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Fair Value Measurements
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value MeasurementsWe apply fair value measurements on a recurring and, as otherwise required, on a nonrecurring basis. Accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The standards also establish a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:
•Level 1 — Quoted prices in active markets for identical assets or liabilities.
•Level 2 — Assets and liabilities valued based on observable market data for similar instruments, such as quoted prices for similar assets or liabilities.
•Level 3 — Unobservable inputs that are supported by little or no market activity; instruments valued based on the best available data, some of which is internally developed, and considers risk premiums that a market participant would require.
We apply the following methods and assumptions in estimating our fair value measurements on a recurring basis:
Cash equivalents — The fair value measurement of money market funds is based on quoted market prices in active markets (Level 1). The fair value measurement of other cash equivalents is based on observable market-based inputs principally derived from or corroborated by observable market data (Level 2).
Short-term investments — The fair value measurement of our short-term investments is based on observable market-based inputs or inputs that are derived principally from or corroborated by observable market data by correlation or other means (Level 2).
Restricted cash — The carrying value of restricted cash approximates fair value due to the short period of time amounts are held in escrow (Level 1).
Mortgage loans held for sale — The fair value of mortgage loans held for sale is generally calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics (Level 2).
Forward contracts — The fair value of mandatory loan sales commitments and derivative instruments such as forward sales of mortgage-backed securities that are utilized as economic hedging instruments is calculated by reference to quoted prices for similar assets (Level 2).
Interest rate lock commitments — The fair value of IRLCs is calculated by reference to quoted prices in secondary markets for commitments to sell mortgage loans with similar characteristics. Expired commitments are excluded from the fair value measurement. Since not all IRLCs will become closed loans, we adjust our fair value measurements for the estimated amount of IRLCs that will not close. This adjustment is effected through the pull-through rate, which represents the probability that an IRLC will ultimately result in a closed loan. For IRLCs that are cancelled or expire, any recorded gain or loss is reversed at the end of the commitment period (Level 3).
The pull-through rate is based on estimated changes in market conditions, loan stage and historical borrower behavior. Pull-through rates are directly related to the fair value of IRLCs as an increase in the pull-through rate, in isolation, would result in an increase in the fair value measurement. Conversely, a decrease in the pull-through rate, in isolation, would result in a decrease in the fair value measurement. Changes in the fair value of IRLCs are included within Mortgages revenue in our consolidated statements of operations.
The following table presents the range and weighted average pull-through rates used in determining the fair value of IRLCs as of the dates presented:
December 31, 2022December 31, 2021
Range
47% - 100%
42% - 100%
Weighted average87%
85%
The following tables present the balances of assets and liabilities measured at fair value on a recurring basis, by level within the fair value hierarchy, as of the dates presented (in millions):
 December 31, 2022
TotalLevel 1Level 2Level 3
Cash equivalents:
Money market funds$1,338 $1,338 $— $— 
Short-term investments:
U.S. government treasury securities1,716 — 1,716 — 
Corporate bonds161 — 161 — 
Commercial paper10 — 10 — 
U.S. government agency securities9 — 9 — 
Mortgage origination-related:
Mortgage loans held for sale41 — 41 — 
Forward contracts - other current assets1 — 1 — 
        Total$3,276 $1,338 $1,938 $— 

 December 31, 2021
 TotalLevel 1Level 2Level 3
Cash equivalents:
Money market funds$2,132 $2,132 $— $— 
Short-term investments:
U.S. government treasury securities471 — 471 — 
Corporate bonds33 — 33 — 
Commercial paper10 — 10 — 
Mortgage origination-related:
Mortgage loans held for sale107 — 107 — 
IRLCs - other assets5 — — 5 
        Total$2,758 $2,132 $621 $5 
The following table presents the changes in our IRLCs for the periods presented (in millions):
Year Ended December 31, 2022Year Ended December 31, 2021
Balance, beginning of the period$5 $12 
Issuances15 70 
Transfers(17)(78)
Fair value changes recognized in earnings(3)1 
Balance, end of period$— $5 
At December 31, 2022, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $62 million and $90 million for our IRLCs and forward contracts, respectively. At December 31, 2021, the notional amounts of the hedging instruments related to our mortgage loans held for sale were $305 million and $388 million for our IRLCs and forward contracts, respectively. We do not have the right to offset our forward contract derivative positions.
See Note 13 for the carrying amount and estimated fair value of our convertible senior notes.