REVENUES
Revenue Recognition
Revenues from home sales are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. Revenues from home sales are recorded at the time each home sale is closed, title and possession are transferred to the customer and we have no significant continuing involvement with the home. Home sales discounts and incentives granted to customers, which are related to the customers’ closing costs that we pay on the customers’ behalf, are recorded as a reduction of revenue in our consolidated financial statements of operations.
The following table presents our home sales revenues disaggregated by revenue stream (in thousands): | | | | | | | | | | | | | | | | | | | | | | |
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| | | | | Year Ended December 31, | |
| | | | | 2025 | | 2024 | | 2023 | |
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| Retail home sales revenues | | | | | $ | 1,475,173 | | | $ | 2,038,520 | | | $ | 2,156,237 | | |
| Wholesale home sales revenues | | | | | 230,331 | | | 164,078 | | | 202,343 | | |
| Total home sales revenues | | | | | $ | 1,705,504 | | | $ | 2,202,598 | | | $ | 2,358,580 | | |
Our home sales revenues are disaggregated by geography, based on our determined reportable segments.
The following table presents our home sales revenues disaggregated by geography, based on our determined reportable segments in Note 15 (in thousands): | | | | | | | | | | | | | | | | | | | | | | |
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| | Year Ended December 31, | | |
| | 2025 | | 2024 | | 2023 | | |
| Central | | $ | 419,240 | | | $ | 564,608 | | | $ | 730,688 | | | |
| Southeast | | 472,150 | | | 538,170 | | | 556,808 | | | |
| Northwest | | 188,969 | | | 258,407 | | | 251,171 | | | |
| West | | 387,232 | | | 472,655 | | | 381,102 | | | |
| Florida | | 237,913 | | | 368,758 | | | 438,811 | | | |
| Home sales revenues | | $ | 1,705,504 | | | $ | 2,202,598 | | | $ | 2,358,580 | | | |
Home Sales Revenues
We generate revenues primarily by delivering move-in ready entry-level and move-up spec homes sold under our LGI Homes brand and our luxury series spec homes sold under our Terrata Homes brand.
Retail homes sold under both our LGI Homes brand and Terrata Homes brand focus on providing move-in ready homes with standardized features within favorable markets that meet certain demographic and economic conditions. Our LGI Homes brand primarily markets to entry-level or first-time homebuyers, while our Terrata Homes brand primarily markets to move-up homebuyers.
Wholesale homes are primarily sold under a bulk sales agreement and focus on providing move-in ready homes with standardized features to real estate investors that will ultimately use the single-family homes as rental properties.
Performance Obligations
Our contracts with customers include a single performance obligation to transfer a completed home to the customer. We generally determine selling price per home on the expected cost plus margin. Our contracts contain no significant financing terms as customers who finance do so through a third party. Performance obligations are satisfied at a moment in time when the home is complete and control of the asset is transferred to the customer at closing. Home sales proceeds are generally received from the title company within a few business days after closing.
Sales and broker commissions are incremental costs incurred to obtain a contract with a customer that would not have been incurred if the contract had not been obtained. Sales and broker commissions are expensed upon fulfillment of a home closing. Advertising costs are costs to obtain a contract that would have been incurred regardless of whether the contract was obtained and are recognized as an expense when incurred. Sales and broker commissions and advertising costs are recorded within sales and marketing expense presented in our consolidated statements of operations as selling expenses.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.