The continued benefits of operating in infill and infill-adjacent locations helped Green Brick Partners deliver “exceptional” third quarter results, including record-high gross margins and a cancellation rate in the single digits.

“We continued to defy the pressure on housing affordability and sales velocity created by the elevated level of mortgage rates during the third quarter,” Jim Brickman, CEO and co-founder of Green Brick Partners, said during the company’s earnings call. “Our performance [was] highlighted by home building gross margins of 33.3%. Strong orders and improved cycle times that are 120 days shorter than peak cycle times in 2022 bolstered our home closings by 16%.”

Green Brick Partners, No. 32 on the 2023 BUILDER 100, recorded third quarter profits of $72.2 million, or $1.56 per share, largely in line with 2022 levels of $73.5 million, or $1.57 per share. The quarterly results outperformed analyst profit projections by approximately $0.10 per share.

“Additionally, we ramped up starts by 79% year over year to 879 for the quarter, bringing year-to-date starts in line with our delivery pace for the year,” Brickman said. “We anticipate continuing to start homes at a robust pace to meet demand in our high-performing markets in Texas, Georgia, and Florida.”

Net new-home orders of 788 homes in the third quarter represented a 95% year-over-year increase. The average sales price for homes delivered in the quarter was $551,500, a decrease of 9.2% on a year-over-year basis.

Green Brick Partners reported an elevated quarterly absorption rate at 9.2 homes per community, a 74% year-over-year increase, with a quarterly cancellation rate of 6.1%. The company was able to grow its backlog by 10.4% on a year-over-year basis in the third quarter.

“We believe the strong demand we experienced is the result of our quality locations, demographic growth, and in-migration in our core markets,” Richard Costello, chief financial officer, said. “Our infill and infill-adjacent communities face limited competition from existing-home supply as existing homeowners are reluctant to forfeit their mortgages. There are also fewer new-home competitors in those areas due to lack of land availability, the higher cost of finished lots, and the complicated entitlement and development process required by these locations.”

At the end of the third quarter, Green Brick owned or controlled 26,219 lots, of which 80.7% were owned.