposit that is recognized as revenue under circumstances where a contract is canceled by the homebuyer. These amounts are recognized as home sales revenue at the time a contract is canceled by the homebuyer. We have not experienced significant contract modifications impacting the timing of revenue recognition under ASC 606, nor will we be required to use estimates in the application of the core revenue recognition principles.
Real Estate Inventories and Cost of Sales
ASC 606 includes Subtopic 340-40,  Other Assets and Deferred Costs - Contracts with Customers (“Subtopic 340-40”), which requires the deferral of incremental costs of obtaining a contract with a customer. The adoption of Subtopic 340-40 impacts the timing of recognition and classification in our consolidated financial statements of certain sales office, model and other marketing related costs that we incur to obtain sales contracts from our customers. For example, we historically capitalized to inventory and amortized through cost of home sales various sales office, model and other marketing related costs with each home delivered in a community. Under Subtopic 340-40, these costs are expensed when incurred or capitalized to other assets and amortized to selling expense.
Recently Issued Accounting Standards Not Yet Adopted
In February 2016, the FASB issued Accounting Standards Update No. 2016-02, (Codified as “ASC 842”), which requires an entity to recognize assets and liabilities on the balance sheet for the rights and obligations created by leases with durations of greater than 12 months, but record expenses on the statements of operations in a manner similar to current accounting. The guidance also requires more disclosures about leases in the notes to consolidated financial statements. ASC 842 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and, at that time, we will adopt the new standard using a modified retrospective approach. We are currently evaluating the impact that the adoption of ASC 842 may have on our consolidated financial statements and disclosures.
In January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment (“ASU 2017-04”), which removes the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. ASU 2017-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019, with early adoption permitted, and applied prospectively. We do not expect ASU 2017-04 to have a material impact on our financial statements.
Adoption of New Accounting Standards
In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230) : Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”) , which provides guidance on how certain cash receipts and cash payments are to be presented and classified in the statement of cash flows. We adopted ASU 2016-15 on January 1, 2018 and our adoption did not have a material impact on our consolidated financial statements.
On January 1, 2018, we adopted ASC 606 using the modified retrospective approach applying the method of presenting the standard of ASC 606 to only those contracts not considered completed under legacy GAAP. As a result of this application of ASC 606, no prior period results have been recast and the standard has been applied prospectively as of January 1, 2018. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet resulting from the adoption of ASC 606 was as follows (in thousands):

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 	 	Balance at December 31, 2017	 	Adjustments due to ASC 606	 	Balance at January 1, 2018	
Assets	 	 	 	 	 	 	
 Real estate inventories	 	$	3,105,553		 	$	(49,317	)	 	$	3,056,236		
 Deferred income tax asset	 	76,413		 	2,429		 	78,842		
 Other assets	 	48,070		 	39,534		 	87,604		
Equity	 	 	 	 	 	 	
 Retained earnings	 	1,134,230		 	(7,354	)	 	1,126,876		
Our cumulative adjustment to retained earnings on January 1, 2018 related primarily to the impact of Subtopic 340-40 and the timing of recognition and classification in our consolidated financial statements of certain sales office, model and other marketing related costs that we incur to obtain sales contracts from our customers. See Significant Accounting Policies Update above.
In accordance with ASC 606 disclosure requirements, the impact of adopting ASC 606 on our consolidated statements of operations and balance sheet for the three and six months ended June 30, 2018 were as follows (in thousands, except per share amounts):

																								
 	Three Months Ended June 30, 2018	 	Six Months Ended June 30, 2018	
 	As Reported	 	Balances Without Adoption of ASC 606	 	Effect of Change Higher/(Lower)	 	As Reported	 	Balances Without Adoption of ASC 606	 	Effect of Change Higher/(Lower)	
Statements of Operations	 	 	 	 	 	 	 	 	 	 	 	
Revenues	 	 	 	 	 	 	 	 	 	 	 	
 Home sales	$	768,795		 	$	768,550		 	$	245		 	$	1,351,367		 	$	1,351,603		 	$	(236	)	
 	 	 	 	 	 	 	 	 	 	 	 	
Costs and expenses	 	 	 	 	 	 	 	 	 	 	 	
 Cost of home sales	604,096		 	613,702		 	(9,606	)	 	1,054,598		 	1,071,841		 	(17,243	)	
 Sales and marketing	45,744		 	38,044		 	7,700		 	84,027		 	70,840		 	13,187		
 Provision for income taxes	(21,136	)	 	(20,600	)	 	536		 	(35,796	)	 	(34,835	)	 	961		
 Net income	63,680		 	62,065		 	1,615		 	106,560		 	103,701		 	2,859		
Diluted earnings per share	$	0.42		 	$	0.40		 	$	0.02		 	$	0.70		 	$	0.68		 	$	0.02		
 	 	 	 	 	 	 	 	 	 	 	 	
 	As of June 30, 2018	 	 	 	 	 	 	
 	As Reported	 	Balances Without Adoption of ASC 606	 	Effect of Change Higher/(Lower)	 	 	 	 	 	 	
Balance Sheet	 	 	 	 	 	 	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	 	 	 	
 Real estate inventories	$	3,247,786		 	$	3,296,309		 	$	(48,523	)	 	 	 	 	 	 	
Deferred tax assets, net	66,414		 	63,025		 	3,389		 	 	 	 	 	 	
 Other assets	94,105		 	51,766		 	42,339		 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	 	 	 	 	
 Accrued expenses and other liabilities	298,077		 	297,615		 	462		 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	 	 	 	
 Retained earnings	1,233,436		 	1,236,693		 	(3,257	)	 	 	 	 	 	 	
Contracts with Customers
In consideration of the appropriate revenue recognition for our contracts with customers, we first assessed our ordinary operations in order to capture all revenue transactions with a counter-party appropriately considered a customer. Historically,

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our ordinary homebuilding revenue generating activities have included contracts with homebuyers to deliver completed homes and to a much lesser extent, contracts with other homebuilders or real estate developers to deliver land or lots in exchange for consideration. The majority of our homebuilding contracts with customers typically include a single performance obligation, which is the transfer of control of the real estate property when all closing conditions are met.
In addition to our core homebuilding operations, we undertake service operations with customers in the form of our financial services reportable segment (“TRI Pointe Solutions”), which is comprised of our mortgage financing operations, title services operations and property and casualty insurance agency operations.  Our mortgage financing operation (“TRI Pointe Connect”) can act as a preferred mortgage broker to our homebuyers in all of the markets in which we operate.  TRI Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting.  Our title services operation (“TRI Pointe Assurance”) provides title examinations for our homebuyers in our Trendmaker Homes and Winchester Homes brands.  TRI Pointe Assurance is a wholly-owned subsidiary of TRI Pointe and acts as a title agency for First American Title Insurance Company. Our property and casualty insurance agency operations (“TRI Pointe Advantage”), which launched in early 2018, is a wholly-owned subsidiary of TRI Pointe that provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate.
We do not currently have any long-term contracts with customers. ASC 606 provides certain practical expedients that limit some of the accounting treatments and disclosure requirements existing under this accounting standard. We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
Disaggregation of Revenues
We generate revenues from a mix of homebuilding operations and financial services operations. Due to the nature of our revenue generating activities, the disaggregated revenue reported on our consolidated statement of operations, in conjunction with the revenues reported in our segment disclosure, is deemed sufficient to report revenue from contracts with customers in accordance with the disaggregation disclosure requirements of ASC 606. We report total revenues in Note 2, Segment Information , which is fully comprised of our revenues from contracts with customers. While the total homebuilding revenues by segment include a mix of home sales revenue, land and lot sales revenue and other operations revenue, all material revenue amounts outside of home sales revenue are attributed to their respective homebuilding segment in the discussion below. Our consideration of disaggregated revenue consisted of a variety of facts and circumstances pertaining to our contracts with customers. These considerations included the nature, amounts, timing and other characteristics and economic factors present within each revenue line item appearing on our consolidated statement of operations. See below for further commentary on each of our revenue streams from contracts with customers.
Home sales revenue
We generate the majority of our total revenue from home sales, which consists of our core business operation of building and delivering completed homes to homebuyers. Included in home sales revenue are forfeited deposits, which occur when homebuyers cancel home purchase contracts that include a nonrefundable deposit. Both revenue from forfeited deposits and deferred revenue resulting from uncompleted performance obligations existing at the time we deliver new homes to our homebuyers is immaterial.
Land and lot sales revenue
Historically, we have generated land and lot sales revenue from a small number of transactions, although in some years we have realized a significant amount of revenue and gross margin. We do not expect our future land and lot sales revenue to be material, but we still consider these sales to be an ordinary part of our business, thus meeting the definition of contracts with customers. Similar to our home sales, revenue from land and lot sales is typically fully recognized when the land and lot sales transactions are consummated, at which time no further performance obligations are left to be satisfied. Some of our historical land and lot sales have included future profit participation rights. We will recognize future land and lot sales revenue in the periods in which all closing conditions are met, subject to the constraint on variable consideration related to profit participation rights, if such rights exist in the sales contract.
Other operations revenue
The majority of our other homebuilding operations revenue relates to a ground lease at our Quadrant Homes reporting segment. We are responsible for making lease payments to the land owner, and we collect sublease payments from the buyers of the buildings. This ground lease is accounted for in accordance with ASC Topic 840, Leases . We do not recognize a material profit on this ground lease.
Financial services revenues

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TRI Pointe Solutions is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, TRI Pointe Assurance title services operations, and TRI Pointe Advantage property and casualty insurance agency operations.
Mortgage financing operations
TRI Pointe Connect was formed as a joint venture with an established mortgage lender and is accounted for under the equity method of accounting.  Based on our percentage stake in this joint venture, we record a percentage of income earned by TRI Pointe Connect. Revenue by TRI Pointe Connect is recognized in the period in which the home sales transactions are consummated. TRI Pointe Connect does not have a history of uncollectable amounts from these operations. TRI Pointe Connect activity appears as equity in income of unconsolidated entities under the Financial Services section of our consolidated statements of operations.
Title services operations
TRI Pointe Assurance provides title examinations for our homebuyers in Texas, Maryland and Virginia.  TRI Pointe Assurance is a wholly-owned subsidiary of TRI Pointe and acts as a title agency for First American Title Insurance Company. At the time of the consummation of the home sales transactions we recognize a percentage of revenue captured by First American Title Insurance Company. We do not have a history of uncollectable amounts from these operations. TRI Pointe Assurance revenue is included in the Financial Services section of our consolidated statements of operations.
Property and casualty insurance agency operations
TRI Pointe Advantage is a wholly-owned subsidiary of TRI Pointe and provides property and casualty insurance agency services that help facilitate the closing process in all of the markets in which we operate. These operations began in February, 2018 and have not generated a material amount of revenue.  We expect revenue from these operations to increase as customers use these services to procure homeowners insurance, with further revenue potential as customers renew their insurance coverages beyond the initial coverage periods.  The total consideration for these services, including renewal options, shall be estimated upon the issuance of the initial insurance policy, subject to constraint. TRI Pointe Advantage revenue is included in the Financial Services section of our consolidated statements of operations.

		
2.	Segment Information	
We operate two principal businesses: homebuilding and financial services.
Our homebuilding operations consist of six homebuilding brands that acquire and develop land and construct and sell single-family detached and attached homes. In accordance with ASC Topic 280, Segment Reporting , in determining the most appropriate reportable segments, we considered similar economic and other characteristics, including product types, average selling prices, gross profits, production processes, suppliers, subcontractors, regulatory environments, land acquisition results, and underlying demand and supply. Based upon these factors, our homebuilding operations are comprised of the following six reportable segments: Maracay, consisting of operations in Arizona; Pardee Homes, consisting of operations in California and Nevada; Quadrant Homes, consisting of operations in Washington; Trendmaker Homes, consisting of operations in Texas; TRI Pointe Homes, consisting of operations in California and Colorado; and Winchester Homes, consisting of operations in Maryland and Virginia.
Our TRI Pointe Solutions financial services operation is a reportable segment and is comprised of our TRI Pointe Connect mortgage financing operations, our TRI Pointe Assurance title services operations, and our TRI Pointe Advantage property and casualty insurance agency operations. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies.
Corporate is a non-operating segment that develops and implements company-wide strategic initiatives and provides support to our homebuilding reporting segments by centralizing certain administrative functions, such as marketing, legal, accounting, treasury, insurance, internal audit and risk management, information technology and human resources, to benefit from economies of scale. Our Corporate non-operating segment also includes general and administrative expenses related to operating our corporate headquarters. A portion of the expenses incurred by Corporate is allocated to the homebuilding reporting segments.
The reportable segments follow the same accounting policies used for our consolidated financial statements, as described in Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies . 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.

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Total revenues and income before income taxes for each of our reportable segments were as follows (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Revenues	 	 	 	 	 	 	 	
Maracay	$	56,949		 	$	75,754		 	$	115,404		 	$	126,814		
Pardee Homes	243,286		 	180,377		 	423,756		 	264,076		
Quadrant Homes	65,404		 	40,266		 	127,307		 	80,818		
Trendmaker Homes	77,716		 	65,466		 	119,124		 	117,828		
TRI Pointe Homes	255,642		 	154,213		 	446,062		 	285,049		
Winchester Homes	71,915		 	54,205		 	122,652		 	88,846		
Total homebuilding revenues	770,912		 	570,281		 	1,354,305		 	963,431		
Financial services	391		 	345		 	674		 	586		
Total	$	771,303		 	$	570,626		 	$	1,354,979		 	$	964,017		
 	 	 	 	 	 	 	 	
Income (loss) before income taxes	 	 	 	 	 	 	 	
Maracay	$	5,014		 	$	6,241		 	$	9,405		 	$	7,998		
Pardee Homes	46,917		 	36,270		 	86,108		 	46,163		
Quadrant Homes	7,797		 	3,109		 	15,937		 	6,853		
Trendmaker Homes	6,228		 	4,542		 	6,598		 	6,424		
TRI Pointe Homes	24,175		 	8,958		 	38,706		 	15,397		
Winchester Homes	4,179		 	2,219		 	5,786		 	2,619		
Corporate	(11,740	)	 	(11,000	)	 	(23,578	)	 	(22,717	)	
Total homebuilding income before income taxes	82,570		 	50,339		 	138,962		 	62,737		
Financial services	2,246		 	1,562		 	3,394		 	1,995		
Total	$	84,816		 	$	51,901		 	$	142,356		 	$	64,732		

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Total real estate inventories and total assets for each of our reportable segments, as of the date indicated, were as follows (in thousands):

								
 	June 30, 2018	 	December 31, 2017	
Real estate inventories	 	 	 	
Maracay	$	275,689		 	$	243,883		
Pardee Homes	1,331,778		 	1,245,659		
Quadrant Homes	297,824		 	257,887		
Trendmaker Homes	225,287		 	204,926		
TRI Pointe Homes	811,746		 	855,727		
Winchester Homes	305,462		 	297,471		
Total	$	3,247,786		 	$	3,105,553		
 	 	 	 	
Total assets	 	 	 	
Maracay	$	296,679		 	$	268,866		
Pardee Homes	1,444,940		 	1,346,296		
Quadrant Homes	325,764		 	312,803		
Trendmaker Homes	253,560		 	224,995		
TRI Pointe Homes	989,955		 	1,062,920		
Winchester Homes	340,160		 	313,921		
Corporate	206,453		 	262,740		
Total homebuilding assets	3,857,511		 	3,792,541		
Financial services	15,174		 	12,840		
Total	$	3,872,685		 	$	3,805,381		

		
3.	Earnings Per Share	
The following table sets forth the components used in the computation of basic and diluted earnings per share (in thousands, except share and per share amounts):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Numerator:	 		 	 		 	 		 	 		
Net income available to common stockholders	$	63,680		 	$	32,714		 	$	106,560		 	$	40,907		
Denominator:	 		 	 		 	 		 	 		
Basic weighted-average shares outstanding	151,983,886		 	155,603,699		 	151,725,651		 	157,335,296		
Effect of dilutive shares:	 		 	 	 	 		 	 		
Stock options and unvested restricted stock units	1,372,079		 	536,844		 	1,341,691		 	589,265		
Diluted weighted-average shares outstanding	153,355,965		 	156,140,543		 	153,067,342		 	157,924,561		
Earnings per share	 		 	 		 	 		 	 		
Basic	$	0.42		 	$	0.21		 	$	0.70		 	$	0.26		
Diluted	$	0.42		 	$	0.21		 	$	0.70		 	$	0.26		
Antidilutive stock options and unvested restricted stock units not included in diluted earnings per share	584,405		 	3,889,923		 	916,444		 	3,862,763		

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4.	Receivables	
Receivables consisted of the following (in thousands):

								
 	June 30, 2018	 	December 31, 2017	
Escrow proceeds and other accounts receivable, net	$	24,323		 	$	89,783		
Warranty insurance receivable (Note 13)	35,288		 	35,817		
Total receivables	$	59,611		 	$	125,600		

Receivables are evaluated for collectability and allowances for potential losses are established or maintained on applicable receivables when collection becomes doubtful.  Receivables were net of allowances for doubtful accounts of $501,000 and $330,000 as of June 30, 2018 and December 31, 2017 , respectively.

		
5.	Real Estate Inventories	
Real estate inventories consisted of the following (in thousands):

								
 	June 30, 2018	 	December 31, 2017	
Real estate inventories owned:	 	 	 	
Homes completed or under construction	$	1,132,976		 	$	793,685		
Land under development	1,601,462		 	1,934,556		
Land held for future development	200,627		 	138,651		
Model homes	248,201		 	211,658		
Total real estate inventories owned	3,183,266		 	3,078,550		
Real estate inventories not owned:	 	 	 	
Land purchase and land option deposits	64,520		 	27,003		
Total real estate inventories not owned	64,520		 	27,003		
Total real estate inventories	$	3,247,786		 	$	3,105,553		
 
Homes completed or under construction is comprised of costs associated with homes in various stages of construction and includes direct construction and related land acquisition and land development costs. Land under development primarily consists of land acquisition and land development costs, which include capitalized interest and real estate taxes, associated with land undergoing improvement activity. Land held for future development principally reflects land acquisition and land development costs related to land where development activity has not yet begun or has been suspended, but is expected to occur in the future. The real estate inventories owned balance was impacted by our one-time cumulative adjustment entry resulting from the adoption of ASC 606. As a result of our cumulative adjustment, the December 31, 2017 balance decreased by $49.3 million on January 1, 2018. For further details, see Note 1,  Organization, Basis of Presentation and Summary of Significant Accounting Policies.
Real estate inventories not owned represents deposits related to land purchase and land and lot option agreements as well as consolidated inventory held by variable interest entities. For further details, see Note 7, Variable Interest Entities .

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Interest incurred, capitalized and expensed were as follows (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Interest incurred	$	21,627		 	$	19,931		 	$	43,147		 	$	38,804		
Interest capitalized	(21,627	)	 	(19,931	)	 	(43,147	)	 	(38,804	)	
Interest expensed	$	—		 	$	—		 	$	—		 	$	—		
Capitalized interest in beginning inventory	$	183,626		 	$	166,515		 	$	176,348		 	$	157,329		
Interest capitalized as a cost of inventory	21,627		 	19,931		 	43,147		 	38,804		
Interest previously capitalized as a cost of
inventory, included in cost of sales	(19,664	)	 	(13,185	)	 	(33,906	)	 	(22,872	)	
Capitalized interest in ending inventory	$	185,589		 	$	173,261		 	$	185,589		 	$	173,261		
 
Interest is capitalized to real estate inventory during development and other qualifying activities. During all periods presented, we capitalized all interest incurred to real estate inventory in accordance with ASC Topic 835, Interest, as our qualified assets exceeded our debt. Interest that is capitalized to real estate inventory is included in cost of home sales or cost of land and lot sales as related units or lots are delivered.  Interest that is expensed as incurred is included in other income, net.
Real Estate Inventory Impairments and Land Option Abandonments
Real estate inventory impairments and land and lot option abandonments and pre-acquisition charges consisted of the following (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Real estate inventory impairments	$	—		 	$	234		 	$	—		 	$	267		
Land and lot option abandonments and pre-acquisition charges	609		 	273		 	857		 	561		
Total	$	609		 	$	507		 	$	857		 	$	828		
 
Impairments of real estate inventory relate primarily to projects or communities that include homes completed or under construction. Within a project or community, there may be individual homes or parcels of land that are currently held for sale. Impairment charges recognized as a result of adjusting individual held-for-sale assets within a community to estimated fair value less cost to sell are also included in the total impairment charges.  
In addition to owning land and residential lots, we also have option agreements to purchase land and lots at a future date. We have option deposits and capitalized pre-acquisition costs associated with the optioned land and lots. When the economics of a project no longer support acquisition of the land or lots under option, we may elect not to move forward with the acquisition. Option deposits and capitalized pre-acquisition costs associated with the assets under option may be forfeited at that time. 
Real estate inventory impairments and land option abandonments are recorded in cost of home sales and cost of land and lot sales on the consolidated statements of operations.

