You are given a text that consists of multiple sentences. Your task is to perform abstractive summarization on this text. Use your understanding of the content to express the main ideas and crucial details in a shorter, coherent, and natural sounding text. 
Text: Joining me on the call today is Bob Schottenstein, our CEO and President; Tom Mason, EVP; Derek Klutch, President of our Mortgage Company; Ann Marie Hunker, VP, Corporate Controller; and Kevin Hake, Senior VP.
We had an outstanding record-setting quarter, highlighted by a 71% increase in new contracts, a 29% increase in homes delivered and a 94% increase in net income.
For the quarter, we sold 2,949 homes.
Year-to-date through September, we have sold 7,299 homes, 43% better than last year and more than we sold all of 2019.
Our sales were strong across the board and throughout all of our markets.
Our absorption pace improved significantly to 4.6 sales per community per month compared to 2.6 a year ago.
A number of factors contributed to our strong sales performance: low interest rates, low inventory levels, a shift in buyer preference toward single-family homes and an increasing number of millennials opting for homeownership.
All of these are fueling a robust housing market.
In addition, we continue to gain market share in most of our markets based upon the strength and quality of our communities, the quality of our online marketing execution and generating online leads and converting those online leads into sales and the continued strong market acceptance of our most affordably priced Smart Series line of homes.
Our Smart Series sales comprised nearly 36% of total companywide sales during the quarter compared to 28% a year ago.
We are now selling our Smart Series homes in all 15 of our divisions.
And on average, our Smart Series communities produce better sales pace, better gross margins, better cycle time and better returns.
We delivered 2,137 homes in the quarter.
Year-to-date through September, we have now delivered 5,467 homes, which is 25% more than last year.
Our backlog sales value at September 30 equaled $1.8 billion, an all-time record, and units in backlog increased 54% to a record 4,503 homes.
Our margins and returns during the quarter were also very strong.
Gross margins during the third quarter improved by 240 basis points to 22.9%, and our SG&A expense ratio improved by 60 basis points to 11.6%, and our pre-tax income percentage significantly improved to 11.2%.
All of this resulted in a greater than 90% improvement in both pre-tax and net income for the quarter.
Our financial services business also had a record quarter, highlighted by strong income and excellent capture rate and very solid across-the-board execution.
Now I will provide some additional comments on our markets.
As you know, we divide our 15 markets into two regions.
The Northern region consists of six of our 15 markets: Columbus, Cincinnati, Indianapolis, Chicago, Minneapolis and Detroit.
Our Southern region consists of the remaining nine markets: Charlotte and Raleigh, North Carolina, Orlando, Tampa and Sarasota, Florida and Houston, Dallas, Austin and San Antonio, Texas.
As I indicated earlier, we experienced strong sales performance in the third quarter across all of our markets.
New contracts in the Southern region increased 63% for the quarter while new contracts in the Northern region increased 85%.
Our deliveries increased by 27% over last year in the Southern region to 1,269 deliveries or 59% of company total.
The Northern region posted 868 deliveries, an increase of 33% over last year and 41% of total.
We also had substantial income contributions from most of our markets led by Orlando, Dallas, Minneapolis, Columbus, Charlotte, Tampa and Cincinnati with Indianapolis, Houston and Austin also having a very strong third quarter.
Our controlled lot position in the Southern region increased by 49% compared to a year ago and increased by 17% in the Northern region.
While we are selling through a number of our communities faster than anticipated, we are nonetheless very well positioned to handle demand.
35% of our owned and controlled lots are in the Northern region with a balance roughly 65% in the Southern region.
We have an outstanding land position companywide.
In total, we own and control approximately 40,000 lots or about a 4.5- to five year supply.
Importantly, roughly 60% of our lots are controlled under option contracts, which, with more than half of our lots controlled by option, gives us tremendous flexibility to react to changes in demand or individual market conditions.
We had 121 communities in the Southern region at the end of the quarter, which is down from 132 a year ago and also down from 126 at the end of this year's second quarter.
We had 86 communities in the Northern region at the end of the third quarter, down slightly from a year ago and down from 94 at the end of this year's second quarter.
The pandemic continues to affect our operations, though our teams have managed through it very well.
We continue to focus on building and selling quality homes, and we continue to manage our operations and our business with the highest standards for our employees, customers and their accompanying work environment.
Finally, let me conclude by saying that in addition to having a record-shattering quarter, our company is in the best shape ever.
Our financial condition is strong.
Our balance sheet is healthy.
We have meaningful operating momentum and are poised to have an outstanding year.
As far as financial results, new contracts for the third quarter increased 71% to 2,949, an all-time quarterly record compared to 1,721 for last year's third quarter.
Our new contracts were up 75% in July, up 94% in August and up 44% in September.
Our sales pace was 4.6 in the third quarter compared to last year's 2.6.
Our cancellation rate for the third quarter was 10%.
