D.R. Horton (DHI) 20 Apr 232023 Q2 Earnings call transcript

Good morning, and welcome to the Second Quarter 2023 Earnings Conference Call for D.R. Horton Americas Builder, the largest builder in the United States. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

the Relations to for turn President Hansen, now Investor of D.R will call Jessica over Vice I Horton.

of for Thank Welcome you, second results to morning. quarter the our call Holly, to discuss and fiscal XXXX. good our

we as by statements Act XXXX. the includes Reform defined Litigation started, call Securities Before get of forward-looking today's Private

be there assurance that actual D.R. any statements such no Although are based will is not materially Horton believes on different. reasonable assumptions, outcomes

the available forward-looking any this date are or on upon statements. D.R. All Horton obligation undertake forward-looking update of information call not to D.R. statements publicly and revise conference any Horton based does to

information Additional Commission. quarterly Form the XX-Q, Horton's that D.R. Annual Exchange material to Report are Securities both on and of report changes on which and lead filed recent in about Form with is most in factors performance contained XX-K could its

found release updated Presentations to next we Relations our the section to earnings file reference. can morning's site for and our call, under This will your our this be and investor.drhorton.com. data Events on website presentations plan and supplementary After we early at XX-Q Investor on News week. investor post

turn to our and David call I President the Auld, Now, CEO. will over

you, Jessica, and good morning. Thank

President also Vice to and I am Wheat, Operating Chief Co-Chief Mike Executive Officer. call this Vice and Executive and by Financial joined pleased be Paul on Murray Presidents our Bill Romanowski, Officers; our and

[X first millionth] We are a excited that to home announce our any closed homebuilder. recently for we

achieving We past years. over dream ownership been part of the are a of a both humbled their million families proud and have to XX home

of by solid delivered team $X.XX Horton highlighted D.R. the quarter, second per share. diluted the earnings For results,

billion $X.X with was revenues margin pre-tax income pre-tax of a in XX.X%. consolidated on profit billion $X Our

same XX inventory was XX Our period return-on-equity for was XX.X%. the for the March trailing homebuilding And our return consolidated XX.X%. ended months on

during and adjustments XX% market the inflationary orders Despite Spring encouraging improved is with normal to to seasonal pressures, rates higher quarter with mortgage and selling the our increasing our conditions. net pricing to quarter. off to from of demand factors, sequentially coupled incentives adapt start season sales an due first use changing

Although time, the new remain of remains supporting at housing higher for homes affordable and interest may and persist limited both points favorable. price and demand uncertainty rates some demographics economic supply existing

We changing conditions affordable product flexible our are supplier experienced great with well-positioned supply to trade navigate market and operators, relationships. offerings, lot and

and sheet, significant strong Our low financial provide liquidity with balance flexibility. us leverage

pace operating We to will sales market-share, on managing product home continue meet market, our optimize to cash and flow. offerings, levels increased generate focus and incentives, the consolidate inventory prices, returns

Mike?

quarter diluted consolidated on XX% the XX% fiscal second for for $X.XX year $X.XX revenues billion. quarter. prior income $X quarter of decreased the XXXX to to Net per to $XXX per decreased of in Earnings share share compared the million

compared XX,XXX homes $X.X home Our closed second were XX,XXX homes a sales quarter the $X.X in billion, billion on prior year. closed revenues to

average Our and X% quarter. down $XXX,XXX, closing was sequentially year price the with essentially quarter prior for the flat

Paul?

net to XX% sales X% and quarter prior the year to decreased homes orders value order billion. decreased XX,XXX from $X.X Our second in the

in the XX% year XX% rate quarter sequentially. prior from was XX%, but cancellation the quarter, Our up for down

communities was sequentially of number up average Our both selling year-over-year. active and X%,

necessary the rates, on and our better prices the X% homes offering price of provide quarter to X% optimize we year higher second affordability to continued adjust mortgage orders change down reducing inventory to the homebuyers where from market The average sequentially. $XXX,XXX, sizes have and our and the net conditions sales of was quarter in prior returns investments. the and up incentives sales in and To

seeing levels We sales that to indications and price expect incentives to XXXX offering incentive average continue and stabilize. a level throughout of beginning are are similar our we

and continued strength factors. rates general quarter and year market affected will selling Our which season economic be mortgage depend conditions, of rest third the the for sales the and other can in the the on by volume Spring significantly in changes of

sufficient sales start meet and We to homes continue maintain demand inventory share. and will to aggregate market

Bill?