		
6.	Investments in Unconsolidated Entities	
As of June 30, 2018 , we held equity investments in four active homebuilding partnerships or limited liability companies and one financial services limited liability company. Our participation in these entities may be as a developer, a builder, or an investment partner. Our ownership percentage varies from 5% to 65% , depending on the investment, with no controlling interest held in any of these investments.

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Investments Held
Our cumulative investment in entities accounted for on the equity method, including our share of earnings and losses, consisted of the following (in thousands):

								
 	June 30, 2018	 	December 31, 2017	
Limited liability company interests	$	1,474		 	$	2,687		
General partnership interests	2,695		 	3,183		
Total	$	4,169		 	$	5,870		
Unconsolidated Financial Information
Aggregated assets, liabilities and operating results of the entities we account for as equity-method investments are provided below. Because our ownership interest in these entities varies, a direct relationship does not exist between the information presented below and the amounts that are reflected on our consolidated balance sheets as our investments in unconsolidated entities or on our consolidated statements of operations as equity in income of unconsolidated entities.
Assets and liabilities of unconsolidated entities (in thousands):

	
								
 	June 30, 2018	 	December 31, 2017	
Assets	 	 	 	
Cash	$	12,207		 	$	11,678		
Receivables	4,394		 	6,564		
Real estate inventories	97,818		 	99,997		
Other assets	866		 	936		
Total assets	$	115,285		 	$	119,175		
Liabilities and equity	 	 	 	
Accounts payable and other liabilities	$	8,165		 	$	12,208		
Company’s equity	4,169		 	5,870		
Outside interests' equity	102,951		 	101,097		
Total liabilities and equity	$	115,285		 	$	119,175		
 
Results of operations from unconsolidated entities (in thousands):

																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Net sales	$	9,325		 	$	5,228		 	$	13,715		 	$	10,318		
Other operating expense	(7,272	)	 	(3,579	)	 	(10,559	)	 	(6,182	)	
Other income	21		 	22		 	84		 	24		
Net income	$	2,074		 	$	1,671		 	$	3,240		 	$	4,160		
Company’s equity in income of unconsolidated entities	$	2,053		 	$	2,802		 	$	2,587		 	$	3,206		

		
7.	Variable Interest Entities	
In the ordinary course of business, we enter into land and lot option agreements in order to procure land and residential lots for future development and the construction of homes. The use of such land and lot option agreements generally allows us to reduce the risks associated with direct land ownership and development, and reduces our capital and financial commitments. Pursuant to these land and lot option agreements, we generally provide a deposit to the seller as consideration for the right to purchase land at different times in the future, usually at predetermined prices. Such deposits are recorded as land purchase and land option deposits under real estate inventories not owned in the accompanying consolidated balance sheets.

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We analyze each of our land and lot option agreements and other similar contracts under the provisions of ASC 810 Consolidation to determine whether the land seller is a VIE and, if so, whether we are the primary beneficiary. Although we do not have legal title to the underlying land, if we are determined to be the primary beneficiary of the VIE, we will consolidate the VIE in our financial statements and reflect its assets as real estate inventory not owned included in our real estate inventories, its liabilities as debt (nonrecourse) held by VIEs in accrued expenses and other liabilities and the net equity of the VIE owners as noncontrolling interests on our consolidated balance sheets. In determining whether we are the primary beneficiary, we consider, among other things, whether we have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Such activities would include, among other things, determining or limiting the scope or purpose of the VIE, selling or transferring property owned or controlled by the VIE, or arranging financing for the VIE.
Creditors of the entities with which we have land and lot option agreements have no recourse against us. The maximum exposure to loss under our land and lot option agreements is generally limited to non-refundable option deposits and any capitalized pre-acquisition costs. In some cases, we have also contracted to complete development work at a fixed cost on behalf of the land owner and budget shortfalls and savings will be borne by us. Additionally, we have entered into land banking arrangements which require us to complete development work even if we terminate the option to procure land or lots.
The following provides a summary of our interests in land and lot option agreements (in thousands):

																								
 	June 30, 2018	 	December 31, 2017	
 	Deposits	 	Remaining
Purchase
Price	 	Consolidated
Inventory
Held by VIEs	 	Deposits	 	Remaining
Purchase
Price	 	Consolidated
Inventory
Held by VIEs	
Consolidated VIEs	$	—		 	$	—		 	$	—		 	$	—		 	$	—		 	$	—		
Unconsolidated VIEs	32,874		 	299,711		 	N/A		 	3,418		 	112,590		 	N/A		
Other land option agreements	31,646		 	372,354		 	N/A		 	23,585		 	269,349		 	N/A		
Total	$	64,520		 	$	672,065		 	$	—		 	$	27,003		 	$	381,939		 	$	—		
 
Unconsolidated VIEs represent land option agreements that were not consolidated because we were not the primary beneficiary. Other land option agreements were not considered VIEs.
In addition to the deposits presented in the table above, our exposure to loss related to our land and lot option contracts consisted of capitalized pre-acquisition costs of $11.3 million and $4.5 million as of June 30, 2018 and December 31, 2017 , respectively. These pre-acquisition costs were included in real estate inventories as land under development on our consolidated balance sheets.  

		
8.	Goodwill and Other Intangible Assets	
As of June 30, 2018 and December 31, 2017 , $139.3 million of goodwill is included in goodwill and other intangible assets, net on each of the consolidated balance sheets. The Company's goodwill balance is included in the TRI Pointe Homes reporting segment in Note 2, Segment Information . 
We have two intangible assets as of June 30, 2018 , comprised of an existing trade name from the acquisition of Maracay in 2006, which has a 20 year useful life, and a TRI Pointe Homes trade name resulting from the acquisition of Weyerhaeuser Real Estate Company (“WRECO”) in 2014, which has an indefinite useful life.
Goodwill and other intangible assets consisted of the following (in thousands):

																								
 	June 30, 2018	 	December 31, 2017	
 	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Net
Carrying
Amount	 	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Net
Carrying
Amount	
Goodwill	$	139,304		 	$	—		 	$	139,304		 	$	139,304		 	$	—		 	$	139,304		
Trade names	27,979		 	(6,589	)	 	21,390		 	27,979		 	(6,322	)	 	21,657		
Total	$	167,283		 	$	(6,589	)	 	$	160,694		 	$	167,283		 	$	(6,322	)	 	$	160,961		

- 17 -

The remaining useful life of our amortizing intangible asset related to the Maracay trade name was 7.7 and 8.2 years as of June 30, 2018 and December 31, 2017 , respectively. The net carrying amount related to this intangible asset was $4.1 million and $4.4 million as of June 30, 2018 and December 31, 2017 , respectively. Amortization expense related to this intangible asset was $134,000 for each of the three-month periods ended June 30, 2018 and 2017 , respectively, and $267,000 for each of the six-month periods ended June 30, 2018 and 2017, respectively. Amortization of this intangible was charged to sales and marketing expense.  Our $17.3 million indefinite life intangible asset related to the TRI Pointe Homes trade name is not amortizing.  All trade names are evaluated for impairment on an annual basis or more frequently if indicators of impairment exist.
Expected amortization of our intangible asset related to Maracay for the remainder of 2018 , the next four years and thereafter is (in thousands):

				
Remainder of 2018	$	267		
2019	534		
2020	534		
2021	534		
2022	534		
Thereafter	1,687		
Total	$	4,090		

		
9.	Other Assets	
Other assets consisted of the following (in thousands):

								
 	June 30, 2018	 	December 31, 2017	
Prepaid expenses	$	17,842		 	$	13,040		
Refundable fees and other deposits	13,614		 	16,012		
Development rights, held for future use or sale	2,569		 	2,569		
Deferred loan costs - unsecured revolving credit facility	2,926		 	3,427		
Operating properties and equipment, net	54,094		 	10,528		
Other	3,060		 	2,494		
Total	$	94,105		 	$	48,070		

    Operating properties and equipment, net was impacted by our one-time cumulative adjustment resulting from the adoption of ASC 606. As a result of our cumulative adjustment, the December 31, 2017 balance increased by $39.5 million on January 1, 2018. For further details, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies .

- 18 -

		
10.	Accrued Expenses and Other Liabilities	
Accrued expenses and other liabilities consisted of the following (in thousands):

								
 	June 30, 2018	 	December 31, 2017	
Accrued payroll and related costs	$	24,232		 	$	36,863		
Warranty reserves   (Note 13)	72,342		 	69,373		
Estimated cost for completion of real estate inventories	102,176		 	105,864		
Customer deposits	28,947		 	19,568		
Income tax liability to Weyerhaeuser	8,321		 	7,706		
Accrued income taxes payable	—		 	30,672		
Liability for uncertain tax positions (Note 15)	1,458		 	1,458		
Accrued interest	10,861		 	11,014		
Accrued insurance expense	4,124		 	1,187		
Other tax liability	28,297		 	33,671		
Other	17,319		 	13,506		
Total	$	298,077		 	$	330,882		

		
11.	Senior Notes and Unsecured Revolving Credit Facility	
Senior Notes
The Company's outstanding senior notes (together, the "Senior Notes") consisted of the following (in thousands):

	
								
 	June 30, 2018	 	December 31, 2017	
4.375% Senior Notes due June 15, 2019	$	428,315		 	$	450,000		
4.875% Senior Notes due July 1, 2021	300,000		 	300,000		
5.875% Senior Notes due June 15, 2024	450,000		 	450,000		
5.250% Senior Notes due June 1, 2027	300,000		 	300,000		
Discount and deferred loan costs	(24,949	)	 	(28,698	)	
Total	$	1,453,366		 	$	1,471,302		
 
In June 2017, TRI Pointe Group issued $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the "2027 Notes") at 100.00% of their aggregate principal amount. Net proceeds of this issuance were $296.3 million , after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1 of each year until maturity, beginning on December 1, 2017.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the "2021 Notes") at 99.44% of their aggregate principal amount. Net proceeds of this issuance were $293.9 million , after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1.
TRI Pointe Group and its 100% owned subsidiary TRI Pointe Homes, Inc. ("TRI Pointe Homes") are co-issuers of the 4.375% Senior Notes due 2019 (the "2019 Notes") and the 5.875% Senior Notes due 2024 (the "2024 Notes"). The 2019 Notes were issued at 98.89% of their aggregate principal amount and the 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering were $861.3 million , after debt issuance costs and discounts. The 2019 Notes and 2024 Notes mature on June  15, 2019 and June 15, 2024 , respectively. Interest is payable semiannually in arrears on June 15 and December 15. During the three months ended June 30, 2018, we repurchased and cancelled an aggregate principal amount of $21.7 million of the 2019 Notes.
As of June 30, 2018 , there was $17.3 million of capitalized debt financing costs, included in senior notes, net on our consolidated balance sheet, related to the Senior Notes that will amortize over the lives of the Senior Notes. Accrued interest related to the Senior Notes was $10.4 million and $10.6 million as of June 30, 2018 and December 31, 2017 , respectively.

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Unsecured Revolving Credit Facility
On June 20, 2017, the Company modified its existing unsecured revolving credit facility (the “Credit Facility”) to extend the maturity date by two years to May 18, 2021, while decreasing the total commitments under the Credit Facility to $600 million from $625 million . In addition, the Credit Facility was modified to give the Company the option to make offers to the lenders to extend the maturity date of the Credit Facility in twelve-month increments, subject to the satisfaction of certain conditions. The Credit Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the Credit Facility in the ordinary course of business to fund its operations, including its land acquisition, land development and homebuilding activities. Borrowings under the Credit Facility will be governed by, among other things, a borrowing base. Interest rates on borrowings under the Credit Facility will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00% , depending on the Company’s leverage ratio. As of June 30, 2018 , we had no outstanding indebtedness under the Credit Facility and $586.8 million of availability after considering the borrowing base provisions and outstanding letters of credit.  As of June 30, 2018 , there was $2.9 million of capitalized debt financing costs, included in other assets on our consolidated balance sheet, related to the Credit Facility that will amortize over the life of the Credit Facility, maturing on May 18, 2021.  Accrued interest, including loan commitment fees, related to the Credit Facility was $455,000 and $426,000 as of June 30, 2018 and December 31, 2017 , respectively.
At June 30, 2018 and December 31, 2017 , we had outstanding letters of credit of $13.2 million and $7.7 million , respectively.  These letters of credit were issued to secure various financial obligations.  We believe it is not probable that any outstanding letters of credit will be drawn upon.
Interest Incurred
During the three months ended June 30, 2018 and 2017 , the Company incurred interest of $21.6 million and $19.9 million , respectively, related to all debt during the period.  Included in interest incurred was amortization of deferred financing and Senior Note discount costs of  $2.1 million  and  $1.8 million  for the three months ended  June 30, 2018  and  2017 , respectively. During the six-month periods ended June 30, 2018 and 2017, the Company incurred interest of $43.1 million and $38.8 million , respectively, related to all debt during the period. Included in interest incurred was amortization of deferred financing and Senior Notes discount costs of $4.1 million and $3.7 million for the six months ended June 30, 2018 and 2017, respectively. Accrued interest related to all outstanding debt at June 30, 2018 and December 31, 2017 was $10.9 million and $11.0 million , respectively. 
Covenant Requirements
The Senior Notes contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions.
Under the Credit Facility, the Company is required to comply with certain financial covenants, including but not limited to (i) a minimum consolidated tangible net worth; (ii) a maximum total leverage ratio; and (iii) a minimum interest coverage ratio.
The Company was in compliance with all applicable financial covenants as of June 30, 2018 and December 31, 2017 .

		
12.	Fair Value Disclosures	
Fair Value Measurements
ASC Topic 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	

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Fair Value of Financial Instruments
A summary of assets and liabilities at June 30, 2018 and December 31, 2017 , related to our financial instruments, measured at fair value on a recurring basis, is set forth below (in thousands):

																		
 	 	 	June 30, 2018	 	December 31, 2017	
 	Hierarchy	 	Book Value	 	Fair Value	 	Book Value	 	Fair Value	
Senior Notes (1)	Level 2	 	$	1,470,664		 	$	1,450,708		 	$	1,491,229		 	$	1,552,335		
  __________
		
(1)  	The book value of the Senior Notes is net of discounts, excluding deferred loan costs of $17.3 million and $19.9 million as of June 30, 2018 and December 31, 2017 , respectively. The estimated fair value of the Senior Notes at June 30, 2018 and December 31, 2017 is based on quoted market prices.	

At June 30, 2018 and December 31, 2017 , the carrying value of cash and cash equivalents and receivables approximated fair value.
Fair Value of Nonfinancial Assets
Nonfinancial assets include items such as real estate inventories and long-lived assets that are measured at fair value on a nonrecurring basis when events and circumstances indicating the carrying value is not recoverable. The following table presents impairment charges and the remaining net fair value for nonfinancial assets that were measured during the periods presented (in thousands):

																
 	Six Months Ended June 30, 2018	 	Year Ended December 31, 2017	
 	Impairment
Charge	 	Fair Value
Net of
Impairment	 	Impairment
Charge	 	Fair Value
Net of
Impairment	
Real estate inventories   (1)	$	—		 	$	—		 	$	854		 	$	12,950		
  __________
(1) Fair value of real estate inventories, net of impairment charges represents only those assets whose carrying values were adjusted to fair value in the respective periods presented. The fair value of these real estate inventories impaired was determined based on an analysis of future undiscounted net cash flows.  In the case of lots for sale, fair value was determined based on recent land and lot sales for similar assets.

13.	Commitments and Contingencies	
Legal Matters
Lawsuits, claims and proceedings have been and may be instituted or asserted against us in the normal course of business, including actions brought on behalf of various classes of claimants. We are also subject to local, state and federal laws and regulations related to land development activities, house construction standards, sales practices, employment practices, environmental protection and financial services. As a result, we are subject to periodic examinations or inquiry by agencies administering these laws and regulations.
We record a reserve for potential legal claims and regulatory matters when they are probable of occurring and a potential loss is reasonably estimable. We accrue for these matters based on facts and circumstances specific to each matter and revise these estimates when necessary.  In view of the inherent difficulty of predicting outcomes of legal claims and related contingencies, we generally cannot predict their ultimate resolution, related timing or eventual loss. Accordingly, it is possible that the ultimate outcome of any matter, if in excess of a related accrual or if no accrual was made, could be material to our financial statements.  For matters as to which the Company believes a loss is probable and reasonably estimable, we had no legal reserves as of June 30, 2018 or December 31, 2017 , respectively.
On April 3, 2017, Pardee Homes was named as a defendant in a lawsuit filed in San Diego County Superior Court by Scripps Health (“Scripps”) related to the April 1989 sale by Pardee Homes of real property located in Carmel Valley, California to Scripps pursuant to a purchase agreement dated December 18, 1987 (as amended, the “Purchase Agreement”). In March 2003, Scripps contacted Pardee Homes and alleged Pardee Homes had breached a covenant in the Purchase Agreement by failing to record a restriction against the development of the surrounding property then owned by Pardee Homes for medical office use. In November 2003, the parties entered into a tolling agreement, pursuant to which the parties agreed to toll any applicable statutes of limitation from November 3, 2003 until the expiration of the agreement. The tolling agreement did not revive any cause of action already time barred by a statute of limitation as of November 3, 2003. The tolling agreement was

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terminated as of February 21, 2017. Pardee Homes became an indirect, wholly owned subsidiary of TRI Pointe on July 7, 2014 in connection with TRI Pointe’s acquisition of WRECO.
We intend to vigorously defend the action, and intend to continue challenging Scripps' claims. On May 18, 2018, Pardee Homes filed a motion for summary judgment in the action, which currently has a hearing date of September 14, 2018. Although we cannot predict or determine the timing or final outcome of the lawsuit or the effect that any adverse findings or determinations may have on us, we believe Scripps has no actionable claims against Pardee Homes and that this dispute will not have a material impact on our business, liquidity, financial condition and results of operations. An unfavorable determination could result in the payment by us of monetary damages, which could be significant. The complaint does not indicate the amount of relief sought, and an estimate of possible loss or range of loss cannot presently be made with respect to this matter. No reserve with respect to this matter has been recorded on our consolidated financial statements.
In April 2018, the California Regional Water Quality Control Board, San Diego Region (“RWQCB”), notified Pardee Homes of its intention to assess a penalty for alleged violations of a General Permit for Storm Water Discharges Associated with Construction and Land Disturbance Activities (the “General Permit”). The alleged violations of the General Permit related to the discharge of stormwater during heavy rains in 2017 in connection with the development of a community in San Diego County, California. On June 4, 2018, Pardee Homes reached a settlement with the RWQCB staff and agreed to pay a fine in the sum of $291,286 .
Warranty
Warranty reserves are accrued as home deliveries occur. Our warranty reserves on homes delivered will vary based on product type and geographic area and also depending on state and local laws. The warranty reserve is included in accrued expenses and other liabilities on our consolidated balance sheets and represents expected future costs based on our historical experience over previous years. Estimated warranty costs are charged to cost of home sales in the period in which the related home sales revenue is recognized.
We maintain general liability insurance designed to protect us against a portion of our risk of loss from warranty and construction defect-related claims. We also generally require our subcontractors and design professionals to indemnify us for liabilities arising from their work, subject to various limitations. However, such indemnity is significantly limited with respect to certain subcontractors that are added to our general liability insurance policy. 
Our warranty reserve and related estimated insurance recoveries are based on actuarial analysis that uses our historical claim and expense data, as well as industry data to estimate these overall costs and related recoveries. Key assumptions used in developing these estimates include claim frequencies, severities and resolution patterns, which can occur over an extended period of time. These estimates are subject to variability due to the length of time between the delivery of a home to a homebuyer and when a warranty or construction defect claim is made, and the ultimate resolution of such claim; uncertainties regarding such claims relative to our markets and the types of product we build; and legal or regulatory actions and/or interpretations, among other factors. Due to the degree of judgment involved and the potential for variability in these underlying assumptions, our actual future costs could differ from those estimated. There can be no assurance that the terms and limitations of the limited warranty will be effective against claims made by homebuyers, that we will be able to renew our insurance coverage or renew it at reasonable rates, that we will not be liable for damages, cost of repairs, and/or the expense of litigation surrounding possible construction defects, soil subsidence or building related claims or that claims will not arise out of uninsurable events or circumstances not covered by insurance and not subject to effective indemnification agreements with certain subcontractors.
We also record expected recoveries from insurance carriers based on actual insurance claims made and actuarially determined amounts that depend on various factors, including the above-described reserve 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. Outstanding warranty insurance receivables were $35.3 million and $35.8 million as of June 30, 2018 and December 31, 2017 , respectively. Warranty insurance receivables are recorded in receivables on the accompanying consolidated balance sheet.

