M.D.C. Holdings, Inc. (NYSE: MDC) on Wednesday reported net income of $26.9 million, or $0.55 per share, for the quarter ended June 30, 2016, up 35% from $20.0 million or $0.41 per share for the quarter ended June 30, 2016. Analysts were expecting a profit of 50 cents a share.
Home sales revenues were up 24% to $571.2 million from $461.7 million as homes delivered rose 13% to 1,272 and the average sales price moved up 10% to $449,100. Net new orders were up 11% to 1,646, with dollar value of net new orders up 15% to $723.0 million. Ending backlog dollar value was up 42% to $1.61 billion from $1.13 billion with backlog units up 35% to 3,445.
"To end the spring selling season, we recorded our ninth consecutive quarter of year-over-year growth in net new orders and achieved our highest second quarter average monthly sales absorption pace in over a decade, enabling us to reach a quarter-end backlog that was considerably higher than a year ago," said Larry A. Mizel, MDC's chairman and CEO. "As we enter the second half of 2016, our focus will be on accelerating the delivery of homes from this robust backlog, with a goal of sustaining our significant year-over-year revenue growth for the remainder of the year."
Home sale revenues for the 2016 second quarter increased 24% to $571.2 million, compared to $461.7 million for the prior year period. This improvement was driven by a 13% increase in deliveries, primarily due to a 39% year-over-year increase of our homes in beginning backlog, and a 10% increase in average selling price. The increase in average selling price was primarily the result of a mix shift to higher-priced submarkets and, to a lesser extent, price increases implemented in the prior year.
For the 2016 second quarter, our gross margin from home sales declined 20 basis points from the same period in 2015. The decline was primarily the result of $1.6 million of inventory impairments, but it was mostly offset by less interest included in cost of sales as a percentage of home sale revenues.
Selling, general and administrative ("SG&A") expenses for the 2016 second quarter were $64.4 million, up $9.6 million from $54.8 million for the same period in 2015. Our SG&A expenses as a percentage of home sale revenues ("SG&A rate") decreased by 60 basis points to 11.3% for the 2016 second quarter from 11.9% in the 2015 second quarter. This decrease in our SG&A rate was primarily the result of a 24% increase in home sale revenues.
The dollar value of net new orders for the 2016 second quarter increased 15% year-over-year to $723.0 million. The improvement was primarily the result of an 11% increase in the number of homes sold, which was driven by a 10% increase in our monthly sales absorption rate. We also had a slight increase in our average selling price, due to price increases implemented in various active communities over the past year and a shift in mix to higher priced communities.
Our backlog value at the end of the 2016 second quarter was up 42% year-over-year to $1.61 billion. The improvement was due mostly to a 35% increase in the number of units in backlog, primarily due to (1) an increase in net new order activity over the last twelve months, (2) a higher percent of our backlog coming from build-to-order sales, which are generally in backlog for a longer period of time and, (3) limited subcontractor availability, which has extended our cycle times.
Income before taxes for our financial services operations for the 2016 second quarter was $9.1 million, a $0.8 million increase from $8.3 million in the 2015 second quarter. The increase in pretax income was primarily the result of year-over-year increases in (1) the dollar value of loans locked, originated, and sold, and (2) higher gains on loans locked and sold.