Our and second decrease XX.X%, higher was On home were sequentially foot XXX December in gross points and incentives per were sales lot home costs the the X% quarter. basis impact margin The X% of revenues per square basis, sequentially. December square profit up revenues quarter reductions. down March home from increased sales price foot down a in our and margin from the on sales gross cost Stick X%. reflects brick to

starts. costs to We construction continuing our to new with home work partners on trade reduce our are and suppliers

some are the to making experiencing some limited environment. but cost We these progress also overall inflationary due still efforts, in are increases

closed the see with homes benefits average cost sales levels. our that we gross stabilize, is to to current is also of the and of starting stabilize However, lower indications margin our beginning around costs, home lumber

Jessica?

was SG&A our prior X% homebuilding increased percentage revenues quarter In year, homebuilding expenses by same SG&A X.X%, from the basis the XX in a up second quarter, points of from expense as the year. last and

are while adequately our platform ensuring We our our business. controlling SG&A supports

Paul?

with We sequentially. inventory, the our homes which of of and up XX XX,XXX homes XX,XXX X,XXX quarter quarter down started ago XX% were X% in this unsold, and from homes were completed. ended XX,XXX a at year March

from the our improvements reflecting chain. quarter, cycle our in decreased For quarter efforts homes supply time we improve first cycle our days closed the construction to and times this XX

to our We current demand will and adjust on homes based inventory and start conditions. and evaluate continue market pace

Mike?

of controlled or XX% consisted owned purchase when approximately XX% contracts. finished lots lots, Our are were we total of position lots be XX owned our controlled of March of and them. homebuilding XX% XXX,XXX at will were and lot through are purchase which XX% our finished

position. is lot to portfolio a Our and our flexible efficient strong key capital competitive

based current actively investments lots, and conditions. on in managing our are land development We market

and option off deposits purchase During of costs the contracts. land $XXX,XXX to and quarter, related and of incurred our homebuilding segment inventory impairments due million $XX diligence wrote lot

lot manage through market our expect to elevated remain somewhat conditions. option of changing we our We portfolio level as XXXX fiscal continue write-offs cost in

$X.X the prior from XX% million, development and homebuilding year investments Our flat second land quarter quarter in down lots, sequentially. and totaled

Our acquisition. land Bill? $XXX investments for land finished lots, current million consisted development for $XXX million quarter for of million $XXX and

the second Financial quarter $XXX revenues profit services with XX.X%. income of a pretax $XX million pretax million on margin was of in

quarter, mortgage the and of second our homebuilding handled our operations, the financing originations company our by to company's XX% mortgage our closed related loan XX% homes During buyers. for of

average and average for quarter. had our company company's and of loans ratio of originating XX% XX% mortgage of Mortgage this loans XXX FICO FHA XX%. VA accounted Borrowers quarter homebuyers The the volume. with handled First-time an mortgage of by an this DHI loan-to-value represented closings the score

Mike?

the the homes, earning rental generated income XXX from second rental single-family $XXX of Our sale operations of revenues million of million. pretax $XX during quarter

billion Our multifamily rental billion, rental rental approximately $X.X which March billion properties. at inventory property XX single-family and $X.X $X.X of properties was of included

rental more and generate expect increases markets. revenues in expands both as our operations We platform significant matures fiscal across and profits to in our XXXX

our rental third the expect to first we quarter, similar to revenues our quarters. second For and be

Paul?

Forestar, pretax our majority-owned of residential second million revenues for income $XX lot $XXX X,XXX development the sold total company and of quarter. million on lots reported

were finished of Forestar's or Forestar. owned under was lots and contract XX Horton. Forestar's quarter $XXX of the our controlled lots a lot million to of D.R. position at with owned offer from in purchased to second first right XX% XX,XXX subject March are lots.

more D.R. XX.X%. debt-to-capital from a net of capitalized ratio separately million $XXX had quarter with Horton and liquidity is of Forestar than end at

meet lot strong and to market is well Horton. with its relationship supply changing D.R. positioned conditions capitalization, Forestar with

Bill?

on balanced Our flexible and capital approach opportunistic. disciplined, being focuses