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Warranty reserve activity consisted of the following (in thousands):

	
																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Warranty reserves, beginning of period	$	70,482		 	$	80,953		 	$	69,373		 	$	83,135		
Warranty reserves accrued	6,666		 	3,794		 	11,412		 	5,674		
Adjustments to pre-existing reserves	—		 	699		 	—		 	621		
Warranty expenditures	(4,806	)	 	(5,318	)	 	(8,443	)	 	(9,302	)	
Warranty reserves, end of period	$	72,342		 	$	80,128		 	$	72,342		 	$	80,128		
 
Performance Bonds
We obtain surety bonds in the normal course of business to ensure completion of certain infrastructure improvements of our projects. The beneficiaries of the bonds are various municipalities. As of June 30, 2018 and December 31, 2017 , the Company had outstanding surety bonds totaling $724.4 million and $627.1 million , respectively. As of June 30, 2018 and December 31, 2017 , our estimated cost to complete obligations related to these surety bonds was $430.2 million and $537.4 million , respectively.

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14.	Stock-Based Compensation	
2013 Long-Term Incentive Plan
The Company’s stock compensation plan, the 2013 Long-Term Incentive Plan (the “2013 Incentive Plan”), was adopted by TRI Pointe in January 2013 and amended, with the approval of our stockholders, in 2014 and 2015. In addition, our board of directors amended the 2013 Incentive Plan in 2014 to prohibit repricing (other than in connection with any equity restructuring or any change in capitalization) of outstanding options or stock appreciation rights without stockholder approval. The 2013 Incentive Plan provides for the grant of equity-based awards, including options to purchase shares of common stock, stock appreciation rights, bonus stock, restricted stock, restricted stock units and performance awards. The 2013 Incentive Plan will automatically expire on the tenth anniversary of its effective date. Our board of directors may terminate or amend the 2013 Incentive Plan at any time, subject to any requirement of stockholder approval required by applicable law, rule or regulation.
As amended, the number of shares of our common stock that may be issued under the 2013 Incentive Plan is 11,727,833 shares. To the extent that shares of our common stock subject to an outstanding option, stock appreciation right, stock award or performance award granted under the 2013 Incentive 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 our common stock generally shall again be available under the 2013 Incentive Plan. As of June 30, 2018 , there were 6,454,995 shares available for future grant under the 2013 Incentive Plan.
The following table presents compensation expense recognized related to all stock-based awards (in thousands):

	
																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Total stock-based compensation	$	3,720		 	$	3,903		 	$	7,190		 	$	7,744		
 
Stock-based compensation is charged to general and administrative expense on the accompanying consolidated statements of operations.  As of June 30, 2018 , total unrecognized stock-based compensation related to all stock-based awards was $24.5 million and the weighted average term over which the expense was expected to be recognized was 2.0 years .
Summary of Stock Option Activity
The following table presents a summary of stock option awards for the six months ended June 30, 2018 :

														
 	Options	 	Weighted
Average
Exercise
Price
Per Share	 	Weighted
Average
Remaining
Contractual
Life	 	Aggregate
Intrinsic
Value
(in thousands)	
Options outstanding at December 31, 2017	1,154,658		 	$	14.16		 	4.9		 	$	4,350		
Granted	—		 	—		 	—		 	—		
Exercised	(154,993	)	 	$	12.33		 	—		 	—		
Forfeited	(18,154	)	 	$	11.77		 	—		 	—		
Options outstanding at June 30, 2018	981,511		 	$	14.49		 	4.7		 	$	2,028		
Options exercisable at June 30, 2018	981,511		 	$	14.49		 	4.7		 	$	2,028		
 
The intrinsic value of each stock option award outstanding or exercisable is the difference between the fair market value of the Company’s common stock at the end of the period and the exercise price of each stock option award to the extent it is considered “in-the-money”. A stock option award is considered to be “in-the-money” if the fair market value of the Company’s stock is greater than the exercise price of the stock option award. The aggregate intrinsic value of options outstanding and options exercisable represents the value that would have been received by the holders of stock option awards had they exercised their stock option award on the last trading day of the period and sold the underlying shares at the closing price on that day.

Summary of Restricted Stock Unit Activity
The following table presents a summary of restricted stock units (“RSUs”) for the six months ended June 30, 2018 :

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 	Restricted
Stock
Units	 	Weighted
Average
Grant Date
Fair Value
Per Share	 	Aggregate
Intrinsic
Value
(in thousands)	
Nonvested RSUs at December 31, 2017	4,307,592		 	$	9.80		 	$	77,192		
Granted	1,124,554		 	$	15.76		 	—		
Vested	(1,102,727	)	 	$	12.47		 	—		
Forfeited	(987,808	)	 	$	9.37		 	—		
Nonvested RSUs at June 30, 2018	3,341,611		 	$	11.05		 	$	54,669		
 
On April 30, 2018, the Company granted an aggregate of 40,910 RSUs to the non-employee members of its board of directors. These RSUs vest in their entirety on the day immediately prior to the Company's 2019 Annual Meeting of Stockholders. The fair value of each RSU granted on April 30, 2018 was measured using a price of $17.11 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.
On May 7, 2018 and February 22, 2018, the Company granted an aggregate of 4,258 and 633,107 , respectively, of time-vested RSUs to certain employees and officers. The RSUs granted vest in equal installments annually on the anniversary of the grant date over a three year period.  The fair value of each RSU granted on May 7, 2018 and February 22, 2018 was measured using a price of $17.61 and $16.94 per share, respectively, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 22, 2018, the Company granted  184,179 , 177,095 , and 85,005 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively. These performance-based RSUs are allocated in equal parts to two separate performance metrics: (i) TSR, with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) earnings per share. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 2018 to December 31, 2020. The fair value of the performance-based RSUs related to the TSR metric was determined to be $10.97 per share based on a Monte Carlo simulation. The fair value of the performance-based RSUs related to the earnings per share goal was measured using a price of  $16.94  per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.

On February 15, 2018, the Compensation Committee of our Board of Directors certified the performance achieved with respect to performance-based RSUs granted to the Company’s Chief Executive Officer, President, and Chief Financial Officer in 2015 that resulted in the issuance of 197,898 shares of our common stock under the 2013 Incentive Plan. The vesting of these performance-based RSUs are included in the table above. RSUs that were forfeited in the table above, during the six months ended June 30, 2018 , included performance-based RSUs and time-based RSUs that were forfeited for no consideration.
On February 27, 2017, the Company granted an aggregate of 990,279 time-vested RSUs to certain employees and officers. The RSUs granted vest in equal installments annually on the anniversary of the grant date over a three year period.  The fair value of each RSU granted on February 27, 2017 was measured using a price of $12.10 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

On February 27, 2017, the Company granted  257,851 , 247,933 and 119,008 performance-based RSUs to the Company’s Chief Executive Officer, President, and Chief Financial Officer, respectively. These performance-based RSUs are allocated in equal parts to two separate performance metrics: (i) TSR, with vesting based on the Company’s TSR relative to its peer-group homebuilders; and (ii) earnings per share. The vesting, if at all, of these performance-based RSUs may range from 0% to 100% and will be based on the Company’s percentage attainment of specified threshold, target and maximum performance goals. The performance period for these performance-based RSUs is January 1, 2017 to December 31, 2019. The fair value of the performance-based RSUs related to the TSR metric was determined to be $6.16 per share based on a Monte Carlo simulation. The fair value of the performance-based RSUs related to the earnings per share goal was measured using a price of  $12.10  per share, which was the closing stock price on the date of grant. Each award will be expensed over the requisite service period.

On May 30, 2017, the Company granted an aggregate of 55,865 RSUs to the non-employee members of its board of directors. These RSUs vest in their entirety on the day immediately prior to the Company's 2018 Annual Meeting of Stockholders. The fair value of each RSU granted on May 30, 2017 was measured using a price of $12.53 per share, which was the closing stock price on the date of grant. Each award will be expensed on a straight-line basis over the vesting period.

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As RSUs vest for employees, a portion of the shares awarded is generally withheld to cover employee tax withholdings. As a result, the number of RSUs vested and the number of shares of TRI Pointe common stock issued will differ.

15.	Income Taxes	
We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740”), which requires an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statements and tax bases of assets and liabilities using enacted tax rates for the years in which taxes are expected to be paid or recovered.  Each quarter we assess our deferred tax asset to determine whether all or any portion of the asset is more likely than not unrealizable under ASC 740.  We are required to establish a valuation allowance for any portion of the asset we conclude is more likely than not to be unrealizable.  Our assessment considers, among other things, the nature, frequency and severity of our current and cumulative losses, forecasts of our future taxable income, the duration of statutory carryforward periods and tax planning alternatives.
We had net deferred tax assets of $66.4 million and $76.4 million as of June 30, 2018 and December 31, 2017 , respectively.  We had a valuation allowance related to those net deferred tax assets of $3.5 million as of both June 30, 2018 and December 31, 2017 .  The Company will continue to evaluate both positive and negative evidence in determining the need for a valuation allowance against its deferred tax assets. Changes in positive and negative evidence, including differences between the Company's future operating results and the estimates utilized in the determination of the valuation allowance, could result in changes in the Company's estimate of the valuation allowance against its deferred tax assets. The accounting for deferred taxes is based upon estimates of future results. Differences between the anticipated and actual outcomes of these future results could have a material impact on the Company's consolidated results of operations or financial position. Also, changes in existing federal and state tax laws and tax rates could affect future tax results and the valuation allowance against the Company's deferred tax assets.
TRI Pointe has certain liabilities with Weyerhaeuser Company (“Weyerhaeuser”) related to a tax sharing agreement.  As of June 30, 2018 and December 31, 2017 , we had an income tax liability to Weyerhaeuser of $8.3 million and $7.7 million , respectively. The income tax liability to Weyerhaeuser is recorded in accrued expenses and other liabilities on the accompanying consolidated balance sheets.
Our provision for income taxes totaled $21.1 million and $19.1 million for the three months ended June 30, 2018 and 2017 , respectively. Our provision for income taxes totaled $35.8 million and $23.7 million for the six months ended June 30, 2018 and 2017 , respectively. The Company classifies any interest and penalties related to income taxes assessed by jurisdiction as part of income tax expense.  The Company had $1.5 million of uncertain tax positions recorded as of both June 30, 2018 and December 31, 2017 .  The Company has not been assessed interest or penalties by any major tax jurisdictions related to prior years. 
On December 22, 2017, the Tax Cuts and Jobs Act was enacted, reducing the U.S. federal corporate income tax rate from 35% to 21%, among other changes. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the income tax effects of the Tax Cuts and Jobs Act, for which the accounting under ASC 740 is incomplete. As of June 30, 2018 , we have completed our accounting for the tax effects of the Tax Cuts and Jobs Act, however, as there is some uncertainty around the grandfathering provisions related to performance-based executive compensation, we have estimated a provisional amount for the deferred tax assets related to performance-based executive compensation. In addition, we also remeasured the applicable deferred tax assets and liabilities based on the rate at which they are expected to reverse in the future, which is generally 21%. We are still analyzing certain aspects of the Tax Cuts and Jobs Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. In the quarter ended December 31, 2017, the Company recorded an income tax charge of $22.0 million related to the re-measurement of our deferred tax assets related to the Tax Cuts and Jobs Act.

16.	Related Party Transactions	
We had no related party transactions for the six months ended June 30, 2018 and 2017.

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17.	Supplemental Disclosure to Consolidated Statements of Cash Flows	
The following are supplemental disclosures to the consolidated statements of cash flows (in thousands):

								
 	Six Months Ended June 30,	
 	2018	 	2017	
Supplemental disclosure of cash flow information:	 	 	 	
Cash paid during the period for:	 	 	 	
Interest, net of amounts capitalized of $39,229 and $43,573	$	—		 	$	—		
Income taxes	$	62,011		 	$	10,950		
Supplemental disclosures of noncash activities:	 	 	 	
Amortization of senior note discount capitalized to real estate inventory	$	1,069		 	$	1,010		
Increase in other assets related to adoption of ASC 606	$	39,534		 	$	—		
Amortization of deferred loan costs capitalized to real estate inventory	$	3,003		 	$	2,648		
Effect of net consolidation and de-consolidation of variable interest entities:	 	 	 	
Decrease in consolidated real estate inventory not owned	$	—		 	$	(3,275	)	
Decrease in noncontrolling interests	$	—		 	$	3,275		

18.	Supplemental Guarantor Information	
2021 Notes and 2027 Notes
On May 26, 2016, TRI Pointe Group issued the 2021 Notes. On June 5, 2017, TRI Pointe Group issued the 2027 Notes. All of TRI Pointe Group’s 100% owned subsidiaries that are guarantors (each a “Guarantor” and, collectively, the “Guarantors”) of the Credit Facility, including TRI Pointe Homes, are party to supplemental indentures pursuant to which they jointly and severally guarantee TRI Pointe Group’s obligations with respect to the 2021 Notes and the 2027 Notes. Each Guarantor of the 2021 Notes and the 2027 Notes is 100% owned by TRI Pointe Group, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2021 Notes and the 2027 Notes, as described in the following paragraph. All of our non-Guarantor subsidiaries have nominal assets and operations and are considered minor, as defined in Rule 3-10(h) of Regulation S-X. In addition, TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X. There are no significant restrictions upon the ability of TRI Pointe Group or any Guarantor to obtain funds from any of their respective wholly owned subsidiaries by dividend or loan. None of the assets of our subsidiaries represent restricted net assets pursuant to Rule 4-08(e)(3) of Regulation S-X.
A Guarantor of the 2021 Notes and the 2027 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe Group or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe Group or another Guarantor, with TRI Pointe Group or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe Group or any other Guarantor which gave rise to such Guarantor guaranteeing the 2021 Notes or the 2027 Notes; (vi) TRI Pointe Group exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable supplemental indenture are discharged.
2019 Notes and 2024 Notes
TRI Pointe Group and TRI Pointe Homes are co-issuers of the 2019 Notes and the 2024 Notes. All of the Guarantors (other than TRI Pointe Homes) have entered into supplemental indentures pursuant to which they jointly and severally guarantee the obligations of TRI Pointe Group and TRI Pointe Homes with respect to the 2019 Notes and the 2024 Notes. Each Guarantor of the 2019 Notes and the 2024 Notes is 100% owned by TRI Pointe Group and TRI Pointe Homes, and all guarantees are full and unconditional, subject to customary exceptions pursuant to the indentures governing the 2019 Notes and the 2024 Notes, as described below.
A Guarantor of the 2019 Notes and the 2024 Notes shall be released from all of its obligations under its guarantee if (i) all of the assets of the Guarantor have been sold; (ii) all of the equity interests of the Guarantor held by TRI Pointe or a subsidiary thereof have been sold; (iii) the Guarantor merges with and into TRI Pointe or another Guarantor, with TRI Pointe or such other Guarantor surviving the merger; (iv) the Guarantor is designated “unrestricted” for covenant purposes; (v) the Guarantor ceases to guarantee any indebtedness of TRI Pointe or any other Guarantor which gave rise to such Guarantor

- 27 -

guaranteeing the 2019 Notes and 2024 Notes; (vi) TRI Pointe exercises its legal defeasance or covenant defeasance options; or (vii) all obligations under the applicable indenture are discharged.
Presented below are the condensed consolidating balance sheets at June 30, 2018 and December 31, 2017 , condensed consolidating statements of operations for the three and six months ended June 30, 2018 and 2017 and condensed consolidating statement of cash flows for the six months ended June 30, 2018 and 2017 .  Because TRI Pointe’s non-Guarantor subsidiaries are considered minor, as defined in Rule 3-10(h) of Regulation S-X, the non-Guarantor subsidiaries’ information is not separately presented in the tables below, but is included with the Guarantors. Additionally, because TRI Pointe Group has no independent assets or operations, as defined in Rule 3-10(h) of Regulation S-X, the condensed consolidated financial information of TRI Pointe Group and TRI Pointe Homes, the co-issuers of the 2019 Notes and 2024 Notes, is presented together in the column titled “Issuer”.
Condensed Consolidating Balance Sheet (in thousands):

	
																
 	June 30, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	125,531		 	$	114,375		 	$	—		 	$	239,906		
Receivables	15,801		 	43,810		 	—		 	59,611		
Intercompany receivables	915,563		 	—		 	(915,563	)	 	—		
Real estate inventories	811,746		 	2,436,040		 	—		 	3,247,786		
Investments in unconsolidated entities	—		 	4,169		 	—		 	4,169		
Goodwill and other intangible assets, net	156,604		 	4,090		 	—		 	160,694		
Investments in subsidiaries	1,534,825		 	—		 	(1,534,825	)	 	—		
Deferred tax assets, net	10,892		 	55,522		 	—		 	66,414		
Other assets	11,461		 	82,644		 	—		 	94,105		
Total assets	$	3,582,423		 	$	2,740,650		 	$	(2,450,388	)	 	$	3,872,685		
 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	
Accounts payable	$	14,608		 	$	74,328		 	$	—		 	$	88,936		
Intercompany payables	—		 	915,563		 	(915,563	)	 	—		
Accrued expenses and other liabilities	82,747		 	215,330		 	—		 	298,077		
Senior notes	1,453,366		 	—		 	—		 	1,453,366		
Total liabilities	1,550,721		 	1,205,221		 	(915,563	)	 	1,840,379		
 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	
Total stockholders’ equity	2,031,702		 	1,534,825		 	(1,534,825	)	 	2,031,702		
Noncontrolling interests	—		 	604		 	—		 	604		
Total equity	2,031,702		 	1,535,429		 	(1,534,825	)	 	2,032,306		
Total liabilities and equity	$	3,582,423		 	$	2,740,650		 	$	(2,450,388	)	 	$	3,872,685		

- 28 -

Condensed Consolidating Balance Sheet (in thousands):

	
																
