NVR, Inc. (NYSE: NVR) on Thursday reported net income for its third quarter ended September 30, 2018 of $195,816,000, or $48.28 per diluted share, up 21% and 27%, respectively, compared to 2017 third quarter net income of $162,102,000, or $38.02 per diluted share. The results missed analyst expectations of a gain of $50.94 per share.
Consolidated revenues for the third quarter of 2018 totaled $1,852,407,000, an 11% increase from $1,667,920,000 in the third quarter of 2017.Net income and diluted earnings per share were favorably impacted by the reduction in the company's effective tax rate for the three and nine months ended September 30, 2018 to 21.6% and 17.2%, respectively, compared to 33.7% and 29.5% for the three and nine months ended September 30, 2017, respectively. The reduction in the effective tax rate was primarily due to the enactment of the Tax Cuts and Jobs Act in December 2017, which lowered the company's federal statutory tax rate from 35% to 21%. Additionally, the effective tax rate for the three and nine months ended September 30, 2018 was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $12,585,000 and $58,607,000, respectively. For the three and nine months ended September 30, 2017, the income tax benefit related to excess tax benefits from stock option exercises totaled $8,357,000 and $44,720,000, respectively.
New orders in the third quarter of 2018 increased 2% to 4,302 units, when compared to 4,200 units in the third quarter of 2017. The average sales price of new orders in the third quarter of 2018 was $374,000, a decrease of 2% when compared with the third quarter of 2017. Settlements increased in the third quarter of 2018 to 4,754 units, 14% higher than the third quarter of 2017. The company's backlog of homes sold but not settled as of September 30, 2018 increased on a unit basis by 10% to 9,710 units and increased on a dollar basis by 7% to $3,662,037,000 when compared to September 30, 2017.
Home building revenues in the third quarter of 2018 totaled $1,809,345,000, 11% higher than the year earlier period. Gross profit margin in the third quarter of 2018 decreased to 18.6%, compared to 19.9% in the third quarter of 2017. Income before tax from the home building segment totaled $224,196,000 in the third quarter of 2018, a decrease of 1% when compared to the third quarter of 2017. Home building gross profit margin and income before tax were negatively impacted by an impairment charge of approximately $7,400,000 to one of the company's joint venture investments in the third quarter of 2018.
Mortgage closed loan production in the third quarter of 2018 totaled $1,249,199,000, an increase of 12% when compared to the third quarter of 2017. Income before tax from the mortgage banking segment totaled $25,514,000 in the third quarter of 2018, an increase of 39% when compared to $18,421,000 in the third quarter of 2017.