We balance to a provides with changing are leverage strong which conditions. adjust low maintaining significant to committed market us to flexibility sheet liquidity, and the

in March our cash year, the of billion of repaid months credit homebuilding million in homebuilding operations six of we we capacity February unrestricted consisting X.XX% senior XX, of on homebuilding August. senior maturity $X.X have of and cash notes We consolidated $XXX of provided and liquidity billion. $XXX first $X At the $X.X facility. homebuilding billion at will During of both $X.X our available that had million by and our billion revolving notes was mature

homebuilding Our at of XX.X% and cash X.X%. end net was homebuilding of leverage leverage was March, the

was consolidated leverage XX.X%, at was March cash consolidated net Our of XX XX.X%. and leverage

billion, value At share book and was a stockholders' was ago. per $XX.XX, March our year XX% up XX, $XX.X from equity

was XX the trailing return XX.X%. our For ended on equity months March,

our Board of level last total X.X Board a of paid million. $XXX repurchased million X.X date. for quarterly million million the as a authorized during we shares our repurchased The During to no replacing We the for expiration of authorization. common authorization fiscal declared $X the quarter new May. our quarter, and up prior million, year-to-date for be our end, in paid at stock, shares to common same $XX.X the of cash to $XXX quarter quarter dividend dividends has billion of stock has repurchase Subsequent

Jessica?

economic general continue to mortgage business. we impact markets current regarding forward, and significantly conditions capital expect conditions look rates, we that As with our the uncertainty may market

as for is providing our standard quarter are the We guidance detailed practice. third

have that of guidance pricing, also providing of are We we demand in season incentives selling seen now for the full incremental sense. beginning signs and the good the and homebuyer with stabilization Spring cost year

of in generate homes. quarter our We to be XX,XXX and currently June $X.X by expect closed in to humbling $X XX,XXX billion revenues our billion, to consolidated of to homes the operations range

gross in be a X.X% as in X.X%. sales the of quarter the expect to percentage quarter of to approximately We XX% in range to the second be SG&A home and third margin homebuilding our revenues to XX%

approximately we XX% expect around our services XX.X% to in financial quarter. a the of be income anticipate tax We pretax and to profit third rate margin XX%,

and operations. positioned We both to are continue aggregating share in our rental well market homebuilding

and to rental year, our our full between X,XXX homebuilding close units between homes X,XXX operations, currently XX,XXX and expect homes and and the in in For operations. we XX,XXX

approximately revenues We year billion be income our to consolidated billion. to fiscal the We of of rate expect an the tax XX%. for $XX range for XXXX $XX.X forecast in

cash fiscal increased consolidated in operations expect We compared fiscal generate XXXX. on our a basis XXXX to to from homebuilding flow and

dependent year our cash plan shares of dollar volume with share to our to also the similar a liquidity, as market our investment and reduce opportunities. conditions repurchases last We repurchase flow, on amount count at

We repay the have from cash. we $XXX million that notes of to which during positioned matured remainder of the are year, senior

our strong core maintaining our and operations, paying liquidity, continue repurchasing to an consistently leverage will among homebuilding utilization priorities increased shares. rental homebuilding We conservative and balance cash dividend flow our operations,

David?

closing, footprint offerings. our In product our geographic and share, results industry-leading reflect experienced diverse position broad market teams and

aggregating market and sheet, in significant balance provide conditions us share. flexibility and economic financial liquidity continue strong effectively leverage to operate Our changing with low

investing consistent of both our plan to through on disciplined maintain a value dividends approach capital returning We the to capital the repurchases and includes to company, share enhance which basis. our shareholders to long-term

countless million special Thank X entire you from team trade participated a our Horton close focus Executive continued hard Don D.R. and D.R. And contributed Chairman, journey Horton partners you countless Founder the the homes. to work. in thank Horton, the build, we and and our participate Horton years. D.R. to the to your -- We and over sell employees to past XX in and for

This our concludes remarks. prepared

now will We host questions.

is [Operator Instructions] UBS. for John from today question Your at coming first Lovallo

and questions. thank you my Good morning, taking guys for

if into Or The one the those third can it, on the third as sequentially. we has that lines, you think like pretty can trends, comment thinking trended the April way absorption gather in to as you typical a along nicely. starting I And quarter is, declining, reasonable here? XX% we are call mean checks move from along March what quarter, extent a it how point about from about April that? first sounds Is same we

Sure.

with to We our be in pleased sales pace April. continue

and April feel You and into everything that we a we call, the really signs stabilize say to us lot of continued has like would on like see. as we've seen heard

versus what QX on way. of QX a dead terms A go of sales, typically, few like it either sales within houses. can it's our times, look In our lot

that. now, down. of sequentially, could we with up. Sales-wise else, slightly be economics good. continued it pretty dependent and happens feels anything the rates strength be obviously, right to could Spring, going that drive though So could what slightly it's on be mortgage We the But

buy more more sense. Makes to could to ahead demand think grab, bit the companies just up I maybe push you land want then more well, say into is reasonably but going positively a of out reset a be to industry, And there expectations trying as land don't given and looking towards somewhat do holding an XXXX? of you

that pretty you owned. them. good look a think XXX,XXX lots out have controlled the portfolio board of I across and over in front roughly that can see know lot we're I were most builders

got handling So we for well feel if have that if increased portfolio. we -- positioning we've good as needed moderates, as demand really we the in about demand flexibility