 	December 31, 2017	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Assets	 	 	 	 	 	 	 	
Cash and cash equivalents	$	176,684		 	$	106,230		 	$	—		 	$	282,914		
Receivables	56,021		 	69,579		 	—		 	125,600		
Intercompany receivables	794,550		 	—		 	(794,550	)	 	—		
Real estate inventories	855,727		 	2,249,826		 	—		 	3,105,553		
Investments in unconsolidated entities	—		 	5,870		 	—		 	5,870		
Goodwill and other intangible assets, net	156,604		 	4,357		 	—		 	160,961		
Investments in subsidiaries	1,448,690		 	—		 	(1,448,690	)	 	—		
Deferred tax assets, net	10,892		 	65,521		 	—		 	76,413		
Other assets	3,465		 	44,605		 	—		 	48,070		
Total assets	$	3,502,633		 	$	2,545,988		 	$	(2,243,240	)	 	$	3,805,381		
 	 	 	 	 	 	 	 	
Liabilities	 	 	 	 	 	 	 	
Accounts payable	$	9,364		 	$	63,506		 	$	—		 	$	72,870		
Intercompany payables	—		 	794,550		 	(794,550	)	 	—		
Accrued expenses and other liabilities	92,245		 	238,637		 	—		 	330,882		
Senior notes	1,471,302		 	—		 	—		 	1,471,302		
Total liabilities	1,572,911		 	1,096,693		 	(794,550	)	 	1,875,054		
 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	
Total stockholders’ equity	1,929,722		 	1,448,690		 	(1,448,690	)	 	1,929,722		
Noncontrolling interests	—		 	605		 	—		 	605		
Total equity	1,929,722		 	1,449,295		 	(1,448,690	)	 	1,930,327		
Total liabilities and equity	$	3,502,633		 	$	2,545,988		 	$	(2,243,240	)	 	$	3,805,381		

- 29 -

Condensed Consolidating Statement of Operations (in thousands):

	
																
 	Three Months Ended June 30, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	255,642		 	$	513,153		 	$	—		 	$	768,795		
Land and lot sales revenue	—		 	1,518		 	—		 	1,518		
Other operations revenue	—		 	599		 	—		 	599		
Total revenues	255,642		 	515,270		 	—		 	770,912		
Cost of home sales	213,038		 	391,058		 	—		 	604,096		
Cost of land and lot sales	—		 	1,426		 	—		 	1,426		
Other operations expense	—		 	589		 	—		 	589		
Sales and marketing	11,992		 	33,752		 	—		 	45,744		
General and administrative	17,941		 	18,542		 	—		 	36,483		
Homebuilding income from operations	12,671		 	69,903		 	—		 	82,574		
Equity in income of unconsolidated entities	—		 	69		 	—		 	69		
Other (expense) income, net	(104	)	 	31		 	—		 	(73	)	
Homebuilding income before income taxes	12,567		 	70,003		 	—		 	82,570		
Financial Services:	 	 	 	 	 	 	 	
Revenues	—		 	391		 	—		 	391		
Expenses	—		 	129		 	—		 	129		
Equity in income of unconsolidated entities	—		 	1,984		 	—		 	1,984		
Financial services income before income taxes	—		 	2,246		 	—		 	2,246		
Income before income taxes	12,567		 	72,249		 	—		 	84,816		
Equity of net income of subsidiaries	51,113		 	—		 	(51,113	)	 	—		
Provision for income taxes	—		 	(21,136	)	 	—		 	(21,136	)	
Net income	63,680		 	51,113		 	(51,113	)	 	63,680		
Net income attributable to noncontrolling interests	—		 	—		 	—		 	—		
Net income available to common stockholders	$	63,680		 	$	51,113		 	$	(51,113	)	 	$	63,680		

- 30 -

 
Condensed Consolidating Statement of Operations (in thousands):

	
																
 	Three Months Ended June 30, 2017	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	154,212		 	$	414,604		 	$	—		 	$	568,816		
Land and lot sales revenue	—		 	865		 	—		 	865		
Other operations revenue	—		 	600		 	—		 	600		
Total revenues	154,212		 	416,069		 	—		 	570,281		
Cost of home sales	132,859		 	321,382		 	—		 	454,241		
Cost of land and lot sales	—		 	644		 	—		 	644		
Other operations expense	—		 	591		 	—		 	591		
Sales and marketing	6,966		 	25,364		 	—		 	32,330		
General and administrative	16,304		 	17,384		 	—		 	33,688		
Homebuilding (loss) income from operations	(1,917	)	 	50,704		 	—		 	48,787		
Equity in income of unconsolidated entities	—		 	1,508		 	—		 	1,508		
Other income, net	9		 	35		 	—		 	44		
Homebuilding (loss) income before income taxes	(1,908	)	 	52,247		 	—		 	50,339		
Financial Services:	 	 	 	 	 	 	 	
Revenues	—		 	345		 	—		 	345		
Expenses	—		 	77		 	—		 	77		
Equity in income of unconsolidated entities	—		 	1,294		 	—		 	1,294		
Financial services income before income taxes	—		 	1,562		 	—		 	1,562		
(Loss) income before income taxes	(1,908	)	 	53,809		 	—		 	51,901		
Equity of net income of subsidiaries	34,415		 	—		 	(34,415	)	 	—		
Benefit (provision) for income taxes	207		 	(19,305	)	 	—		 	(19,098	)	
Net income	32,714		 	34,504		 	(34,415	)	 	32,803		
Net income attributable to noncontrolling interests	—		 	(89	)	 	—		 	(89	)	
Net income available to common stockholders	$	32,714		 	$	34,415		 	$	(34,415	)	 	$	32,714		

- 31 -

Condensed Consolidating Statement of Operations (in thousands):

	
																
 	Six Months Ended June 30, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	446,062		 	$	905,305		 	$	—		 	$	1,351,367		
Land and lot sales revenue	—		 	1,741		 	—		 	1,741		
Other operations revenue	—		 	1,197		 	—		 	1,197		
Total revenues	446,062		 	908,243		 	—		 	1,354,305		
Cost of home sales	372,093		 	682,505		 	—		 	1,054,598		
Cost of land and lot sales	—		 	1,929		 	—		 	1,929		
Other operations expense	—		 	1,191		 	—		 	1,191		
Sales and marketing	22,509		 	61,518		 	—		 	84,027		
General and administrative	36,100		 	37,197		 	—		 	73,297		
Homebuilding income from operations	15,360		 	123,903		 	—		 	139,263		
Equity in loss of unconsolidated entities	—		 	(399	)	 	—		 	(399	)	
Other income, net	35		 	63		 	—		 	98		
Homebuilding income before income taxes	15,395		 	123,567		 	—		 	138,962		
Financial Services:	 	 	 	 	 	 	 	
Revenues	—		 	674		 	—		 	674		
Expenses	—		 	266		 	—		 	266		
Equity in income of unconsolidated entities	—		 	2,986		 	—		 	2,986		
Financial services income before income taxes	—		 	3,394		 	—		 	3,394		
Income before income taxes	15,395		 	126,961		 	—		 	142,356		
Equity of net income of subsidiaries	91,165		 	—		 	(91,165	)	 	—		
Provision for income taxes	—		 	(35,796	)	 	—		 	(35,796	)	
Net income	106,560		 	91,165		 	(91,165	)	 	106,560		
Net income attributable to noncontrolling interests	—		 	—		 	—		 	—		
Net income available to common stockholders	$	106,560		 	$	91,165		 	$	(91,165	)	 	$	106,560		

- 32 -

Condensed Consolidating Statement of Operations (in thousands):

	
																
 	Six Months Ended June 30, 2017	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Homebuilding:	 	 	 	 	 	 	 	
Home sales revenue	$	285,049		 	$	675,771		 	$	—		 	$	960,820		
Land and lot sales revenue	—		 	1,443		 	—		 	1,443		
Other operations revenue	—		 	1,168		 	—		 	1,168		
Total revenues	285,049		 	678,382		 	—		 	963,431		
Cost of home sales	245,117		 	527,528		 	—		 	772,645		
Cost of land and lot sales	—		 	1,298		 	—		 	1,298		
Other operations expense	—		 	1,151		 	—		 	1,151		
Sales and marketing	13,449		 	45,581		 	—		 	59,030		
General and administrative	33,553		 	34,784		 	—		 	68,337		
Homebuilding (loss) income from operations	(7,070	)	 	68,040		 	—		 	60,970		
Equity in income of unconsolidated entities	—		 	1,646		 	—		 	1,646		
Other income, net	18		 	103		 	—		 	121		
Homebuilding (loss) income before income taxes	(7,052	)	 	69,789		 	—		 	62,737		
Financial Services:	 	 	 	 	 	 	 	
Revenues	—		 	586		 	—		 	586		
Expenses	—		 	151		 	—		 	151		
Equity in income of unconsolidated entities	—		 	1,560		 	—		 	1,560		
Financial services income before income taxes	—		 	1,995		 	—		 	1,995		
(Loss) income before income taxes	(7,052	)	 	71,784		 	—		 	64,732		
Equity of net income of subsidiaries	43,452		 	—		 	(43,452	)	 	—		
Benefit (provision) for income taxes	4,507		 	(28,219	)	 	—		 	(23,712	)	
Net income	40,907		 	43,565		 	(43,452	)	 	41,020		
Net income attributable to noncontrolling interests	—		 	(113	)	 	—		 	(113	)	
Net income available to common stockholders	$	40,907		 	$	43,452		 	$	(43,452	)	 	$	40,907		

- 33 -

Condensed Consolidating Statement of Cash Flows (in thousands):

	
																
 	Six Months Ended June 30, 2018	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Cash flows from operating activities:	 	 	 	 	 	 	 	
Net cash provided by (used in) operating activities	$	97,711		 	$	(97,760	)	 	$	—		 	$	(49	)	
Cash flows from investing activities:	 	 	 	 	 	 	 	
Purchases of property and equipment	(4,148	)	 	(11,534	)	 	—		 	(15,682	)	
Proceeds from sale of property and equipment	—		 	3		 	—		 	3		
Investments in unconsolidated entities	—		 	(1,178	)	 	—		 	(1,178	)	
Intercompany	(118,615	)	 	—		 	118,615		 	—		
Net cash (used in) provided by investing activities	(122,763	)	 	(12,709	)	 	118,615		 	(16,857	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	
Repayment of debt	(21,685	)	 	—		 	—		 	(21,685	)	
Distributions to noncontrolling interests	—		 	(1	)	 	—		 	(1	)	
Proceeds from issuance of common stock under
   share-based awards	1,633		 	—		 	—		 	1,633		
Minimum tax withholding paid on behalf of employees for
   restricted stock units	(6,049	)	 	—		 	—		 	(6,049	)	
Intercompany	—		 	118,615		 	(118,615	)	 	—		
Net cash (used in) provided by financing activities	(26,101	)	 	118,614		 	(118,615	)	 	(26,102	)	
Net (decrease) increase in cash and cash equivalents	(51,153	)	 	8,145		 	—		 	(43,008	)	
Cash and cash equivalents - beginning of period	176,684		 	106,230		 	—		 	282,914		
Cash and cash equivalents - end of period	$	125,531		 	$	114,375		 	$	—		 	$	239,906		

- 34 -

Condensed Consolidating Statement of Cash Flows (in thousands):

	
																
 	Six Months Ended June 30, 2017	
 	Issuer	 	Guarantor
Subsidiaries	 	Consolidating
Adjustments	 	Consolidated
TRI Pointe
Group, Inc.	
Cash flows from operating activities:	 	 	 	 	 	 	 	
Net cash used in operating activities	$	(38,171	)	 	$	(182,529	)	 	$	—		 	$	(220,700	)	
Cash flows from investing activities:	 	 	 	 	 	 	 	
Purchases of property and equipment	(1,232	)	 	(561	)	 	—		 	(1,793	)	
Proceeds from sale of property and equipment	—		 	6		 	—		 	6		
Investments in unconsolidated entities	—		 	(462	)	 	—		 	(462	)	
Intercompany	(184,084	)	 	—		 	184,084		 	—		
Net cash used in investing activities	(185,316	)	 	(1,017	)	 	184,084		 	(2,249	)	
Cash flows from financing activities:	 	 	 	 	 	 	 	
Borrowings from notes payable	450,000		 	—		 	—		 	450,000		
Repayment of notes payable	(213,726	)	 	—		 	—		 	(213,726	)	
Debt issuance costs	(5,906	)	 	—		 	—		 	(5,906	)	
Distributions to noncontrolling interests	—		 	(987	)	 	—		 	(987	)	
Proceeds from issuance of common stock under
   share-based awards	2,449		 	—		 	—		 	2,449		
Minimum tax withholding paid on behalf of employees for restricted stock units	(2,896	)	 	—		 	—		 	(2,896	)	
Share repurchases	(99,697	)	 	—		 	—		 	(99,697	)	
Intercompany	—		 	184,084		 	(184,084	)	 	—		
Net cash provided by financing activities	130,224		 	183,097		 	(184,084	)	 	129,237		
Net decrease in cash and cash equivalents	(93,263	)	 	(449	)	 	—		 	(93,712	)	
Cash and cash equivalents - beginning of period	141,568		 	67,089		 	—		 	208,657		
Cash and cash equivalents - end of period	$	48,305		 	$	66,640		 	$	—		 	$	114,945		

- 35 -

		
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 certain statements that are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based on our current intentions, beliefs, expectations and predictions for the future, and you should not place undue reliance on these statements. These statements use forward-looking terminology, are based on various assumptions made by us, and may not be accurate because of risks and uncertainties surrounding the assumptions that are made.
Factors listed in this section – as well as other factors not included – may cause actual results to differ significantly from the forward-looking statements included in this Quarterly Report on Form 10-Q. There is no guarantee that any of the events anticipated by the forward-looking statements in this Quarterly Report on Form 10-Q will occur, or if any of the events occurs, there is no guarantee what effect it will have on our operations, financial condition, or share price.
We undertake no, and hereby disclaim any, obligation to update or revise any forward-looking statements, unless required by law. However, we reserve the right to make such updates or revisions from time to time by press release, periodic report, or other method of public disclosure without the need for specific reference to this Quarterly Report on Form 10-Q. No such update or revision shall be deemed to indicate that other statements not addressed by such update or revision remain correct or create an obligation to provide any other updates or revisions.
Forward-Looking Statements
Forward-looking statements that are included in this Quarterly Report on Form 10-Q are generally accompanied by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “future,” “goal,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would,” or other words that convey the uncertainty of future events or outcomes. These forward-looking statements may include, but are not limited to, statements regarding our strategy, projections and estimates concerning the timing and success of specific projects and our future production, land and lot sales, the outcome of legal proceedings, the anticipated impact of natural disasters on our operations, operational and financial results, including our estimates for growth, financial condition, sales prices, prospects and capital spending.
Risks, Uncertainties and Assumptions
The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:
		
•	the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar;	
		
•	market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;	
		
•	levels of competition;	
		
•	the successful execution of our internal performance plans, including restructuring and cost reduction initiatives;	
		
•	global economic conditions;	
		
•	raw material and labor prices and availability;	
		
•	oil and other energy prices;	
		
•	the effect of weather, including the re-occurrence of drought conditions in California;  	
		
•	the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters;	
		
•	transportation costs;	
		
•	federal and state tax policies;	
		
•	the effect of land use, environment and other governmental laws and regulations;	
		
•	legal proceedings or disputes and the adequacy of reserves;	
		
•	risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects;	
		
•	changes in accounting principles;	

- 36 -

		
•	risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and	
		
•	other factors described in “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2017 and in other filings we make with the Securities and Exchange Commission (“SEC”).	
The following discussion and analysis should be read in conjunction with our consolidated financial statements and related condensed notes thereto contained elsewhere in this Quarterly Report on Form 10-Q. The information contained in this Quarterly Report on Form 10-Q is not a complete description of our business or the risks associated with an investment in our securities. We urge investors to review and consider carefully the various disclosures made by us in this report and in our other reports filed with the SEC, including our Annual Report on Form 10-K for the year ended December 31, 2017 and subsequent reports on Form 8-K, which discuss our business in greater detail. The section entitled “Risk Factors” set forth in Item 1A of our Annual Report on Form 10-K, and similar disclosures in our other SEC filings, discuss some of the important risk factors that may affect our business, results of operations and financial condition. Investors should carefully consider those risks, in addition to the information in this report and in our other filings with the SEC, before deciding to invest in, or maintain an investment in, our common stock.
Overview and Outlook
We continue to be encouraged by the strength of the overall U.S. new-home market, which continues to be supported by strong general economic conditions, historically low unemployment levels and modest wage gains, combined with a limited supply of new and existing homes. Nevertheless, we continue to see variability from market to market with demand mostly driven by general local economic conditions. In certain of our markets, price and affordability issues are potentially limiting demand. Additionally, homebuilding activity in many markets continues to be constrained by land and labor availability, as well as fee increases and delays imposed by local municipalities, which we expect will continue to constrict supply. While the limited supply and production deficits have supported price appreciation in many markets, these increases have been partially or sometimes fully offset by increases in labor and material costs and we expect that these construction cost pressures will continue.  We continue to monitor the impact of rising interest rates, which could challenge our ability to capture steady price increases in certain markets and could negatively impact our sales pace. Overall, we believe demand trends will result in a continued growth trajectory in the homebuilding market, with consumer, job and household formation growth serving as leading indicators of positive demand, offset by the downward supply pressures described above. While market conditions remain generally strong, we continue to monitor the potential impact of political policy, most notably the potential cost pressures and overall economic impact resulting from modified international trade tariffs.
Our results for the three and six months ended June 30, 2018 support our generally positive outlook. For the quarter ended June 30, 2018, deliveries increased 13% from the prior-year period and average sales price increased 19%, fueling a 35% increase in home sales revenue. The increase in new home deliveries was accompanied by a 130 basis point increase in homebuilding gross margins and a 90 basis point reduction in selling, general and administrative expense as a percentage of home sales revenues. New home orders were down 7% compared to the prior-year period, and backlog units at quarter end were up 8% compared to the end of the prior-year period, with backlog dollar value up 13%. The average sales price of homes in backlog at quarter end was $668,000, the highest quarter end level we have experienced since the inception of TRI Pointe Group.