As to our buyer profile, about 53% of our third quarter sales were to first-time buyers compared to 50% in the second quarter.
In addition, 40% of our third quarter sales were inventory homes compared to 45% in the second quarter.
Our community count was 207 at the end of the third quarter compared to 221 at the end of '19 third quarter.
The breakdown by region is 86 in the Northern region and 121 in the Southern region.
During the quarter, we opened 12 new communities while closing 25, and we opened 51 new communities during the nine months ended 9/30 this year.
We delivered a third quarter record 2,137 homes, delivering 58% of our backlog, which was the same percentage as a year ago.
And revenue increased 30% in the third quarter, reaching a third quarter record of $848 million.
Our average closing price for the third quarter was $380,000, a 1% decrease when compared to last year's third quarter average closing price of $382,000.
Our backlog sales price is $404,000, up from $390,000 a year ago, and the backlog average sales price of our Smart Series is $315,000.
Our third quarter 2020 operating gross margin was 22.9%, up 240 basis points year-over-year and up 100 basis points from the second quarter.
And our third quarter SG&A expenses were 11.6% of revenue, increasing -- improving 60 basis points compared to 12.2% a year ago, reflecting greater operating leverage.
Interest expense decreased $3.4 million for the quarter compared to last year.
Interest incurred for the quarter was $10 million compared to $12.9 million a year ago.
The decrease is due to lower outstanding borrowings in this year's third quarter as well as a lower weighted average borrowing rate.
During the third quarter, we generated $111 million of EBITDA compared to $67 million in last year's third quarter.
We have $22 million in capitalized interest on our balance sheet, which is about 1% of our total assets.
Our effective tax rate was 23% in the quarter compared to last year's 24% in the third quarter.
Our third quarter rate benefited from energy tax credits that were retroactive to 2019, and we estimate our annual effective rate this year to be around 23%.
And our earnings per diluted share for the quarter increased to $2.51 per share from $1.32 last year.
Now Derek will cover our mortgage company results.
Our mortgage and title operations achieved record third quarter results in pre-tax income, revenue and number of loans originated.
Revenue was up 115% to $28.9 million due to a higher volume of loans closed and sold along with significantly higher pricing margins.
For the quarter, the pre-tax income was $19.2 million, which was a 241% increase compared to 2019's third quarter.
76% of the loans closed in the quarter were conventional and 24% FHA or VA compared to 78% and 22%, respectively, for 2019's third quarter.
Our average mortgage amount increased to $314,000 in 2020 third quarter compared to $312,000 last year.
Loans originated increased to a third quarter and all-time record of 1,636 loans, 32% more than last year, and the volume of loans sold increased by 39%.
Our borrower profile remains solid with an average down payment of over 15%.
And for the quarter, the average credit score on mortgages originated by M/I Financial was 747, up slightly from 745 last year.
Our mortgage operation captured over 85% of our business in the third quarter, which was in line with last year.
We maintained two separate mortgage warehouse facilities that provide us with funding for our mortgage originations prior to the sale to investors.
At September 30, we had $136 million outstanding under these facilities.
We extended our repo line this month through October of 2021 and increased the commitment amount from $65 million to $90 million.
Both facilities are typical 364-day mortgage warehouse lines that we extend annually.
As far as the balance sheet, our total homebuilding inventory at 9/30 was $1.8 billion, an increase of $16 million over last year.
Our unsold land investment at 9/30/20 is $762 million compared to $821 million a year ago.
At September 30, we had $362 million of raw land and land under development and $400 million of finished unsold lots.
We own 4,942 unsold finished lots with an average cost of $81,000 per lot, and this average lot cost is 20% of our $404,000 backlog average sale price.
Our goal is to maintain about a one year supply of finished lots and to own a two to three year supply.
Lots owned and controlled as of 9/30/20, totaled 39,600 lots, 15,100 of which were owned and 24,500 under contract.
We own 6,900 lots in our Northern region and 8,200 lots in our Southern region.
A year ago, we owned more than 14,800 lots and controlled an additional 14,200 lots for a total of more than 29,000 lots.
And during this year's third quarter, we spent $107 million on land purchases and $89 million on land development for a total of $196 million.
Year-to-date, we have spent $267 million on land purchases and $222 million on land development for a total year-to-date land spend of $489 million, and about 48% of our purchase amount was raw land.
At the end of the quarter, we had 266 completed inventory homes, about one per community, and 1,113 total inventory homes.
And of the total inventory, 550 are in the Northern region and 563 are in the Southern region.
At September 30, '19, we had 531 completed inventory homes and 1,513 total inventory homes.
We'll now open the call for any questions or comments.

user
q3 earnings per share $2.51.
new contracts increased 71% to 2,949 contracts in quarter.
backlog units increased 54% to 4,503 in quarter.
backlog sales value reached $1.8 billion in quarter.
homes delivered in 2020's q3 increased 29% to a record 2,137.

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