We on our makes seen will grab look where it deal-by-deal portfolio of market-by-market on a to to sense continue to yet. basis. a big add land evidence Haven't

guys. Thanks much very Got it.

from ISI. coming at is question Stephen next Evercore Your Kim

to got for 'XX effectively, achievement off your closings the stable I guide this is given with saw environment end pretty closings that and have last you'll in volatility start much late high the very you do is a we which if had year, Thanks guys. a remarkable comment, of which year. 'XX, the adverse in pretty 'XX,

So you on that. congrats guys to

Now talk regarding share. about the market -- wanted to I

of able see who trend the from I of your to things as dependent -- particularly One be that are more an seen some yourselves builders private is such we've local regional and as to that are share, guys going as gain upon banks. emerging

strength over was So to with a volumes the rebound you market few is your that that without so, that commensurate that if can months? I a in the share were which overall -- ask you've gains, think rise last people be and a recently seeing to mean can been wrestling costs, attributed theme continue to does you see wanted you seeing lot whether of to that

Stephen, in market where largest cost demand in market have both our deliveries We largest we and and margin. more the controlled much see share markets stability share. and

stability So margin it's as you. expectation be and be to we cost continue norm a honest and There's of going consolidate kind with to markets. to of new structure, our

get as maintain hit in efficient still we more efficient It affordability and can delivering requirements we allows and more -- margin. houses, the

of it, us of the focus more houses, relationship which So our realtors, and on number business. with that why a materials third-party to controlling all stronger trades, it's percentage about the just and the drive access not developers we market gives but

encouraging. Appreciate that. That's Great.

environment, market. to sort product But also some incentives what adjusting able ahead? you back that as affordable looking as able value you design? put you're stable you I to roll probably bit I a has talked that curious I will by you product over would out ratchet sort going you degree orientation. And be ratchet the what to of know a I a relates and question term get more about inherently I'm whether of to are guess Second of be out back that. you anticipate that little medium to incentives to your probably more know

opportunity, back the power. as it in have pricing Stephen, stability allows we that. to have us of the and incentives where taking we We're certainly on and market, see we pull advantage some

We aren't offer a we change seeing what the significant in in market.

it makes able we're We to put have and some of we've that taking out smaller advantage been homes sense, that. where

opportunity and power on back an incentives pricing take basis. see go-forward advantage to do peel we of So continue a to on

to And our the as by not we're nationwide, with globally are everything, directing community those local operators local anything community, returns at market decisions market, level. making maximize by

Thanks guys. Great. lot a

Your next at from question Reichardt for today BTIG. is Carl coming

of Good for there weak. been bag in this the terms the for builders terms of on and of some and mixed going the West any of see when was markets Thanks quarters, quarter, the up in to pretty Texas I quarter, the sort some But good of with there's weaker, time. in performance the morning. orders? in Last a everybody. site. first Hi, Southeast that I'm one put been guys we're sort in curious recovery know information of geographic David, significant especially West have the the you of stuff in couple

Carl, it's positioned positioning. and the We about like way it's then less, stability. driving out we're there

flag But count, we the stability, so. overall a improvement. contributor, that it's part saw consistency, significant I'm of again, sure So not

absorption was versus really pickup our of Most Yes. community count.

and count of are the community lot the was our the but East higher. than We in markets, Carolinas. X% much regions communities, And a North East we call strength, new and up the it, still three North particularly just Southeast, seasonality, XX%. showing only then that Southeast the Florida than sequentially. overall continued of better Our were The but up and less normal saw is new have

Jess. And to down on in cycle down I'm chain Okay. additional half all quicker you Thanks And of turn? the supply in then -- that curious improvement days. to back or, mentioned mentioned and just or moving mix sort the to some homes sorry, that then are if metric? And of improvement extent, you the year expecting on supply was chain, XX you really times,

primarily sequentially of construction better the early of continuing Yes. supply prepared more that improvements, various and labor. to organized we Carl, was saw throughout see quarter, the improvement started. with finally houses homes stages being improvement we're recently stage and construction, getting through And chain in movements

So yes, as we year. cycle expect to times see through better we the progress

I appreciate it Thanks all. so much.

next is at Rehaut question Your coming from Mike JPMorgan.