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Consolidated Financial Data (in thousands, except per share amounts):

	
																
 	Three Months Ended June 30,	 	Six Months Ended June 30,	
 	2018	 	2017	 	2018	 	2017	
Homebuilding:	 		 	 		 	 	 	 	
Home sales revenue	$	768,795		 	$	568,816		 	$	1,351,367		 	$	960,820		
Land and lot sales revenue	1,518		 	865		 	1,741		 	1,443		
Other operations revenue	599		 	600		 	1,197		 	1,168		
Total revenues	770,912		 	570,281		 	1,354,305		 	963,431		
Cost of home sales	604,096		 	454,241		 	1,054,598		 	772,645		
Cost of land and lot sales	1,426		 	644		 	1,929		 	1,298		
Other operations expense	589		 	591		 	1,191		 	1,151		
Sales and marketing	45,744		 	32,330		 	84,027		 	59,030		
General and administrative	36,483		 	33,688		 	73,297		 	68,337		
Homebuilding income from operations	82,574		 	48,787		 	139,263		 	60,970		
Equity in income (loss) of unconsolidated entities	69		 	1,508		 	(399	)	 	1,646		
Other (expense) income, net	(73	)	 	44		 	98		 	121		
Homebuilding income before income taxes	82,570		 	50,339		 	138,962		 	62,737		
Financial Services:	 	 	 	 	 	 	 	
Revenues	391		 	345		 	674		 	586		
Expenses	129		 	77		 	266		 	151		
Equity in income of unconsolidated entities	1,984		 	1,294		 	2,986		 	1,560		
Financial services income before income taxes	2,246		 	1,562		 	3,394		 	1,995		
Income before income taxes	84,816		 	51,901		 	142,356		 	64,732		
Provision for income taxes	(21,136	)	 	(19,098	)	 	(35,796	)	 	(23,712	)	
Net income	63,680		 	32,803		 	106,560		 	41,020		
Net income attributable to noncontrolling interests	—		 	(89	)	 	—		 	(113	)	
Net income available to common stockholders	$	63,680		 	$	32,714		 	$	106,560		 	$	40,907		
Earnings per share	 	 	 		 	 	 	 		
Basic	$	0.42		 	$	0.21		 	$	0.70		 	$	0.26		
Diluted	$	0.42		 	$	0.21		 	$	0.70		 	$	0.26		
Three Months Ended June 30, 2018 Compared to Three Months Ended June 30, 2017
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment

	
																											
 	Three Months Ended June 30, 2018	 	Three Months Ended June 30, 2017	 	Percentage Change	
 	Net New
Home
Orders	 	Average
Selling
Communities	 	Monthly
Absorption
Rates	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Monthly
Absorption
Rates	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Monthly
Absorption
Rates	
Maracay	132		 	14.2		 	3.1		 	162		 	16.0		 	3.4		 	(19	)%	 	(11	)%	 	(8	)%	
Pardee Homes	464		 	33.5		 	4.6		 	483		 	28.8		 	5.6		 	(4	)%	 	16	 %	 	(17	)%	
Quadrant Homes	54		 	6.3		 	2.9		 	107		 	6.8		 	5.2		 	(50	)%	 	(7	)%	 	(46	)%	
Trendmaker Homes	161		 	29.0		 	1.9		 	129		 	31.7		 	1.4		 	25	 %	 	(9	)%	 	36	 %	
TRI Pointe Homes	408		 	33.8		 	4.0		 	413		 	31.5		 	4.4		 	(1	)%	 	7	 %	 	(8	)%	
Winchester Homes	124		 	14.0		 	3.0		 	151		 	12.0		 	4.2		 	(18	)%	 	17	 %	 	(30	)%	
Total	1,343		 	130.8		 	3.4		 	1,445		 	126.8		 	3.8		 	(7	)%	 	3	 %	 	(10	)%	

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Net new home orders for the three months ended June 30, 2018 decreased by 102 orders, or 7%, to 1,343 , compared to 1,445 during the prior-year period.  The decrease in net new home orders was due to a 10% decrease in monthly absorption rates, slightly offset by a 3% increase in average selling communities.
Maracay reported a 19% decrease in net new home orders driven by an 11% decrease in average selling communities and an 8% decrease in monthly absorption rate. The decrease in average selling communities was due to the timing of the opening and closing of communities. Maracay continued to experience strong market conditions in Arizona, as demonstrated by a monthly absorption rate of 3.1 homes per community. Pardee Homes reported a 4% decrease in net new home orders driven by a 17% decrease in monthly absorption rate, offset by a 16% increase in average selling communities. The decrease in monthly absorption rate was primarily due to the fact that the prior-year period included a high absorbing entry level attached community in San Diego with no similar project in the current period. Overall demand remained strong at Pardee Homes with an absorption rate of 4.6 homes per community per month. The increase in average selling communities was a result of increased community count in the Los Angeles, Inland Empire and Las Vegas markets, offset by a decrease in San Diego. Net new home orders decreased 50% at Quadrant Homes due primarily to a 46% decrease in monthly absorption rate compared to the prior-year period. The decrease in absorption rate at Quadrant Homes was due to the timing of new community openings and a higher priced but slower absorbing product mix compared to the prior year, as evidenced by the 32% increase in average sales price in backlog as of June 30, 2018 compared to the same period in the prior year. Trendmaker Homes’ net new home orders increased 25% due to a 36% increase in monthly absorption rate offset by a 9% decrease in average selling communities. The increase in absorption rate was due to improved market conditions in Houston during the quarter. TRI Pointe Homes’ net new home orders decreased 1% due to an 8% decrease in monthly absorption rate offset by a 7% increase in average selling communities. Demand remained strong in the markets in which TRI Pointe Homes builds, as evidenced by a monthly absorption rate of 4.0 homes per community at average selling prices above the Company average. Winchester Homes reported an 18% decrease in net new home orders as a result of a 30% decrease in monthly absorption rate, offset by a 17% increase in average selling communities. The decrease in monthly absorption rate was due to changes in product mix, with fewer high absorbing attached communities compared to the prior-year period.
Backlog Units, Dollar Value and Average Sales Price by Segment (dollars in thousands)

																															
 	As of June 30, 2018	 	As of June 30, 2017	 	Percentage Change	
 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	 	Backlog
Units	 	Backlog
Dollar
Value	 	Average
Sales
Price	
Maracay	256		 	$	134,138		 	$	524		 	311		 	$	156,611		 	$	504		 	(18	)%	 	(14	)%	 	4	 %	
Pardee Homes	695		 	451,860		 	650		 	553		 	369,021		 	667		 	26	 %	 	22	 %	 	(3	)%	
Quadrant Homes	138		 	130,270		 	944		 	201		 	144,204		 	717		 	(31	)%	 	(10	)%	 	32	 %	
Trendmaker Homes	250		 	145,046		 	580		 	204		 	105,663		 	518		 	23	 %	 	37	 %	 	12	 %	
TRI Pointe Homes	728		 	523,907		 	720		 	613		 	428,281		 	699		 	19	 %	 	22	 %	 	3	 %	
Winchester Homes	204		 	132,875		 	651		 	226		 	135,437		 	599		 	(10	)%	 	(2	)%	 	9	 %	
Total	2,271		 	$	1,518,096		 	$	668		 	2,108		 	$	1,339,217		 	$	635		 	8	 %	 	13	 %	 	5	 %	
 
Backlog units reflect the number of homes, net of actual cancellations experienced during the period, for which we have entered into a sales contract with a homebuyer but for which we have not yet delivered the home. Homes in backlog are generally delivered within three to nine months, although we may experience cancellations of sales contracts prior to delivery. Our cancellation rate of homebuyers who contracted to buy a home but cancelled prior to delivery of the home (as a percentage of overall orders) was relatively consistent at 16% compared to 15% during the prior-year period. The dollar value of backlog was approximately $1.5 billion as of June 30, 2018, an increase of $178.9 million, or 13%, compared to $1.3 billion as of June 30, 2017.  This increase was due to an increase in backlog units of 163, or 8%, to 2,271 as of June 30, 2018, compared to 2,108 as of June 30, 2017 and a 5% increase in the average sales price of homes in backlog to $668,000 as of June 30, 2018, compared to $635,000 as of June 30, 2017.
Maracay's backlog dollar value decreased 14% compared to the prior year due to an 18% decrease in backlog units, offset by a 4% increase in average sales price. The decrease in backlog units was due to the 19% decrease in net new home orders during the three months ended June 30, 2018 as a result of a decrease in average selling communities and monthly absorption rate. Pardee Homes’ backlog dollar value increased 22% due to an increase in backlog units of 26% offset by a decrease in average sales price of 3%. The increase in backlog units was due to the carryover of backlog units from the first quarter of 2018 and the timing of construction and deliveries. Quadrant Homes’ backlog dollar value decreased 10% as a result of a 31% decrease in backlog units offset by a 32% increase in average sales price. The increase in average sales price w

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as related to a higher mix of homes in backlog from the core Seattle markets of King and Snohomish counties which have higher price points and reflects the continued pricing power in this market. The decrease in backlog units was a result of the 50% decrease in new home orders for the three months ended June 30, 2018. Trendmaker Homes’ backlog dollar value increased 37% primarily due to a 23% increase in backlog units and a 12% increase in average sales price. The increase in backlog units related to the 25% increase in net new home orders for the quarter and timing of deliveries. TRI Pointe Homes’ backlog dollar value increased 22% due to a 19% increase in backlog units and a 3% increase in average selling price. The increase in backlog units was the result of the carryover of backlog units from the first quarter of 2018 and the timing of deliveries. Winchester Homes’ backlog dollar value decreased 2% driven by the 10% decrease in backlog units offset by a 9% increase in average sales price. The decrease in backlog units is a result of an 18% decrease in net new home orders for the three months ended June 30, 2018. The increase in average sales price compared to the prior year was due to mix of more detached product which generally has a higher average sales price.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)

																															
 	Three Months Ended June 30, 2018	 	Three Months Ended June 30, 2017	 	Percentage Change	
 	New
Homes
Delivered	 	Home
Sales
Revenue	 	Average
Sales
Price	 	New
Homes
Delivered	 	Home
Sales
Revenue	 	Average
Sales
Price	 	New
Homes
Delivered	 	Home
Sales
Revenue	 	Average
Sales
Price	
Maracay	121		 	$	56,949		 	$	471		 	164		 	$	75,754		 	$	462		 	(26	)%	 	(25	)%	 	2	 %	
Pardee Homes	377		 	243,286		 	645		 	372		 	180,377		 	485		 	1	 %	 	35	 %	 	33	 %	
Quadrant Homes	85		 	64,805		 	762		 	64		 	39,667		 	620		 	33	 %	 	63	 %	 	23	 %	
Trendmaker Homes	155		 	76,198		 	492		 	133		 	64,798		 	487		 	17	 %	 	18	 %	 	1	 %	
TRI Pointe Homes	347		 	255,642		 	737		 	243		 	154,212		 	635		 	43	 %	 	66	 %	 	16	 %	
Winchester Homes	130		 	71,915		 	553		 	95		 	54,008		 	569		 	37	 %	 	33	 %	 	(3	)%	
Total	1,215		 	$	768,795		 	$	633		 	1,071		 	$	568,816		 	$	531		 	13	 %	 	35	 %	 	19	 %	
 
Home sales revenue increased nearly $200.0 million, or 35%, to $768.8 million for the three months ended June 30, 2018. The increase was comprised of (i) $123.5 million related to a $102,000, or 19%, increase in average sales price of homes delivered to $633,000 for the three months ended June 30, 2018, from $531,000 in the prior-year period, and (ii) $76.5 million related to an increase in new homes delivered to 1,215 for the three months ended June 30, 2018 from 1,071 in the prior-year period.
Maracay had a 25% decrease in home sales revenue due to a 26% decrease in new homes delivered. The decrease in new home deliveries was due to the decrease in new home orders and the timing of deliveries. Pardee Homes’ home sales revenue increased 35% due to a 33% increase in average sales price. The increase in average sales price was due to a product mix shift that included a greater proportion of deliveries from our higher priced long-dated California assets. Quadrant Homes increased home sales revenue by 63% due to a 33% increase in new homes delivered and a 23% increase in average sales price. The increase in new homes delivered was due to starting the year with a higher number of backlog units compared to the prior-year period. The increase in average sales price was the result of delivering more units in the core Seattle markets of King and Snohomish counties, which have higher price points and reflects the continued pricing power in this market. Trendmaker Homes’ home sales revenue increased 18% due to a 17% increase in new homes delivered. The increase in new homes delivered was largely due to timing of deliveries, which was driven by a 17% increase in backlog units to start the quarter compared to the prior-year period. TRI Pointe Homes had a 66% increase in home sales revenue due to a 43% increase in new homes delivered and a 16% increase in average sales price. The increase in new homes delivered was driven by 51% higher backlog to start the quarter compared to the prior-year period, and the increase in average sales price was related to product mix in the quarter. Home sales revenue increased at Winchester Homes by 33% largely due to an increase in homes delivered as a result of higher backlog to start the quarter compared to the prior-year period.

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Homebuilding Gross Margins (dollars in thousands)

														
 	Three Months Ended June 30,	
 	2018	 	%	 	2017	 	%	
Home sales revenue	$	768,795		 	100.0	%	 	$	568,816		 	100.0	%	
Cost of home sales	604,096		 	78.6	%	 	454,241		 	79.9	%	
Homebuilding gross margin	164,699		 	21.4	%	 	114,575		 	20.1	%	
Add:  interest in cost of home sales	19,569		 	2.5	%	 	13,145		 	2.3	%	
Add:  impairments and lot option abandonments	609		 	0.1	%	 	507		 	0.1	%	
Adjusted homebuilding gross margin (1)	$	184,877		 	24.0	%	 	$	128,227		 	22.5	%	
Homebuilding gross margin percentage	21.4	%	 	 	 	20.1	%	 	 	
Adjusted homebuilding gross margin percentage (1)	24.0	%	 	 	 	22.5	%	 	 	
__________

(1)  	Non-GAAP financial measure (as discussed below).	
Our homebuilding gross margin percentage increased to 21.4% for the three months ended June 30, 2018 as compared to 20.1% for the prior-year period.  The increase in gross margin percentage was primarily due to the mix of deliveries from our long-dated California communities, which produce gross margins above the Company average, having a greater impact on our overall gross margin percentage compared to the prior-year period. In addition, gross margin percentage increased at each of our homebuilding segments for the quarter as compared to the prior-year period. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.0% for the three months ended June 30, 2018 , compared to 22.5% for the prior-year period.
Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Because adjusted homebuilding gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.  See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the most directly comparable GAAP measure.
Sales and Marketing, General and Administrative Expense (dollars in thousands)

														
 	Three Months Ended June 30,	 	As a Percentage of
Home Sales Revenue	
 	2018	 	2017	 	2018	 	2017	
Sales and marketing	$	45,744		 	$	32,330		 	6.0	%	 	5.7	%	
General and administrative (G&A)	36,483		 	33,688		 	4.7	%	 	5.9	%	
Total sales and marketing and G&A	$	82,227		 	$	66,018		 	10.7	%	 	11.6	%	
 
Total sales and marketing and G&A (“SG&A”) as a percentage of home sales revenue decreased to 10.7% for the three months ended June 30, 2018 , compared to 11.6% in the prior-year period. Total SG&A expense increased $16.2 million , to $82.2 million for the three months ended June 30, 2018 from $66.0 million in the prior-year period.  
Sales and marketing expense as a percentage of home sales revenue increased to 6.0% for the three months ended June 30, 2018 , compared to 5.7% for the prior-year period. The increase was due primarily to advertising costs impacted by the timing of future community openings and the accounting changes resulting from the adoption of ASC 606 on January 1, 2018. For further details on ASC 606, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. Sales and marketing expense increased to $45.7 million for the three months ended June 30, 2018 compared to $32.3 million in the prior-year period due in part to the variable cost associated with higher home sales revenue, in addition to the accounting changes resulting from the adoption of ASC 606 on January 1, 2018.
General and administrative (“G&A”) expenses as a percentage of home sales revenue decreased to 4.7% of home sales revenue for the three months ended June 30, 2018 compared to 5.9% for the prior-year period as a result of higher operating

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leverage due to the 35% increase in home sales revenue.  G&A expenses increased to $36.5 million for the three months ended June 30, 2018 compared to $33.7 million for the prior-year period primarily as a result of additional headcount to support future growth in our existing markets.
Interest
Interest, which was incurred principally to finance land acquisitions, land development and home construction, totaled $21.6 million and $19.9 million for the three months ended June 30, 2018 and 2017 , respectively.  All interest incurred in both periods was capitalized.  The increase in interest incurred during the three months ended June 30, 2018 as compared to the prior-year period was primarily attributable to the issuance of our $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “2027 Notes”) in June of 2017.
Income Tax
For the three months ended June 30, 2018 , we recorded a tax provision of $21.1 million based on an effective tax rate of 24.9% .  For the three months ended June 30, 2017 , we recorded a tax provision of $ 19.1 million based on an effective tax rate of 36.8% . The decrease in the current year income tax rate is due to enactment of the Tax Cuts and Jobs Act which reduced the federal corporate tax rate to 21% from 35%, effective January 1, 2018. The increase in provision for income taxes is due to a $32.9 million increase in income before income taxes to $84.8 million for the three months ended June 30, 2018 , compared to $51.9 million for the prior-year period.
Financial Services Segment
Income from our financial services operations increased to $2.2 million for the three months ended June 30, 2018 compared to $1.6 million for the prior-year period.  The increase in financial services income for the three months ended June 30, 2018 compared to the prior-year period relates to the growth of our mortgage financing and title services operations.  Both our mortgage financing and title service operations were started in late 2014 and have experienced steady year-over-year growth from inception. In early 2018, we further expanded our suite of financial services operations to include homeowners' insurance services. We expect the launch of these insurance agency operations will provide further growth to this segment of our business.
Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017
Net New Home Orders, Average Selling Communities and Monthly Absorption Rates by Segment

	
																											
 	Six Months Ended June 30, 2018	 	Six Months Ended June 30, 2017	 	Percentage Change	
 	Net New
Home
Orders	 	Average
Selling
Communities	 	Monthly
Absorption
Rates	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Monthly
Absorption
Rates	 	Net New
Home
Orders	 	Average
Selling
Communities	 	Monthly
Absorption
Rates	
Maracay	285		 	13.6		 	3.5		 	346		 	16.1		 	3.6		 	(18	)%	 	(16	)%	 	(3	)%	
Pardee Homes	937		 	33.1		 	4.7		 	861		 	28.6		 	5.0		 	9	 %	 	16	 %	 	(6	)%	
Quadrant Homes	162		 	6.6		 	4.1		 	227		 	7.3		 	5.2		 	(29	)%	 	(10	)%	 	(21	)%	
Trendmaker Homes	316		 	29.3		 	1.8		 	280		 	31.9		 	1.5		 	13	 %	 	(8	)%	 	20	 %	
TRI Pointe Homes	867		 	33.6		 	4.3		 	766		 	30.7		 	4.2		 	13	 %	 	9	 %	 	2	 %	
Winchester Homes	272		 	13.9		 	3.3		 	264		 	12.0		 	3.7		 	3	 %	 	16	 %	 	(11	)%	
Total	2,839		 	130.1		 	3.6		 	2,744		 	126.6		 	3.6		 	3	 %	 	3	 %	 	—	 %	
 
Net new home orders for the six months ended June 30, 2018 increased by 95 orders, or 3%, to 2,839 , compared to 2,744 during the prior-year period.  The increase in net new home orders was due to a 3% increase in average selling communities.
Maracay reported an 18% decrease in net new home orders driven by a 16% decrease in average selling communities and a 3% decrease in monthly absorption rate. The decrease in average selling communities was due to the timing of the opening and closing of communities. Maracay continued to experience strong market conditions in Arizona, as demonstrated by a monthly absorption rate of 3.5 homes per community. Pardee Homes increased net new home orders by 9% due to a 16% increase in average community count offset by a 6% decrease in monthly absorption rate. The increase in average selling

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communities was a result of increased community growth in the Los Angeles, Inland Empire and Las Vegas markets. Overall demand remained strong at Pardee Homes with an absorption rate of 4.7 homes per community per month. Net new home orders decreased 29% at Quadrant Homes due primarily to a 21% decrease in monthly absorption rate and a 10% decrease in average selling communities. The decrease in absorption rates at Quadrant Homes was due to the timing of new community openings and a higher priced but slower absorbing product mix compared to the prior year, as evidenced by the 32% increase in the average sales price in backlog as of June 30, 2018 compared to June 30, 2017. Trendmaker Homes’ net new home orders increased 13% due to a 20% increase in monthly absorption rate offset by an 8% decrease in average selling communities. The increase in absorption rates was due to improved market conditions in Houston during the six months ended June 30, 2018 compared to the prior-year period. TRI Pointe Homes’ net new home orders increased 13% due to a 9% increase in average selling communities and a 2% increase in monthly absorption rate. The increase in average selling communities was driven by community growth in our Southern California and Colorado markets. Demand remained strong in the markets in which TRI Pointe Homes builds, as evidenced by a monthly absorption rate of 4.3 homes per community at average selling prices above the Company average. Winchester Homes increased net new home orders 3% as a result of a 16% increase in average selling communities offset by an 11% decrease in monthly absorption rate. The decrease in monthly absorption rate was due to changes in product mix, with fewer higher absorbing attached communities compared to the prior-year period.
New Homes Delivered, Homes Sales Revenue and Average Sales Price by Segment (dollars in thousands)

																															
 	Six Months Ended June 30, 2018	 	Six Months Ended June 30, 2017	 	Percentage Change	
 	New
Homes
Delivered	 	Home
Sales
Revenue	 	Average
Sales
Price	 	New
Homes
Delivered	 	Home
Sales
Revenue	 	Average
Sales
Price	 	New
Homes
Delivered	 	Home
Sales
Revenue	 	Average
Sales
Price	
Maracay	246		 	$	115,404		 	$	469		 	283		 	$	126,814		 	$	448		 	(13	)%	 	(9	)%	 	5	%	
Pardee Homes	651		 	423,756		 	651		 	568		 	264,076		 	465		 	15	 %	 	60	 %	 	40	%	
Quadrant Homes	168		 	126,111		 	751		 	127		 	79,550		 	626		 	32	 %	 	59	 %	 	20	%	
Trendmaker Homes	239		 	117,383		 	491		 	239		 	116,737		 	488		 	—	 %	 	1	 %	 	1	%	
TRI Pointe Homes	616		 	446,062		 	724		 	451		 	285,049		 	632		 	37	 %	 	56	 %	 	15	%	
Winchester Homes	219		 	122,651		 	560		 	161		 	88,594		 	550		 	36	 %	 	38	 %	 	2	%	
Total	2,139		 	$	1,351,367		 	$	632		 	1,829		 	$	960,820		 	$	525		 	17	 %	 	41	 %	 	20	%	
 
Home sales revenue increased $390.5 million, or 41%, to $1.4 billion for the six months ended June 30, 2018. The increase was comprised of (i) $227.7 million related to an increase in new homes delivered to 2,139 for the six months ended June 30, 2018 from 1,829 in the prior-year period, and (ii) $162.9 million related to a $107,000, or 20%, increase in average sales price of homes delivered to $632,000 for the six months ended June 30, 2018, from $525,000 in the prior-year period.
Maracay had a 9% decrease in home sales revenue due to a 13% decrease in new homes delivered, offset by a 5% increase in average sales price. The decrease in new home deliveries was due to the decrease in new home orders and the timing of deliveries. Pardee Homes’ home sales revenue increased 60% due to a 40% increase in average sales price and a 15% increase in new homes delivered. The increase in average sales price was due to a product mix shift that included a greater proportion of deliveries from our higher priced long-dated California assets. Quadrant Homes increased home sales revenue by 59% due to a 32% increase in new homes delivered and a 20% increase in average sales price. The increase in average sales price was the result of delivering more units in the core Seattle markets of King and Snohomish counties, which have higher price points and reflects the continued pricing power in this market. Trendmaker Homes’ home sales revenue remained relatively flat compared to the prior year. TRI Pointe Homes had a 56% increase in home sales revenue due to a 37% increase in new homes delivered and a 15% increase in average sales price. The increase in new homes delivered was driven by a greater number of backlog units to start the year compared to the prior-year period, and the increase in average sales price was related to product mix in the quarter. Home sales revenue increased at Winchester Homes by 38% largely due to an increase in homes delivered as a result of a greater number of backlog units to start the year compared to the prior-year period.

