Century Communities just posted a stellar Q1 2024, blowing past expectations with a 23% increase in home deliveries and a staggering 114% surge in adjusted diluted earnings per share. The company, known for its commitment to affordability, seems to be navigating the turbulent waters of interest rate hikes with remarkable resilience. But amidst the positive headlines and congratulatory analyst calls, a subtle shift is taking place within Century Communities, a shift that might be pointing towards a fundamental reshaping of the company's future. This shift, likely overlooked by most analysts focused on headline figures, lies in the delicate balance between Century Communities' two core brands: Century Communities and Century Complete.

Century Complete, the brand targeting the ultra-affordable segment with homes priced in the mid to below $300,000 range, has been a consistent performer, accounting for roughly a third of Century's overall volume for several quarters. This strategically important brand, operating exclusively on a finished-lot, just-in-time model, allows Century to tap into secondary markets with less competition from publicly traded giants, effectively capturing market share from capital-constrained smaller private builders.

In recent quarters, Century has been pushing to increase Century Complete's contribution to overall volume, aiming to reach a 50% share. However, as the traditional Century Communities brand enjoys robust growth, achieving this target becomes increasingly challenging. Q1 2024, however, presents an intriguing anomaly. Despite robust sales for both brands, Century Complete's contribution to overall deliveries dipped to 33%, down from 39% in Q4 2023.

While management attributed this dip to temporary circumstances, stating that Century Complete homes were simply "less this quarter than what we had on our communities brand," this explanation, while plausible, might be masking a more strategic move. Could this dip be a deliberate pause, allowing Century Communities to solidify its traditional brand's gains before re-accelerating Century Complete's expansion?

The hypothesis is compelling. With interest rate volatility casting a shadow of uncertainty, focusing on the higher-margin Century Communities brand, even temporarily, makes strategic sense. This allows Century to maximize profitability in the near-term while the interest rate picture becomes clearer.

Let's look at the numbers. Century Complete, despite the lower delivery share, saw a 35% increase in sales quarter-over-quarter. This suggests that demand remains robust, even in the face of rising rates. Furthermore, Century's land pipeline reveals a significant bias towards affordable markets, with Texas and the Southeast, combined with Century Complete's markets, accounting for nearly 75% of their owned and controlled land supply.

This strategic land allocation, coupled with the recent acquisition of Landmark Homes of Tennessee, which strengthens Century's presence in the high-growth Nashville market and provides a valuable pipeline of controlled lots, reinforces the belief that Century hasn't abandoned its 50% goal for Century Complete. It appears to be a calculated pause, allowing Century to fortify its position before unleashing the full potential of its ultra-affordable brand.

The company's unwavering focus on affordability, evident in their commitment to keeping over 90% of deliveries priced below FHA limits, positions Century uniquely to capture the hearts and wallets of today's price-conscious buyers.

Century Complete Deliveries vs. Total Deliveries

The following chart shows the trend of Century Complete deliveries as a percentage of total deliveries.

Century Communities Financial Highlights (Q1 2024)

While Century hasn't explicitly stated a timeline for achieving the 50% target, their actions, from land acquisition to brand expansion, suggest a long-term commitment to this strategy. As the interest rate fog clears, we might witness an aggressive push by Century to unlock the full power of their "invisible hand," driving Century Complete to claim its 50% share of the Century Communities empire.

"Fun Fact: Century Communities, despite being a major player in the US housing market, maintains a strong focus on community involvement, supporting initiatives related to affordable housing, education, and disaster relief. This commitment aligns perfectly with their core value of making homeownership accessible to a broad range of individuals and families."