Good everyone. Thanks. morning,

sense. First I to wanted a get question,

our as was you net stabilized. than in words, based the end net the that March an point, from XQ improvement with year. you're else end beginning recently incentives the that if towards or that or on the saw even certain mentioned there I'm if better You metric? equal, by pricing particularly bit of March other privates, here And range a throughout this if well? And in have has of stabilized with somewhat curious higher margin pricing little that quarter. all stabilization the been in, conversations on gross In so, of your above, expecting

good tighten up. to Yes, Mike, move able started turns. place remains see stabilization incentive we during bit keep able as stabilization. using through up season. bit. the tighten here Naturally, Spring key We're longer, by been see things We've I pricing Community selling is a and to And you think strength, we've community, that the are to levels those in to a we the we able word see as things quarter. stabilized

it's community community. that's by certainly So expectation, an overall but

some slightly able where pushing we stabilize, we're little there up it start to we're still places still where are some it seeing places So are seeing places bit. pricing decline, a

around forward, to look we levels. we a stabilize our on basis, expect as So current net margins

quarter, know it's early this for out of anticipates remainder the that will our the perhaps a perhaps play quarter. that's sure slightly too little range guidance quarter. to above how below this coming So why over And

how I to fully this has not we to drive about directionally Okay. if changes wouldn't fiscal there's to little cetera? building be guess, 'XX, a specifically, just and mix of guess affordability another you it perhaps ASPs, lower secondly, et ASP, or just but of appreciate think for been bit or the feel something where adjustment maybe may levels, to Bill. been thinking on around I year, I'm even about 'XX. more current challenges, affordability that, in product continue half back -- at Is question want should most the like the ASP you I try address potential made fiscal more address market into

can. Mike, that's think of why part mix for as the try here, our ongoing homes room were affordability we just Yes, levels all the reductions of be us. address because a that's current trying as I the in leave going we an to there always equation. we around That's slightly size And affordable to little effort to

But do same some good time, of to at market power, we advantage able we if the that a take community and also by community. pricing have we're will

the we ultimately in environment. dependent the obviously, happens it's far the largely day to remainder of and is what the guide market be for prices rate going word don't on and sales stabilization very And out. year over So conditions the

Thank you. Great.

from for at Your is Bouley today next question Barclays. Matthew coming

from smaller the land Thank terms you in on those Are And question smaller of the sort regional banks. wanted conditions from any you leveraging any you. competitively builders everyone. morning, Thanks of earlier from regional banking good I happening Hi, acquisition to changing private for of course, system. with of builders How generally questions. the changes are Steve's yet tightening what's starts? builders? guys from those seeing follow credit around reacting actually sort to taking up

we on there, and the land a certainly the have of shift and they're positions, haven't regional, through a operating lot product. come in few year market. any A seen of of cancellations. been of they for picked up how certainly most smaller working they're or inventory the significant through here in significant privates out builders a have that shift significant Not starts of positions seeing addressing end but the have had lot and basis calendar We They've may market. no go-forward that how this really gone in

Got it.

And started Okay. less the it Thank that. quarter. sold than like for you during you secondly, then looks you homes

a have demand forward starts harder of room going guys pace. sort kind to spoken I you these and trends? about are starts think aligning forward? thinking going How little some of you here that any Is of guys on improving previously given about there sales push

to Yes. of quarters, We quarter. kind in neck search focus were sales. in closely we and it in at transition our closings you space. this the last our really, if that, couple neck And a look tied were is of was But more

increase. starts do so increase our our we a community to to be our extent And market, and on different by back what do of by would trying next with to build guide The to factors, market capabilities, lot quarter expect dependent expect for we next community which starts will we're our but production to quarter.

All Good right. everyone. luck. Thanks Thanks Jessica.

Thanks Matt.

Your at next Wolfe Research. from Truman question Patterson coming is

Thanks morning, for my good Hi, everyone. taking questions.

to Are usual, you mid-tier business to mortgage kind hoping wanted overall for and update as it's tightening loans? thoughts. tightening from consumer been credit environment. your I financing First, standards of that the get but mortgage on in the distress market lending or non-agency We've or your any of agency, an banks, heard seeing in business warehouse get

headlines that's moment, continue our having to lot we'll very something have it's facility conversation of just as place. We and watching I obviously, been bank all we've with kept banking with closely, business heard. warehouse what obviously, the the At Yes, relationships, quarter, that group same quarter, still that had we basically echo our monitor. this in would this but usual. you renewed But a we the mortgage market

to working functioning be to still to. we'll further prepared market, adjust something that's is distress obviously, as But -- if and And see so that that in we normal. that market need