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Homebuilding Gross Margins (dollars in thousands)

														
 	Six Months Ended June 30,	
 	2018	 	%	 	2017	 	%	
Home sales revenue	$	1,351,367		 	100.0	%	 	$	960,820		 	100.0	%	
Cost of home sales	1,054,598		 	78.0	%	 	772,645		 	80.4	%	
Homebuilding gross margin	296,769		 	22.0	%	 	188,175		 	19.6	%	
Add:  interest in cost of home sales	33,798		 	2.5	%	 	22,825		 	2.4	%	
Add:  impairments and lot option abandonments	857		 	0.1	%	 	795		 	0.1	%	
Adjusted homebuilding gross margin (1)	$	331,424		 	24.5	%	 	$	211,795		 	22.0	%	
Homebuilding gross margin percentage	22.0	%	 	 	 	19.6	%	 	 	
Adjusted homebuilding gross margin percentage (1)	24.5	%	 	 	 	22.0	%	 	 	
__________

(1)  	Non-GAAP financial measure (as discussed below).	
Our homebuilding gross margin percentage increased to 22.0% for the six months ended June 30, 2018 as compared to 19.6% for the prior-year period.  The increase in gross margin percentage was primarily due to the mix of new home deliveries from our long-dated California communities, which produce gross margins above the Company average, having a greater impact on our overall gross margin percentage compared to the prior-year period. In addition, gross margin percentage increased at each of our homebuilding segments for the six months ended June 30, 2018 as compared to the prior-year period. Excluding interest and impairment and lot option abandonments in cost of home sales, adjusted homebuilding gross margin percentage was 24.5% for the six months ended June 30, 2018, compared to 22.0% for the prior-year period.
Adjusted homebuilding gross margin is a non-GAAP financial measure. We believe this information is meaningful as it isolates the impact that leverage and noncash charges have on homebuilding gross margin and permits investors to make better comparisons with our competitors, who adjust gross margins in a similar fashion. Because adjusted homebuilding gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.  See the table above reconciling this non-GAAP financial measure to homebuilding gross margin, the most directly comparable GAAP measure.
Sales and Marketing, General and Administrative Expense (dollars in thousands)

														
 	Six Months Ended June 30,	 	As a Percentage of
Home Sales Revenue	
 	2018	 	2017	 	2018	 	2017	
Sales and marketing	$	84,027		 	$	59,030		 	6.2	%	 	6.1	%	
General and administrative (G&A)	73,297		 	68,337		 	5.4	%	 	7.1	%	
Total sales and marketing and G&A	$	157,324		 	$	127,367		 	11.6	%	 	13.3	%	
 
Total sales and marketing and G&A (“SG&A”) as a percentage of home sales revenue decreased to 11.6% for the six months ended June 30, 2018 , compared to 13.3% for the prior-year period. Total SG&A expense increased $29.9 million, to $157.3 million for the six months ended June 30, 2018 from $127.4 million in the prior-year period.  
Sales and marketing expense as a percentage of home sales revenue increased to 6.2% for the six months ended June 30, 2018 , compared to 6.1% for the prior-year period. The increase was due primarily to advertising costs impacted by the timing of future community openings. This was mostly offset by the higher operating leverage on the fixed components of sales and marketing expenses as a result of the 41% increase in homes sales revenue. Sales and marketing expense increased to $84.0 million for the six months ended June 30, 2018 compared to $59.0 million in the prior-year period due to higher advertising costs and the variable cost associated with higher home sales revenue, in addition to the accounting changes resulting from the adoption of ASC 606 on January 1, 2018. For further details on ASC 606, see Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

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General and administrative (“G&A”) expenses as a percentage of home sales revenue decreased to 5.4% of home sales revenue for the six months ended June 30, 2018 compared to 7.1% for the prior-year period as a result of higher operating leverage due to the 41% increase in home sales revenue.  G&A expenses increased to $73.3 million for the six months ended June 30, 2018 compared to $68.3 million in the prior-year period primarily as a result of additional headcount to support future growth in our existing markets.
Interest
Interest, which was incurred principally to finance land acquisitions, land development and home construction, totaled $43.1 million and $38.8 million for the six months ended June 30, 2018 and 2017 , respectively.  All interest incurred in both periods was capitalized.  The increase in interest incurred during the six months ended June 30, 2018 as compared to the prior-year period was primarily attributable to the issuance in June of 2017 of our $300 million aggregate principal amount of 5.250% Senior Notes due 2027 (the “2027 Notes”).
Income Tax
For the six months ended June 30, 2018 , we recorded a tax provision of $35.8 million based on an effective tax rate of 25.1% .  For the six months ended June 30, 2017 , we recorded a tax provision of $23.7 million based on an effective tax rate of 36.6% . The decrease in the current year income tax rate is due to enactment of the Tax Cuts and Jobs Act which reduced the federal corporate tax rate to 21% from 35%, effective January 1, 2018. The increase in provision for income taxes is due to a $77.6 million increase in income before income taxes to $142.4 million for the six months ended June 30, 2018 , compared to $64.7 million for the prior-year period.
Financial Services Segment
Income from our financial services operations increased to $3.4 million for the six months ended June 30, 2018 compared to $2.0 million for the prior-year period.  The increase in financial services income for the six months ended June 30, 2018 compared to the prior-year period relates to the growth of our mortgage financing and title services operations.  Both our mortgage financing and title service operations were started in late 2014 and have experienced steady year-over-year growth from inception. In early 2018, we further expanded our suite of financial services operations to include homeowners' insurance services. We expect the launch of these insurance agency operations will provide further growth to this segment of our business.

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Lots Owned or Controlled by Segment
Excluded from owned and controlled lots are those related to Note 6, Investments in Unconsolidated Entities , to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q. The table below summarizes our lots owned or controlled by segment as of the dates presented:

												
 	June 30,	 	Increase
(Decrease)	
 	2018	 	2017	 	Amount	 	%	
Lots Owned	 	 	 	 	 	 	 	
Maracay	2,142		 	1,993		 	149		 	7	 %	
Pardee Homes	14,749		 	16,037		 	(1,288	)	 	(8	)%	
Quadrant Homes	1,073		 	1,107		 	(34	)	 	(3	)%	
Trendmaker Homes	1,443		 	1,578		 	(135	)	 	(9	)%	
TRI Pointe Homes	2,584		 	2,921		 	(337	)	 	(12	)%	
Winchester Homes	1,570		 	1,672		 	(102	)	 	(6	)%	
Total	23,561		 	25,308		 	(1,747	)	 	(7	)%	
Lots Controlled (1)	 	 	 	 	 	 	 	
Maracay	914		 	1,030		 	(116	)	 	(11	)%	
Pardee Homes	1,075		 	125		 	950		 	760	 %	
Quadrant Homes	759		 	745		 	14		 	2	 %	
Trendmaker Homes	481		 	334		 	147		 	44	 %	
TRI Pointe Homes	1,584		 	573		 	1,011		 	176	 %	
Winchester Homes	455		 	777		 	(322	)	 	(41	)%	
Total	5,268		 	3,584		 	1,684		 	47	 %	
Total Lots Owned or Controlled (1)	28,829		 	28,892		 	(63	)	 	—	 %	
__________
		
(1)  	As of June 30, 2018 and 2017 , lots controlled represented lots that were under land or lot option contracts or purchase contracts.	

Liquidity and Capital Resources
Overview
Our principal uses of capital for the six months ended June 30, 2018 were operating expenses, land purchases, land development, home construction and repurchases of our senior notes. We used funds generated by our operations to meet our short-term working capital requirements. We remain focused on generating positive margins in our homebuilding operations and acquiring desirable land positions in order to maintain a strong balance sheet and keep us poised for growth. As of June 30, 2018 , we had total liquidity of $826.7 million , including cash and cash equivalents of $239.9 million and $586.8 million of availability under the Credit Facility after considering the borrowing base provisions and outstanding letters of credit.
Our board of directors 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 availability of particular assets, and our Company as a whole, to generate cash flow to cover the expected debt service.
Senior Notes
In June 2017, TRI Pointe Group issued the 2027 Notes at 100.00% of their aggregate principal amount. Net proceeds of this issuance was $296.3 million , after debt issuance costs and discounts. The 2027 Notes mature on June 1, 2027 and interest is paid semiannually in arrears on June 1 and December 1.
In May 2016, TRI Pointe Group issued $300 million aggregate principal amount of 4.875% Senior Notes due 2021 (the “2021 Notes”) at 99.44% of their aggregate principal amount. Net proceeds of this issuance was $293.9 million , after debt issuance costs and discounts. The 2021 Notes mature on July 1, 2021 and interest is paid semiannually in arrears on January 1 and July 1.

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TRI Pointe Group and TRI Pointe Homes are co-issuers of $450 million aggregate principal amount of 4.375% Senior Notes due 2019 (“2019 Notes”) and $450 million aggregate principal amount of 5.875% Senior Notes due 2024 (“2024 Notes”). The 2019 Notes were issued at 98.89% of their aggregate principal amount and the 2024 Notes were issued at 98.15% of their aggregate principal amount. The net proceeds from the offering were $861.3 million , after debt issuance costs and discounts. The 2019 Notes and 2024 Notes mature on June 15, 2019 and June 15, 2024, respectively. Interest is payable semiannually in arrears on June 15 and December 15. During the three months ended June 30, 2018, we repurchased and cancelled an aggregate principal amount of $21.7 million of the 2019 Notes.
Our senior notes contain covenants that restrict our ability to, among other things, create liens or other encumbrances, enter into sale and leaseback transactions, or merge or sell all or substantially all of our assets. These limitations are subject to a number of qualifications and exceptions. As of June 30, 2018, we were in compliance with the covenants required by our senior notes.
Unsecured Revolving Credit Facility
On June 20, 2017, the Company modified the Credit Facility to extend the maturity date by two years to May 18, 2021, while decreasing the total commitments under the Credit Facility to $600 million from $625 million .  In addition, the Credit Facility was modified to give the Company the option to make offers to the lenders to extend the maturity date of the Credit Facility in twelve-month increments, subject to the satisfaction of certain conditions. The Credit Facility contains a sublimit of $75 million for letters of credit. The Company may borrow under the Credit Facility in the ordinary course of business to fund its operations, including its land development and homebuilding activities. Borrowings under the Credit Facility will be governed by, among other things, a borrowing base. The Credit Facility contains customary affirmative and negative covenants, including financial covenants relating to consolidated tangible net worth, leverage, and liquidity or interest coverage. Interest rates on borrowings will be based on either a daily Eurocurrency base rate or a Eurocurrency rate, in either case, plus a spread ranging from 1.25% to 2.00% depending on the Company’s leverage ratio. As of June 30, 2018 , we had no outstanding indebtedness under the Credit Facility and $586.8 million of availability after considering the borrowing base provisions and outstanding letters of credit.  At June 30, 2018 , we had outstanding letters of credit of $13.2 million .  These letters of credit were issued to secure various financial obligations.  We believe it is not probable that any outstanding letters of credit will be drawn upon.
Under the Credit Facility, we are required to comply with certain financial covenants, including, but not limited to, those set forth in the table below (dollars in thousands):

	
								
 	Actual at
June 30,	 	Covenant
Requirement at
June 30,	
Financial Covenants	2018	 	2018	
Consolidated Tangible Net Worth	$	1,871,008		 	$	1,242,779		
(Not less than $1.1 billion plus 50% of net income and
   50% of the net proceeds from equity offerings after
   March 31, 2017)	 	 	 		
Leverage Test	39.9	%	 	≤55%		
(Not to exceed 55%)	 	 	 		
Interest Coverage Test	6.1		 	≥1.5		
(Not less than 1.5:1.0)	 	 	 		
 
As of June 30, 2018 , we were in compliance with all of these financial covenants.
Stock Repurchase Program
On February 16, 2018, our board of directors discontinued and cancelled a share repurchase program approved in 2017 (the “2017 Repurchase Program”), and approved a new share repurchase program authorizing the repurchase of shares of common stock with an aggregate value of up to $100 million through March 31, 2019 (the “2018 Repurchase Program”). Purchases of common stock pursuant to the 2018 Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, 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 under the Exchange Act. We are not obligated under the 2018 Repurchase Program to repurchase any specific number or dollar amount of shares of common

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stock, and we may modify, suspend or discontinue the 2018 Repurchase Program at any time. Our management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. During the six months ended June 30, 2018, we did not repurchase any shares under either the 2017 Repurchase Program or the 2018 Repurchase Program, and we have not repurchased any shares under the 2018 Repurchase Program through the date of the filing of this Quarterly Report on Form 10-Q.
Leverage Ratios
We believe that our leverage ratios provide useful information to the users of our financial statements regarding our financial position and cash and debt management. The ratio of debt-to-capital and the ratio of net debt-to-net capital are calculated as follows (dollars in thousands):  

								
 	June 30, 2018	 	December 31, 2017	
Senior Notes	$	1,453,366		 	$	1,471,302		
Total debt	1,453,366		 	1,471,302		
Stockholders’ equity	2,031,702		 	1,929,722		
Total capital	$	3,485,068		 	$	3,401,024		
Ratio of debt-to-capital (1)	41.7	%	 	43.3	%	
 	 	 	 	
Total debt	$	1,453,366		 	$	1,471,302		
Less: Cash and cash equivalents	(239,906	)	 	(282,914	)	
Net debt	1,213,460		 	1,188,388		
Stockholders’ equity	2,031,702		 	1,929,722		
Net capital	$	3,245,162		 	$	3,118,110		
Ratio of net debt-to-net capital (2)	37.4	%	 	38.1	%	
__________

(1)  	The ratio of debt-to-capital is computed as the quotient obtained by dividing total debt by the sum of total debt plus equity.	
		
(2)  	The ratio of net debt-to-net capital is a non-GAAP financial measure and is computed as the quotient obtained by dividing net debt (which is total debt less cash and cash equivalents) by the sum of net debt plus equity. The most directly comparable GAAP financial measure is the ratio of debt-to-capital. We believe the ratio of net debt-to-net 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. See the table above reconciling this non-GAAP financial measure to the ratio of debt-to-capital.  Because the ratio of net debt-to-net capital is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for, or superior to, financial measures prepared in accordance with GAAP.	
Cash Flows— Six Months Ended June 30, 2018 Compared to Six Months Ended June 30, 2017
For the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 , the comparison of cash flows is as follows:
		
•	Net cash used in operating activities decreased by $220.7 million to $49,000 for the six months ended June 30, 2018 , from net cash used of $220.7 million for the six months ended June 30, 2017 . The change was comprised of offsetting activity, including (i) a decrease in cash outflows related to real estate inventories of $109.6 million due to timing of land acquisition and development, (ii) an increase in net income to $106.6 million in the six months ended June 30, 2018 compared to $41.0 million in the prior-year period, (iii) an increase in cash collected from receivables of $66.0 million in the six months ended June 30, 2018 compared to $9.7 million in the prior-year period, and (iv) other offsetting activity, including changes in other assets, accounts payable and accrued expenses.	
		
•	Net cash used in investing activities was $16.9 million for the six months ended June 30, 2018 , compared to $2.2 million for the prior-year period.  The increase in cash used in investing activities was due mainly to increased purchases of property and equipment and cash outflows associated with investments in unconsolidated entities.	
		
•	Net cash used in financing activities was $26.1 million for the six months ending June 30, 2018 , from net cash provided by financing activities of $129.2 million for the same period in the prior year. The change was primarily	

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driven by a decrease in net borrowings which were $236.3 million in the prior year, compared to net repayments of $21.7 million in the six months ended June 30, 2018. In addition, we used $99.7 million to repurchase shares of our common stock during the six months ended June 30, 2017 compared to none during the six months ended June 30, 2018.
Off-Balance Sheet Arrangements and Contractual Obligations
In the ordinary course of business, we enter into purchase 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 land banking arrangements as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources.  These option contracts and land banking arrangements generally require a non-refundable deposit for the right to acquire land and 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.  In some cases, however, we may be contractually obligated to complete development work even if we terminate the option to procure land or lots. As of June 30, 2018 , we had $64.5 million of cash deposits, the majority of which are non-refundable, pertaining to land and lot option contracts and purchase contracts with an aggregate remaining purchase price of $672.1 million (net of deposits).
Our utilization of land and lot option contracts and land banking arrangements is dependent on, among other things, the availability of land sellers or land banking firms willing to enter into such arrangements, the availability of capital to finance the development of optioned land and 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.
As of June 30, 2018 , we had total liquidity of $826.7 million , including cash of $239.9 million and $586.8 million of availability under the Credit Facility after considering the borrowing base provisions and outstanding letters of credit.
Inflation
Our operations 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 are often 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 during the first and second quarters of our fiscal year, 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 three to nine months to construct a new home, the number of homes delivered and associated home sales revenue typically increases in the third and fourth quarters of our fiscal year as new home orders sold earlier in the year 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 of our fiscal year, and the majority of cash receipts from home deliveries occur 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.

Description of Projects and Communities Under Development
The following table presents project information relating to each of our markets as of June 30, 2018 and includes information on current projects under development where we are building and selling homes.

