In M.D.C. Holding's first quarter 2015 results, the big stories were net new orders of 1,593, which jumped 29%, and gross margins, which fell from 18.5% to 15.4%. 

Orders in Utah, Nevada, California, Florida, Colorado, Virginia, Washington, and Arizona rose 53%, 51%, 50%, 25%, 24%, 22%, 22% and 18%, respectively, while Maryland fell 1%. 

J.P. Morgan only estimated 10% order growth. “The rise was driven by absorption increasing 20%, above our 3% estimate, while average community count rose 7%, in-line with our estimate,” J.P. Morgan’s Michael Rehaut wrote.

In his prepared statements, Larry A. Mizel, M.D.C.'s chairman and CEO, addressed the margin issue head on. "The dollar value of our quarter-end backlog increased by 46% year-over-year, giving us a foundation for solid performance in the coming quarters,” he said. 

That said, there were a lot of positives in M.D.C.’s earnings. While net income fell from $11.5 million to $8.4 million, home sale revenues were up 18% to $377.0 million, average sales price was up 14% to $49,900 per home, and home building SG&A rate improved by 180 basis points to 13.4%, down from 15.2%. 

"During the first quarter, to start the spring selling season, we were pleased to see an overall improvement in home building industry conditions across most of our markets,” said Mizel. “Our net new orders increased 29% year-over-year, driven by increases in both our absorption rate and active community count. Furthermore, we were able to increase prices in many of our active communities across the country, helping to offset cost increases experienced over the past few quarters.”

Looking forward, Mizel appears to have the dry powder to add more land as conditions improve.

“Looking forward to our prospects further out, we believe we are well prepared for growth, with a strong balance sheet, overall liquidity of $825 million and no senior note maturities until 2020,” he said. “Although our land acquisition activity has been relatively light over the past couple quarters, we have recently seen an uptick in our pipeline of new proposed land acquisitions, which provides the potential for additional home closings in 2016 and beyond.”