D.R. the market, Bill, comments? that of those kind and to both Horton relates broader

the see a headlines, we not rate no, significant so be happens all the impact. environment seen obviously. Yes, absolutely. spectrum But there of headlines further today, banks, what and have the We there. in could on same And across depending

outside increasing Okay. an on relatively costs might even of think you seems a update I lumber. you could Bill, then Perfect. And us bit. moving sticky. construction like just be little costs of some savings And year they've just been viewing update But magnitude It Or XXXX? stable things lumber? pretty the are on really through see just an give we outside at cost this how Should into of point? really the you're improvement potential mentioned

I recent a think of benefiting the to at A lumber increases through the of that starting some seeing stability. were starts we're lot would well effects declines. be price the getting stopped. the taking we're stable we're pricing. past But have we're seeing lot commodity the from the lumber year more coming cost more over But we of point those normalized market to anniversary into increases

I'm they cost our -- certainly not to have but huge been inputs, a been in little expecting see bit changes sticky. have increases So

Thank right. And good you, the all. All luck upcoming on quarter.

Thanks Truman.

Your Pettinari at is next from coming Citi. question Anthony

morning. Good

which than little better expecting. were think, ASP I was bit a is Your quarter-over-quarter, X% net we up, order

stabilizing? effects call Just that mix wondering type if given of commentary product any there's there, kind incentive whether around kind or out you'd the of regionally

quarter. stabilizing I delivered much fact, think sold in quarter. like-for-like. half We saw quarter a were of in we this through the about it's pretty market homes the the And

looking and And adjust to absorptions and and We've in market conditions stabilization the good level, in right we're see seen levels hitting we that, incentive incentive we're so about communities pretty pricing. at a levels we pricing feel good community-by-community when now.

of of kind on mortgage to year helpful. were about room for rates limit assume sort do go around That's the current that up could if we maybe rates full that upper production? flex of levels? you And moderate XX,XXX outlook, should does just to Or to Okay. an some think the a have bit, And year? you where then

that think for our in and an provided to expect realistic to in would is improve incrementally in range stated, from range and inventory is all this given as our step-up that But one saw the we've that the under expect incrementally we year our delivery have production, a say already conditions think I significant of we quarter we this here. a currently I we current do nice the homes upside our realistic and quarters. starts starts in the coming We range to terms increase a current circumstances. year, would

the call rate And around Okay. the we are where out full mortgage of guidance you'd around there? just year or assumptions or kind anything

conditions. outlook. We things could our If affect change, Yes, obviously that current current conditions. on guide based

I'll That's Okay. turn it over. helpful.

for coming from Maklari Your Sachs. next Susan at question today is Goldman

you. in Thank you a first we've little little quarter. you you what outlook about My Good on rentals? get And morning. for talk how there? As any of can seeing question thinking you're seen side are side, the sale business? is, rental the the bit the the the Are a seeing shift better about

ability and We to on our up our have seen rent. both good rent pace apartments single-family for

prior We we've seen and there. have seen stability the XX in over rent rates. They've been stability bit increasing quite months, a

the in activity see market. still we side, purchase the On

demand certainly out although some this quarter would buyers terms see get we for in and market. of to sold we We the to a of little their off pushed bit last and of number of of back have terms tightening in solid really we out in we seen pretty the that these still have financed, communities And that some but ability number units credit to have consistent units.

next appetite then And we said the you sequentially. as helpful. talk land are was of together. you given for through trajectory That's How Okay. your about outlook it spend, way go Land quarters? the that about bit be acquisitions? thinking coming you believe flat and I a demand to couple about seems the the Can

just a position. lot market. continuing the good replenishing look We're supply really flexible by We've to market lot position, at got good a

just our the to closings X -- to expect way moves bit we'll continue be incrementally to that. or don't then replenishing significant volume little So a match increase, it. But and to of replenish I we'll sales more necessarily as be other.

good luck. and you, Thank Okay.

at question from for Research. today Your Cleveland Eric next is Bosshard coming

Good things. morning. Two

performance? First of gross gross bit the better margin the think targeted. was different had all, in margin a drove the I quarter was that relative than What you better

we than spring, start stabilized projecting. see was higher I stabilize. not of were think end QX. gotten the were able once pricing our really we've stabilization difference into the that seeing the to the been of at But signs to main level a slightly at We we've

that quarter think I we sooner -- projected little we're think seeing would So have a I ago. than or that a earlier stabilization a little

We season the closed before, I March quarter. in to the spring mentioned in definitely start quarter. as saw the half a we sold selling And strong were homes the

from quarter. carried improving completed price stabilizing the of of environment. We they number fair some benefited in So the specs and a

the And looks of what with consumers number you Okay. if the the what on where of rate rates average that to what help then words, sense closings guess, magic get the trying bull can are a rate the in effort, or pricing. curious need secondly, buy comfortable downs I'm side get in to like, regards of I to the what rates to get of homes? you I'm the part is? incentives other that magnitude or closing -- on just