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Maracay

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
June 30,
2018	 	Lots
Owned as of
June 30, 2018 (3)	 	Backlog as of
June 30,
2018 (4)(5)	 	Homes
Delivered
for the Six
Months Ended
June 30,
2018	 	Sales Price
Range
(in thousands) (6)	
Phoenix, Arizona	 	 	 	 	 	 	 	 	 	 	 	 	 	
City of Buckeye:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Verrado Victory	2015	 	98		 	67		 	31		 	12		 	18		 	 $373 - $405	
Arroyo Seco	2019	 	44		 	—		 	44		 	—		 	—		 	 $406 - $458	
City of Chandler:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Hawthorn Manor	2017	 	84		 	46		 	38		 	12		 	15		 	 $500 - $564	
Mission Estates	2019	 	26		 	—		 	26		 	—		 	—		 	 $564 - $592	
Windermere Ranch	2019	 	91		 	—		 	91		 	—		 	—		 	 $448 - $476	
City of Gilbert:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Artisan at Morrison Ranch	2016	 	105		 	104		 	1		 	1		 	19		 	$340 - $393	
The Preserve at Adora Trails	2017	 	82		 	55		 	27		 	23		 	21		 	$420 - $463	
Marathon Ranch	2018	 	63		 	—		 	63		 	13		 	—		 	$506 - $549	
Lakes At Annecy	2019	 	216		 	—		 	216		 	—		 	—		 	$280 - $333	
Lakeview Trails	2019	 	92		 	—		 	92		 	—		 	—		 	$468 - $560	
Copper Bend	2019	 	38		 	—		 	38		 	—		 	—		 	$451 - $484	
Hamstra Assemblage	2020	 	86		 	—		 	86		 	—		 	—		 	$470 - $750	
City of Goodyear:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Villages at Rio Paseo	2018	 	117		 	2		 	115		 	10		 	2		 	 $204 - $218	
Cottages at Rio Paseo	2018	 	93		 	6		 	87		 	24		 	6		 	 $238 - $257	
City of Mesa:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Kinetic Point at Eastmark	2013	 	80		 	77		 	3		 	3		 	—		 	 $297 - $376	
Curie Court at Eastmark	2016	 	106		 	91		 	15		 	15		 	33		 	 $297 - $376	
The Vista at Granite Crossing	2018	 	37		 	—		 	37		 	22		 	—		 	 $438 - $513	
Electron at Eastmark	2019	 	53		 	—		 	53		 	—		 	—		 	 $355 - $405	
Town of Peoria:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Legacy at The Meadows	2017	 	74		 	51		 	23		 	14		 	25		 	 $425 - $451	
Estates at The Meadows	2017	 	272		 	60		 	212		 	42		 	17		 	 $484 - $558	
Enclave at The Meadows	2018	 	126		 	13		 	113		 	12		 	13		 	 $385 - $480	
Riverwalk	2019	 	94		 	—		 	94		 	—		 	—		 	 $494 - $547	
City of Phoenix:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Navarro Groves	2018	 	54		 	—		 	54		 	21		 	—		 	 $429 - $474	
Avance	2019	 	394		 	—		 	394		 	—		 	—		 	 $342 - $598	
Town of Queen Creek:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Spur Cross	2020	 	118		 	—		 	118		 	—		 	—		 	 $454 - $544	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	23		 	 	
Phoenix, Arizona Total	 	 	2,643		 	572		 	2,071		 	224		 	192		 	 	
Tucson, Arizona	 	 	 	 	 	 	 	 	 	 	 	 	 	
Oro Valley:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Desert Crest - Center Pointe Vistoso	2016	 	103		 	67		 	36		 	11		 	18		 	$262 - $307	
The Cove - Center Pointe Vistoso	2016	 	83		 	68		 	15		 	8		 	19		 	$345 - $405	
Summit N & S - Center Pointe Vistoso	2016	 	88		 	74		 	14		 	9		 	9		 	$397 - $432	
The Pinnacle - Center Pointe Vistoso	2016	 	69		 	63		 	6		 	4		 	3		 	$448 - $480	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	5		 	 	
Tucson, Arizona Total	 	 	343		 	272		 	71		 	32		 	54		 	 	
Maracay Total	 	 	2,986		 	844		 	2,142		 	256		 	246		 	 	

- 50 -

Pardee Homes

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
June 30,
2018	 	Lots
Owned as of
June 30, 2018 (3)	 	Backlog as of
June 30,
2018 (4)(5)	 	Homes
Delivered
for the Six
Months Ended
June 30,
2018	 	Sales Price
Range
(in thousands) (6)	
California	 	 	 	 	 	 	 	 	 	 	 	 	 	
San Diego County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Almeria	2017	 	80		 	36		 	44		 	26		 	21		 	$1,440 - $1,550	
Olvera	2017	 	84		 	46		 	38		 	27		 	31		 	$1,315 - $1,470	
Vista Santa Fe	2019	 	44		 	—		 	44		 	—		 	—		 	$1,750 - $1,895	
Sendero	2019	 	112		 	—		 	112		 	—		 	—		 	$1,175 - $1,275	
Terraza	2019	 	81		 	—		 	81		 	—		 	—		 	$1,290 - $1,380	
Carmel	2019	 	105		 	—		 	105		 	—		 	—		 	$1,425 - $1,525	
Vista Del Mar	2019	 	79		 	—		 	79		 	—		 	—		 	$1,550 - $1,700	
Pacific Highlands Ranch Future	TBD	 	115		 	—		 	115		 	—		 	—		 	TBD	
Sandstone	2018	 	81		 	9		 	72		 	33		 	9		 	$640 - $700	
Lake Ridge	2018	 	129		 	—		 	129		 	45		 	—		 	$710 - $860	
Azul	2017	 	121		 	110		 	11		 	11		 	46		 	$360 - $475	
Veraz	2018	 	111		 	—		 	111		 	—		 	—		 	$380 - $460	
Moderna	2018	 	44		 	—		 	44		 	—		 	—		 	$355 - $440	
Ocean View Hills Future	2019	 	359		 	—		 	359		 	—		 	—		 	TBD	
Meadowood	TBD	 	845		 	—		 	845		 	—		 	—		 	$290 - $590	
South Otay Mesa	TBD	 	893		 	—		 	893		 	—		 	—		 	TBD	
Los Angeles County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Verano	2017	 	95		 	23		 	72		 	15		 	14		 	$560 - $660	
Arista	2017	 	112		 	50		 	62		 	9		 	20		 	$700 - $785	
Cresta	2018	 	67		 	—		 	67		 	15		 	5		 	$790 - $865	
Aliento - 55x100	2018	 	94		 	—		 	94		 	—		 	—		 	TBD	
Lyra	2019	 	84		 	—		 	84		 	—		 	—		 	 $648 - $715	
Sola	2019	 	73		 	—		 	73		 	—		 	—		 	 $540 - $570	
Skyline Ranch Future	TBD	 	1,063		 	—		 	1,063		 	—		 	—		 	 $550 - $810	
Riverside County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Vantage	2016	 	101		 	66		 	35		 	29		 	14		 	$390 - $410	
Overlook	2016	 	112		 	111		 	1		 	1		 	21		 	$320 - $355	
Aura	2017	 	100		 	64		 	36		 	17		 	16		 	$370 - $385	
Starling	2018	 	68		 	33		 	35		 	4		 	18		 	$420 - $430	
Canyon Hills Future 70 x 115	TBD	 	125		 	—		 	125		 	—		 	—		 	TBD	
Village @ Lakeshore	2020	 	163		 	—		 	163		 	—		 	—		 	$310 - $325	
Skycrest	2015	 	125		 	123		 	2		 	2		 	16		 	$378 - $400	
Flagstone	2016	 	79		 	75		 	4		 	1		 	11		 	$430 - $450	
Elara	2016	 	245		 	162		 	83		 	18		 	43		 	$300 - $325	
Daybreak	2017	 	158		 	45		 	113		 	16		 	20		 	$345 - $375	
Cascade	2017	 	151		 	42		 	109		 	47		 	15		 	$300 - $320	
Abrio	2018	 	126		 	—		 	126		 	25		 	—		 	$390 - $415	
Beacon	2018	 	106		 	—		 	106		 	19		 	—		 	$455 - $500	
PA13	2019	 	90		 	—		 	90		 	—		 	—		 	TBD	
Sundance Future	TBD	 	43		 	—		 	43		 	—		 	—		 	TBD	
Vita	2019	 	152		 	—		 	152		 	—		 	—		 	$305 - $315	
Avid	2019	 	103		 	—		 	103		 	—		 	—		 	$335 - $355	
Elan	2019	 	81		 	—		 	81		 	—		 	—		 	$400 - $420	
Mira	2018	 	92		 	—		 	92		 	—		 	—		 	$375 - $395	
Sundance Future Active Adult	TBD	 	276		 	—		 	276		 	—		 	—		 	TBD	
Avena	2018	 	84		 	2		 	82		 	16		 	2		 	$450 - $475	
Tamarack	2018	 	84		 	17		 	67		 	31		 	17		 	$470 - $510	
Braeburn	2018	 	82		 	—		 	82		 	3		 	—		 	TBD	
Canvas	2018	 	89		 	—		 	89		 	3		 	—		 	$400 - $420	
Kadence	2018	 	85		 	—		 	85		 	1		 	—		 	$420 - $440	

- 51 -

	
																			
Newpark	2018	 	93		 	—		 	93		 	—		 	—		 	$445 - $480	
Easton	2018	 	92		 	—		 	92		 	3		 	—		 	$470 - $520	
Tournament Hills Future	TBD	 	268		 	—		 	268		 	—		 	—		 	TBD	
Banning	2020	 	4,386		 	—		 	4,386		 	—		 	—		 	TBD	
San Joaquin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bear Creek	TBD	 	1,252		 	 	 	1,252		 	—		 	—		 	TBD	
Closed Communities	 	 	—		 	—		 	—		 	—		 	80		 	 	
California Total	 	 	13,882		 	1,014		 	12,868		 	417		 	419		 	 	
Nevada	 	 	 	 	 	 	 	 	 	 	 	 	 	
Clark County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
North Peak	2015	 	178		 	159		 	19		 	16		 	37		 	$312 - $370	
Castle Rock	2015	 	181		 	152		 	29		 	26		 	36		 	$360 - $455	
Camino	2016	 	86		 	85		 	1		 	1		 	1		 	$256 - $270	
Escala	2016	 	103		 	61		 	42		 	 	 	8		 	 $520 - $590	
Montero	2016	 	77		 	72		 	5		 	5		 	15		 	 $432 - $510	
Strada	2017	 	119		 	33		 	86		 	17		 	9		 	 $420 - $470	
Linea	2018	 	90		 	2		 	88		 	40		 	2		 	$350 - $390	
Meridian	2016	 	62		 	55		 	7		 	3		 	13		 	 $595 - $690	
Pebble Estate Future	TBD	 	8		 	—		 	8		 	—		 	—		 	 TBD	
Encanto	2016	 	51		 	44		 	7		 	2		 	10		 	 $475 - $530	
Luma	2018	 	63		 	5		 	58		 	20		 	5		 	 $480 - $525	
Evolve	2019	 	70		 	—		 	70		 	—		 	—		 	 TBD	
Horizon Terrace	2014	 	165		 	161		 	4		 	4		 	26		 	 $415 - $470	
Corterra	2018	 	112		 	—		 	112		 	—		 	—		 	 $450 - $500	
Keystone	2017	 	70		 	41		 	29		 	19		 	17		 	 $460 - $550	
Cobalt	2017	 	121		 	17		 	104		 	21		 	12		 	 $375 - $450	
Onyx	2018	 	74		 	—		 	74		 	8		 	—		 	 $450 - $480	
Axis	2017	 	78		 	16		 	62		 	23		 	6		 	 $850 - $1,125	
The Canyons at MacDonald Ranch - R	2019	 	22		 	—		 	22		 	—		 	—		 	 $515 - $585	
The Canyons at MacDonald Ranch - H	2020	 	82		 	—		 	82		 	—		 	—		 	 $540 - $585	
Pivot	2017	 	88		 	26		 	62		 	11		 	16		 	 $400 - $460	
Strada at Pivot	2017	 	27		 	17		 	10		 	7		 	10		 	 $450 - $480	
Nova Ridge	2018	 	108		 	7		 	101		 	34		 	6		 	 $660 - $810	
Tera Luna	2018	 	116		 	—		 	116		 	2		 	—		 	 $545 - $660	
Indogo	2018	 	202		 	—		 	202		 	16		 	—		 	 $300 - $350	
Larimar	2018	 	170		 	—		 	170		 	3		 	—		 	 $320 - $360	
Blackstone	2018	 	140		 	—		 	140		 	—		 	—		 	 $369 - $430	
Cactus/Jones	2019	 	54		 	—		 	54		 	—		 	—		 	 $349 - $375	
Sandalwood	2020	 	117		 	—		 	117		 	—		 	—		 	 TBD	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	3		 	 	
Nevada Total	 	 	2,834		 	953		 	1,881		 	278		 	232		 	 	
Pardee Total	 	 	16,716		 	1,967		 	14,749		 	695		 	651		 	 	

- 52 -

Quadrant Homes  

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
June 30,
2018	 	Lots
Owned as of
June 30, 2018 (3)	 	Backlog as of
June 30,
2018 (4)(5)	 	Homes
Delivered
for the Six
Months Ended
June 30,
2018	 	Sales Price
Range
(in thousands) (6)	
Washington	 	 	 	 	 	 	 	 	 	 	 	 	 	
Snohomish County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Grove at Canyon Park, Bothell	2017	 	60		 	57		 	3		 	3		 	19		 	$760 - $785	
Greenstone Heights, Bothell	2017	 	41		 	13		 	28		 	21		 	11		 	$955 - $1,140	
Grove North, Bothell	2019	 	43		 	—		 	43		 	—		 	—		 	$790 - $925	
Grove South, Bothell	2019	 	9		 	—		 	9		 	—		 	—		 	$805 - $840	
King County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Vareze, Kirkland	2019	 	82		 	—		 	82		 	—		 	—		 	$700 - $940	
Hazelwood Ridge, Newcastle	2017	 	30		 	28		 	2		 	—		 	6		 	$1,174	
Inglewood Landing, Sammamish	2018	 	21		 	—		 	21		 	6		 	—		 	$1,150 - $1,330	
Jacobs Landing, Sammamish	2017	 	20		 	4		 	16		 	10		 	3		 	$1,160 - $1,280	
Kirkwood Terrace, Sammamish	2018	 	12		 	—		 	12		 	—		 	—		 	$1,700 - $1,890	
English Landing P2, Redmond	2017	 	25		 	20		 	5		 	5		 	13		 	$1,164 - $1,344	
English Landing P1, Redmond	2018	 	50		 	—		 	50		 	27		 	—		 	$1,170 - $1,425	
Cedar Landing, North Bend	2019	 	138		 	—		 	138		 	—		 	—		 	$685 - $860	
Monarch Ridge, Sammamish	2019	 	59		 	—		 	59		 	—		 	—		 	$970 - $1,145	
Overlook at Summit Park, Maple Valley	2019	 	126		 	—		 	126		 	—		 	—		 	$615 - $770	
Ray Meadows, Redmond	2018	 	27		 	—		 	27		 	—		 	—		 	$1,165 - $1,390	
Wynstone, Federal Way	TBD	 	4		 	—		 	4		 	—		 	—		 	TBD	
Canton Crossing, Maple Valley	2017	 	51		 	39		 	12		 	10		 	23		 	$580 - $665	
Aurea, Sammamish	2019	 	41		 	—		 	41		 	—		 	—		 	$690 - $880	
Aldea (Avalon Townhomes), Newcastle	2019	 	129		 	—		 	129		 	—		 	—		 	$715 - $925	
Lario, Bellevue	2019	 	46		 	—		 	46		 	—		 	—		 	$810 - $1,140	
Soundview Manor, Federal Way	2018	 	21		 	—		 	21		 	—		 	—		 	$566 - $660	
Eagles Glen, Sammamish	2019	 	10		 	—		 	10		 	—		 	—		 	$1,100 - $1,225	
Pierce County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Harbor Hill S-5/6, Gig Harbor	2017	 	72		 	41		 	31		 	16		 	18		 	$453 - $523	
Harbor Hill S-2, Gig Harbor	2017	 	41		 	23		 	18		 	7		 	16		 	$425 - $480	
Kitsap County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Mountain Aire, Poulsbo	2016	 	145		 	109		 	36		 	33		 	32		 	$422 - $499	
Winslow Grove, Bainbridge Island	2018	 	19		 	—		 	19		 	—		 	—		 	$1,097 - $1,242	
Blue Heron, Poulsbo	2020	 	85		 	—		 	85		 	—		 	—		 	$474 - $649	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	27		 	N/A	
Washington Total	 	 	1,407		 	334		 	1,073		 	138		 	168		 	 	
Quadrant Total	 	 	1,407		 	334		 	1,073		 	138		 	168		 	 	

- 53 -

Trendmaker Homes

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
June 30,
2018	 	Lots
Owned as of
June 30, 2018 (3)	 	Backlog as of
June 30,
2018 (4)(5)	 	Homes
Delivered
for the Six
Months Ended
June 30,
2018	 	Sales Price
Range
(in thousands) (6)	
Texas	 	 	 	 	 	 	 	 	 	 	 	 	 	
Brazoria County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Pomona, Manvel	2015	 	49		 	24		 	25		 	5		 	3		 	$375 - $471	
Rise Meridiana	2016	 	47		 	24		 	23		 	3		 	7		 	$292 - $350	
Fort Bend County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cross Creek Ranch 60', Fulshear	2013	 	43		 	21		 	22		 	4		 	6		 	$369 - $453	
Cross Creek Ranch 65', Fulshear	2013	 	74		 	60		 	14		 	6		 	9		 	$436 - $509	
Cross Creek Ranch 70', Fulshear	2013	 	111		 	82		 	29		 	7		 	10		 	$490 - $553	
Cross Creek Ranch 80', Fulshear	2013	 	63		 	43		 	20		 	6		 	3		 	$571 - $676	
Cross Creek Ranch 90', Fulshear	2013	 	34		 	28		 	6		 	—		 	2		 	$653 - $733	
Fulshear Run 1/2 Acre, Richmond	2016	 	54		 	20		 	34		 	11		 	2		 	$567 - $679	
Harvest Green 75', Richmond	2015	 	38		 	22		 	16		 	7		 	2		 	$467 - $543	
Sienna Plantation 85', Missouri City	2015	 	39		 	21		 	18		 	4		 	5		 	$546 - $645	
Villas at Aliana, Richmond	2013	 	117		 	115		 	2		 	1		 	9		 	$487	
Harris County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
The Groves, Humble	2015	 	103		 	59		 	44		 	8		 	4		 	$323 - $524	
Lakes of Creekside	2015	 	21		 	10		 	11		 	2		 	1		 	$512 - $585	
Bridgeland '80, Cypress	2015	 	135		 	110		 	25		 	12		 	9		 	$548 - $636	
Bridgeland Patio, Cypress 60'	2017	 	32		 	25		 	7		 	3		 	10		 	$415 - $422	
Bridgeland 70'	2018	 	19		 	—		 	19		 	4		 	—		 	$461 - $542	
Villas at Bridgeland 50'	2018	 	13		 	—		 	13		 	2		 	—		 	$350 - $383	
Elyson 70', Cypress	2016	 	20		 	11		 	9		 	—		 	3		 	$484	
Hidden Arbor, Cypress	2015	 	129		 	113		 	16		 	6		 	25		 	$419 - $543	
Clear Lake, Houston	2015	 	778		 	355		 	423		 	74		 	47		 	$335 - $663	
Montgomery County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Woodtrace, Woodtrace	2014	 	39		 	35		 	4		 	1		 	5		 	$498 - $550	
Northgrove, Tomball	2015	 	25		 	7		 	18		 	—		 	2		 	TBD	
Bender's Landing Estates, Spring	2014	 	104		 	76		 	28		 	7		 	16		 	$470 - $579	
The Woodlands, Creekside Park	2015	 	109		 	55		 	54		 	13		 	16		 	$413 - $639	
Royal Brook, Porter	2019	 	6		 	—		 	6		 	—		 	—		 	TBD	
Waller County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cane Island, Katy	2015	 	23		 	22		 	1		 	—		 	2		 	$525 - $634	
LakeHouse	2019	 	350		 	—		 	350		 	—		 	—		 	TBD	
Williamson County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Crystal Falls	2016	 	29		 	20		 	9		 	4		 	4		 	522	
Rancho Sienna 60'	2016	 	32		 	11		 	21		 	4		 	7		 	$350 - $422	
Rancho Sienna 80'	2018	 	5		 	—		 	5		 	3		 	—		 	TBD	
Highlands at Mayfield Ranch 50'	2018	 	35		 	5		 	30		 	1		 	—		 	$280 - $330	
Highlands at Mayfield Ranch 60'	2018	 	19		 	—		 	19		 	2		 	—		 	$340 - $406	
Rancho Sienna 50'	2019	 	7		 	—		 	7		 	—		 	—		 	TBD	
Palmera Ridge	2019	 	11		 	—		 	11		 	—		 	—		 	TBD	
Hays County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Belterra 60', Austin	2017	 	36		 	16		 	20		 	2		 	7		 	$375 - $466	
Belterra 80', Austin	2016	 	37		 	25		 	12		 	3		 	7		 	$535 - $603	
Headwaters, Dripping Springs	2017	 	30		 	14		 	16		 	10		 	7		 	$399 - $450	
Travis County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Lakes Edge 70'	2018	 	45		 	3		 	42		 	27		 	3		 	$650 - $835	
Lakes Edge 80'	2018	 	14		 	—		 	14		 	8		 	—		 	$650 - $835	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	6		 	 	
Texas Total	 	 	2,875		 	1,432		 	1,443		 	250		 	239		 	 	
Trendmaker Homes Total	 	 	2,875		 	1,432		 	1,443		 	250		 	239		 	 	

- 54 -

TRI Pointe Homes

	
																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
June 30,
2018	 	Lots
Owned as of
June 30, 2018 (3)	 	Backlog as of
June 30,
2018 (4)(5)	 	Homes
Delivered
for the Six
Months Ended
June 30,
2018	 	Sales Price
Range
(in thousands) (6)	
Southern California	 	 	 	 	 	 	 	 	 	 	 	 	 	
Orange County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Aria, Rancho Mission Viejo	2016	 	151		 	115		 	36		 	26		 	20		 	 $636 - $713	
Aubergine, Rancho Mission Viejo	2016	 	66		 	65		 	1		 	1		 	7		 	 $983 - $1,129	
Viridian	2018	 	72		 	—		 	72		 	12		 	—		 	 $893 - $965	
Carlisle 10-Pack Garden Court, Irvine	2017	 	74		 	64		 	10		 	8		 	41		 	 $712 - $842	
Sterling Row Townhomes, Irvine	2017	 	96		 	59		 	37		 	34		 	37		 	 $622 - $824	
Varenna at Orchard Hills, Irvine	2016	 	60		 	54		 	6		 	15		 	15		 	 $1,217 - $1,275	
Alston, Anaheim	2017	 	75		 	33		 	42		 	18		 	14		 	 $816 - $853	
StrataPointe, Buena Park	2017	 	149		 	80		 	69		 	42		 	26		 	 $558 - $720	
Cadence (Lyric)	2019	 	70		 	—		 	70		 	—		 	—		 	 $790 - $917	
San Diego County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Prism at Weston	2018	 	142		 	5		 	137		 	21		 	5		 	 $590 - $629	
Talus at Weston	2018	 	63		 	—		 	63		 	28		 	—		 	 $680 - $720	
Riverside County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Terrassa Court, Corona	2015	 	94		 	87		 	7		 	3		 	20		 	 $509 - $566	
Terrassa Villas, Corona	2015	 	52		 	24		 	28		 	22		 	10		 	 $486 - $547	
Los Angeles County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
VuePointe, El Monte	2017	 	102		 	49		 	53		 	38		 	35		 	 $509 - $629	
Bradford @ Rosedale, Azusa	2017	 	52		 	30		 	22		 	18		 	15		 	 $836 - $896	
Lucera at Aliento	2017	 	67		 	41		 	26		 	10		 	18		 	 $625 - $645	
Tierno at Aliento	2017	 	63		 	45		 	18		 	3		 	18		 	 $669 - $697	
Tierno II at Aliento	2018	 	—		 	—		 	—		 	6		 	—		 	 $669 - $697	
Paloma at West Creek	2018	 	155		 	—		 	155		 	39		 	—		 	 $448 - $503	
San Bernardino County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
St. James at Park Place, Ontario	2015	 	125		 	119		 	6		 	—		 	10		 	 $514 - $544	
St. James III at Park Place, Ontario	2018	 	82		 	—		 	82		 	20		 	—		 	 $514 - $544	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	22		 	 	
Southern California Total	 	 	1,810		 	870		 	940		 	364		 	313		 	 	
Northern California	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contra Costa County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Marquette at Barrington, Brentwood	2015	 	90		 	86		 	4		 	—		 	11		 	 $695 - $730	
Wynstone at Barrington, Brentwood	2017	 	92		 	52		 	40		 	14		 	16		 	 $518 - $634	
Santa Clara County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Madison Gate	2018	 	65		 	3		 	62		 	14		 	3		 	 $690 - $975	
Solano County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Redstone, Vacaville	2015	 	141		 	125		 	16		 	10		 	19		 	 $485 - $548	
Green Valley-Bloom, Fairfield	2018	 	91		 	5		 	86		 	24		 	5		 	 $530 - $575	
Green Valley-Harvest, Fairfield	2018	 	56		 	3		 	53		 	19		 	3		 	 $575 - $630	
Villages of Fairfield	2018	 	133		 	—		 	133		 	—		 	—		 	 $455 - $480	
San Joaquin County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Sundance, Mountain House	2015	 	113		 	107		 	6		 	—		 	2		 	 $595 - $675	
Sundance II, Mountain House	2017	 	138		 	32		 	106		 	22		 	29		 	 $600 - $710	
Alameda County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Linear, Alameda Landing	2015	 	106		 	105		 	1		 	1		 	20		 	 $779 - $955	
Commercial, Alameda Landing	2018	 	2		 	—		 	2		 	—		 	—		 	$620	
Blackstone at the Cannery, Hayward SFA	2016	 	105		 	94		 	11		 	8		 	20		 	$666 - $769	
Slate at Jordan Ranch, Dublin	2017	 	56		 	36		 	20		 	13		 	20		 	$1,070 - $1,189	
Onyx at Jordan Ranch, Dublin	2017	 	105		 	28		 	77		 	18		 	19		 	$875 - $925	
Quartz at Jordan Ranch, Dublin	2018	 	45		 	—		 	45		 	25		 	—		 	$855 - $1,000	
Mission Stevenson, Fremont	2018	 	77		 	—		 	77		 	36		 	—		 	$675 - $965	

- 55 -

	
																			
Palm Avenue, Fremont	2018	 	31		 	—		 	31		 	—		 	—		 	$2,080 - $2,235	
Pleasant Hill	2019	 	44		 	—		 	44		 	—		 	—		 	$875 - $945	
Parkside, Oakland	2019	 	128		 	—		 	128		 	—		 	—		 	$720 - $805	
Sacramento County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Natomas	2019	 	94		 	—		 	94		 	—		 	—		 	$356 - $396	
San Francisco County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cambridge Street SFA	2020	 	54		 	—		 	54		 	—		 	—		 	$985 - $1,200	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	17		 	 	
Northern California Total	 	 	1,766		 	676		 	1,090		 	204		 	184		 	 	
California Total	 	 	3,576		 	1,546		 	2,030		 	568		 	497		 	 	
Colorado	 	 	 	 	 	 	 	 	 	 	 	 	 	
Douglas County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Terrain Ravenwood Village (3500)	2018	 	157		 	15		 	142		 	33		 	15		 	 $382 - $432	
Terrain Ravenwood Village (4000)	2018	 	100		 	14		 	86		 	17		 	14		 	 $412 - $475	
Jefferson County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Candelas 6000 Series, Arvada	2015	 	76		 	72		 	4		 	1		 	19		 	 $534 - $671	
Candelas 3500 Series, Arvada	2016	 	97		 	53		 	44		 	32		 	17		 	 $416 - $466	
Candelas 5000 Series, Arvada	2017	 	62		 	23		 	39		 	21		 	14		 	 $532 - $581	
Candelas 4000 Series, Arvada	2018	 	29		 	—		 	29		 	—		 	—		 	 $458 - $515	
Crown Pointe, Westminster	2018	 	64		 	—		 	64		 	—		 	—		 	 $430 - $490	
Arapahoe County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Whispering Pines, Aurora	2015	 	115		 	44		 	71		 	23		 	17		 	 $605 - $670	
Adams County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Amber Creek, Thornton	2017	 	121		 	46		 	75		 	33		 	17		 	 $406 - $486	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	6		 	 	
Colorado Total	 	 	821		 	267		 	554		 	160		 	119		 	 	
TRI Pointe Total	 	 	4,397		 	1,813		 	2,584		 	728		 	616		 	 	

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Winchester Homes

																			
County, Project, City	Year of
First
Delivery (1)	 	Total
Number of
Lots (2)	 	Cumulative
Homes
Delivered
as of
June 30,
2018	 	Lots
Owned as of
June 30, 2018 (3)	 	Backlog as of
June 30,
2018 (4)(5)	 	Homes
Delivered
for the Six
Months Ended
June 30,
2018	 	Sales Price
Range
(in thousands) (6)	
Maryland	 	 	 	 	 	 	 	 	 	 	 	 	 	
Anne Arundel County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Two Rivers Townhomes, Crofton	2017	 	84		 	24		 	60		 	16		 	16		 	$450 - $560	
Two Rivers Cascades SFD, Crofton	2018	 	25		 	3		 	22		 	12		 	3		 	$575 - $625	
Watson's Glen, Millersville	2015	 	103		 	4		 	99		 	—		 	—		 	Closed	
Frederick County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landsdale, Monrovia	 	 	 	 	 	 	 	 	 	 	 	 	 	
Landsdale SFD	2015	 	222		 	105		 	117		 	19		 	19		 	$495 - $597	
Landsdale Townhomes	2015	 	100		 	61		 	39		 	15		 	14		 	$330 - $383	
Landsdale TND Neo SFD	2015	 	77		 	33		 	44		 	7		 	6		 	$440 - $473	
Montgomery County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Cabin Branch, Clarksburg	 	 	 	 	 	 	 	 	 	 	 	 	  	
Cabin Branch SFD	2014	 	359		 	166		 	193		 	28		 	22		 	 $510 - $745	
Cabin Branch Avenue Townhomes	2017	 	121		 	38		 	83		 	4		 	14		 	$420 - $485	
Cabin Branch Townhomes	2014	 	507		 	251		 	256		 	10		 	30		 	 $393 - $438	
Preserve at Stoney Spring	N/A	 	5		 	—		 	5		 	—		 	—		 	 N/A	
Poplar Run SFD, Silver Spring	2010	 	305		 	294		 	11		 	10		 	13		 	 $635 - $770	
Glenmont MetroCenter, Silver Spring	2016	 	171		 	57		 	114		 	11		 	21		 	 $435 - $513	
Chapman Row, Rockville	2019	 	61		 	—		 	61		 	—		 	—		 	 TBD	
Randolph Farms, Rockville	2019	 	104		 	—		 	104		 	—		 	—		 	 TBD	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	8		 	  	
Maryland Total	 	 	2,244		 	1,036		 	1,208		 	132		 	166		 	 	
Virginia	 	 	 	 	 	 	 	 	 	 	 	 	 	
Fairfax County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Stuart Mill & Timber Lake, Oakton	2014	 	14		 	11		 	3		 	3		 	2		 	$1,363 - $1,675	
Stuart Mill, Oakton	N/A	 	5		 	—		 	5		 	—		 	—		 	N/A	
Westgrove, Fairfax	2018	 	24		 	—		 	24		 	1		 	—		 	$996 - $1,102	
West Oaks Corner, Fairfax	2019	 	188		 	—		 	188		 	—		 	—		 	TBD	
Prince William County:	 	 	 	 	 	 	 	 	 	 	 	 	 	
Villages of Piedmont, Haymarket	2015	 	168		 	140		 	28		 	15		 	31		 	$373 - $460	
Loudoun County:	 	 		 		 		 		 		 	 	
Brambleton, Ashburn	 	 	 	 	 	 	 	 	 	 	 	 	 	
West Park SFD	2018	 	30		 	7		 	23		 	13		 	7		 	$708 - $724	
Birchwood AA	2018	 	16		 	—		 	16		 	9		 	—		 	$574 - $629	
Vistas at Lansdowne, Lansdowne	2015	 	120		 	81		 	39		 	20		 	10		 	$531 - $571	
Willowsford Grant II, Aldie	2017	 	44		 	13		 	31		 	11		 	3		 	$950 - $1,226	
Willowsford Greens, Aldie	N/A	 	5		 	—		 	5		 	—		 	—		 	N/A	
Closed Communities	N/A	 	—		 	—		 	—		 	—		 	—		 	 	
Virginia Total	 	 	614		 	252		 	362		 	72		 	53		 	 	
Winchester Total	 	 	2,858		 	1,288		 	1,570		 	204		 	219		 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Combined Company Total	 	 	31,239		 	7,678		 	23,561		 	2,271		 	2,139		 	 	
__________

(1)  	Year of first delivery for future periods is based upon management’s estimates and is subject to change.	
		
(2)  	The number of homes to be built at completion is subject to change, and there can be no assurance that we will build these homes.	
		
(3)  	Owned lots as of June 30, 2018 include owned lots in backlog as of June 30, 2018 .	
		
(4)  	Backlog consists of homes under sales contracts that have not yet been delivered, and there can be no assurance that delivery of sold homes will occur.	
		
(5)  	Of the total homes subject to pending sales contracts that have not been delivered as of June 30, 2018 , 1,762 homes are under construction, 239 homes have completed construction, and 270 homes have not started construction.	

- 57 -

		
(6)  	Sales price range reflects base price only and excludes any lot premium, buyer incentives and buyer-selected options, which may vary from project to project. Sales prices for homes required to be sold pursuant to affordable housing requirements are excluded from sales price range. Sales prices reflect current pricing and might not be indicative of past or future pricing.	
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, which have been prepared in accordance with GAAP. Our condensed notes to the unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 describe the significant accounting policies essential to our unaudited condensed consolidated financial statements. The preparation of our financial statements requires our management to make estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions that we have used are appropriate and correct based on information available at the time they were made. These estimates, judgments and assumptions can affect our reported assets and liabilities as of the date of the financial statements, as well as the reported revenues and expenses during the period presented. If there is a material difference between these estimates, judgments and assumptions and actual facts, our financial statements may be affected.
In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require our judgment in its application. There are areas in which our judgment in selecting among available alternatives would not produce a materially different result, but there are some areas in which our judgment in selecting among available alternatives would produce a materially different result. See the condensed notes to the unaudited consolidated financial statements that contain additional information regarding our accounting policies and other disclosures.
Except for accounting policies related to our adoption of ASC 606, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. See Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies, to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for the critical accounting policies resulting from our adoption of ASC 606.
Recently Issued Accounting Standards
See Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies , to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q.

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	

We are exposed to market risks related to fluctuations in interest rates on our outstanding debt.  We did not utilize swaps, forward or option contracts on interest rates or commodities, or other types of derivative financial instruments as of or during the six months ended June 30, 2018 . We did not enter into during the six months ended June 30, 2018 , and currently do not hold, derivatives for trading or speculative purposes.

Item 4.	Controls and Procedures	

We have established disclosure controls and procedures to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and accumulated and communicated to management, including the Chief Executive Officer (the “Principal Executive Officer”) and Chief Financial Officer (the “Principal Financial Officer”), as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of senior management, including our Principal Executive Officer and Principal Financial Officer, we evaluated our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2018 .

- 58 -

Our management, including our Principal Executive Officer and Principal Financial Officer, has evaluated our internal control over financial reporting to determine whether any change occurred during the three months ended June 30, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there has been no such change during the three months ended June 30, 2018 .

- 59 -

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	
The information required with respect to this item can be found under Note 13, Commitments and Contingencies-Legal Matters , to the accompanying condensed notes to unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q and is incorporated by reference into this Item 1.

Item 1A.	Risk Factors	

There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2017.  If any of the risks discussed in our Annual Report on Form 10-K occur, our business, prospects, liquidity, financial condition and results of operations could be materially and adversely affected, in which case the trading price of our common stock could decline significantly and you could lose all or a part of your investment.  Some statements in this Quarterly Report on Form 10-Q constitute forward-looking statements.  Please refer to Part I, Item 2 of this Quarterly Report on Form 10-Q entitled “Cautionary Note Concerning Forward-Looking Statements.”

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	
On February 16, 2018, our board of directors discontinued and cancelled the 2017 Repurchase Program and approved the 2018 Repurchase Program, authorizing the repurchase of shares of common stock with an aggregate value of up to $100 million through March 31, 2019. Purchases of common stock pursuant to the 2018 Repurchase Program may be made in open market transactions effected through a broker-dealer at prevailing market prices, 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 under the Exchange Act. We are not obligated under the 2018 Repurchase Program to repurchase any specific number or dollar amount of shares of common stock, and we may modify, suspend or discontinue the 2018 Repurchase Program at any time. Our management will determine the timing and amount of repurchase in its discretion based on a variety of factors, such as the market price of our common stock, corporate requirements, general market economic conditions and legal requirements. During the six months ended June 30, 2018, we did not repurchase any shares under either the 2017 Repurchase Program or the 2018 Repurchase Program.

- 60 -

		
Item 6.	Exhibits  	

			
Exhibit
Number	 	Exhibit Description	
 	 	 	
3.1	 	Amended and Restated Certificate of Incorporation of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K (filed July 7, 2015))	
 	 	 	
3.2	 	Amended and Restated Bylaws of TRI Pointe Group, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (filed October 27, 2016))	
 	 	 	
31.1	 	Chief Executive Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002	
 	 	 	
31.2	 	Chief Financial Officer Section 302 Certification of the Sarbanes-Oxley Act of 2002	
 	 	 	
32.1	 	Chief Executive Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002	
 	 	 	
32.2	 	Chief Financial Officer Section 906 Certification of the Sarbanes-Oxley Act of 2002	
 	 	 	
101	 	The following materials from TRI Pointe Group, Inc.’s Quarterly Report on Form 10-Q for the six months ended June 30, 2018, formatted in eXtensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statement of Cash Flows, and (v) Condensed Notes to Consolidated Financial Statement.	

- 61 -

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.

	
			
 	TRI Pointe Group, Inc.	
 	 	 	
 	By:	/s/ Douglas F. Bauer	
 	 	Douglas F. Bauer	
 	 	Chief Executive Officer	
 	By:	/s/ Michael D. Grubbs	
 	 	Michael D. Grubbs	
Date: July 27, 2018	 	Chief Financial Officer	

- 62 -

Exhibit 31.1
SECTION 302 CERTIFICATION
I, Douglas F. Bauer, certify that:
		
(1)	I have reviewed this report on Form 10-Q of TRI Pointe Group, 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 15d-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	

a.	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 27, 2018	/s/ Douglas F. Bauer	
 	Douglas F. Bauer	
 	Chief Executive Officer (Principal Executive Officer)	

Exhibit 31.2
SECTION 302 CERTIFICATION
I, Michael D. Grubbs, certify that:
		
(1)	I have reviewed this report on Form 10-Q of TRI Pointe Group, 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 15d-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;	

a.	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;	

a.	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	

b.	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	

a.	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 27, 2018	/s/ Michael D. Grubbs	
 	Michael D. Grubbs	
 	Chief Financial Officer (Principal Financial Officer)	

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 Report of TRI Pointe Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas F. Bauer, 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 27, 2018	/s/ Douglas F. Bauer	
 	Douglas F. Bauer	
 	Chief Executive Officer (Principal Executive Officer)	

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 Report of TRI Pointe Group, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2018 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael D. Grubbs, 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 27, 2018	/s/ Michael D. Grubbs	
 	Michael D. Grubbs	
 	Chief Financial Officer (Principal Financial Officer)