Yes.

general So on average our loan point typically buy value. down the is a

X.X%. this headlines what there talking is a in been probably It would is reasonable relatively little a consumer I about a okay point. of with say bit, fluctuates at So X.X% out lot but of there's terms

down XX%, through are Roughly buy of utilizing company. buyers our XX% our that mortgage

that of they're benefit And down. point that buy getting so

any those? change , moves has to but XX either works? around And been And the trend trend that of there there the variability the has that is within the of any been that? X.X% Or is kind around, regarding out then XX market that, obviously, mortgage the in bulls that within

in on rates. have certainly rate stayed consistent. It's the pretty see what consistent the overall to throughout And and relatively fluctuate we been will rates market the market our based quarter, we

to X.X% be So and accepted it's that right hovered quarter, for seems homebuyers. by the around our last

Great. Thank you.

question Zelman Associates. Alan next from & is Ratner coming Your at

morning. Good for quarter. taking my Nice question. guys. Hi, Thanks

are question, builder, First an obviously, you you as points at exposure but do in guys entry-level have price segments well. different

in I sit quarters So recent notable trends there differences this price in I'm curious across that the to holding changed period rates that to the were you off you -- for of you're mentioned all? similar time? guys volatility was -- are that a willingness along in construction process. in points? backlog a guys longer as you at effect, stability reluctance and Are terms the if seeing heard that now sit kind given well time seeing maybe of have And period in buyers with specs of you until we to long and they seeing Has your in of a think of demand backlog for more further any were

seeing to bit rates, I our in But earlier feel market us they better willing are cycle the the in a that. and some times buyers is process. buy improve. of good think There's we been little stability thing we're for about production seeing

in So give sort they a a backlog we're to certainly ago. of still year of period than able have six shorter time them or had months would

we're a that that quite sell able level from that to so And helps there's confidence bit. a buyer

and notable question, that it's the And on differences smaller a your point price part it. active any move Got recognizing up adult business? of

even and the price. higher where market down market We in price really we price that to price point difference are the given at for we're any end demand we value go still seen curve, up levels the market haven't a significant Alan. the in No, market, of as at of of terms

still seeing for off may price, or they X of we're be that they've that $XXX,XXX if X. So looking And us, means demand. for come a

And move so I the people, are down catching think, as we they curve. those

available. And amount limited. changed what there still home very the out existing That and hasn't remains of is inventory

is want if find price does And it higher at a home somebody can lower point so they a price where right point, new or to construction now.

cost from of migration operators low the high Florida lower price or And seems relatively in cost where you our to Florida California. a coming York trend point somebody for a like what is from have New state states, price also high

price. look about can the might number decline If rental your squeeze of on is be segment. since in we're price follow-up sure the relatively small there average order SFR at If quite I a in come a XX% I'm involved significantly. homes. I mix it's there And per unit some Understood. of XX%, But that homes, down talking

trends was quarter's that going in today? have for-sale XXXs. this in the of Is the market? Or on think mirrored what's low I average the the representative market

projects. seen in the I this being was were cap fall saw delivered change mix certainly largely those those with where on markets, capital geographies a quarter homes of disruption those properties. what increases disposition we've rates and But for we related NOIs the rates and think of the in of through in rental

about that front for the execution help So with about that good are been those going excited sure. feel of the for the the that disposition in properties. and platform stabilizing overall which is us excited Very still opportunities have sure, of markets capital little to on a bit,

see a be communities rental selling or more around to smaller because geographic location our just expect, whole that they business. can homes a to a for-sale little in go-forward we're basis, than variability and time, our townhomes more And cause platform on little or a at also could move

up the number quarter-to-quarter in Until going state, to see and to projects more a the you're level the larger stats of little gets the bit steady in in a closing quarter volume there. lumpiness

say little ground of lot properties. on there and will money out get difficult had it's investment to inventory a a I chasing And very very to the house lot put build, a

for think this hopes we have we product high So segment.

Thanks color. the Appreciate guys.

Your question Jadrosich Rafe Bank America. coming next today from of for at is

mortgage Thanks ability morning. prevent as question. down environment? offer of offer how you do rate taking your good your a ability impacts and to volatile and mortgage I wanted weekly that? buy think demand sort rate Do move buy volatility to rate Hi, my to around? is ask, about see demand how rates for traffic in to downs you Or

the change time certainly But see, immediate. that to you sales cycle could in going think shift traffic, you're up or rates I either as down. see isn't

relationships offer of close. really so And good and us to and maintaining that some our ability stability buyer those and partners at our agents in rate a the helps our do job realtor

buyer the gives at a payment have X.X% at of confidence than we a certainty qualified do just to we rate, buyers And the more and X.X% rate.

So people up it that. opens if you're to to ownership present more able

manage point through mean back easier manage in environment rates now we of as last year. XX impactful rate year. we as what what had last to when were versus moves to I half experiencing the about the you're interest basis XX talking to in to Much it's just not

guidance and raise anticipated Or the then was prices just margin gross as you sell higher initial than improved pricing as at came Thank following the for did the all was Is quarter you the like how gross it you. better didn't quarter? versus throughout in there where start It stability projected. during sounded on have quarter. And to the a up earlier your on that you an the elasticity question rate? margin had to then -- the current to homes lower prices much

it quarter We the we lower bag and had got by actually spring, But that's as how necessarily. as sold we that to not of gave, we community latter. did we guidance the terms the half we Mike Versus as we're was this about have been the projecting quarter. our as said, we much into mix did, community in closed a homes managing in

So as seeing hitting certain solid into demand carefully, up, to pushing we started communities, starting our spring, we are the definitely are up. pace, pricing push in but it

Thank you. Very helpful.

Your is James. Buck from Horne coming next Raymond at question

Good morning. thanks. Hi,

multifamily a the drill in to just year. expectations for Before remainder we terms breaking wanted leave apart the your I further rental of bit maybe down versus for little the rental single-family segment altogether, of

Is backing rates of with and expectations, buyer vice of some been kind of for SFR what stabilized rate disruptions cost up -- the terms that guess, pronounced there's versa? cap of multifamily in expectations you or higher more versus markets. I segment? in that are cap mentioned in either Or capital capital You on seeing

The It's other a are don't the On were has changing that's there it higher not gap but think from the multifamily saying pleased known it a changed. does ahead go-forward a between next the rate. more very over they market, performance the year -- a the than Like-for-like, quarters. has opportunities I seem have several stabilized. been rental. a to and the it's multifamily with getting us Generally, What single-family basis, relative and still we ago. cap that than at more segment lower we're projects disposition underwrite slightly established of market.

for might Appreciate here competition environment more with homebuilding Okay. opportunities more later is, on next either challenges there's more just that kind year possible capital that just smaller year your in constraints the competition private you if -- that And regional and it's that. constraints M&A and hypothetically up in maybe That's small banking competition regional there? just out particularly would open for of of private helpful. maybe your or think this -- ahead some capital thinking the

-- acquisition We constraints markets, see positioning in market can to is people capital that upon going opportunities. a it's based the do we'll than lots or or them more for we the smaller by or opportunities or Well, to up have, they a believe private and aggregate regardless, privates we builders evaluate region. in the impactful pursue that going inventory be not. via a done us it's providing here availability help But small whether picking just be and

us. for opportunity an It's So

next Housing today Research Barron Your from at coming Alex question for is Center.

then time level deliver homes? and could to capture do what able guys something, those this or some of of different able keep the XXXX, picture. thought warehousing and you grow have we Yes. of around vertical took of of a orders Thank was type you. At deliveries you everybody differently end big of was some the lot Any of lot -- there could and hoping talk hiring I Meaning think and just a a big or to thoughts good guys to doing supply be integration? in limited? towards demand think deliveries go say, into to do anything X%, do next ran below rates. in kind were If at of you X% suddenly X% materials not as pretty be to here chain year to down, you issues the crews on is your the year, or X.X% or demand rates around following just

could just XX bring issue the to some that is next getting industry. think And be the even huge months. you've the a got within life I happens. mean there when capacity XX built-in transformers you think delivered then issue for a everything in I else innovations and something solved, lots

ground, trade capacity. constantly we we've consolidating had gaining our difficult capacity, looking because very you difficult operations, communities. would trade you're it that's do of we markets, XXX% pick of for in that capacity how a capacity, And push, we're trade built. entire material within we so focused the It's And supply to the XXX% materials both up is we level very incremental where do simplifying But why on, throughout and at focused are can constructed. on really it's improve controlling chain. from kind get our logistics share to positioned, of still been market consolidating on getting what if just lots I house are industry, the and And be think the division in lines, how

that in in And you you option? the materially percentage versus the of terms to your guys in own shifted you guess, you Forestar Okay. ability is help process of how to that could option even increase land ratio your there many you to obviously And anything do Forestar grow that acquired more? years. else lots kind I to but last I few of do shift or What mean, to something of going supply, have

standpoint trust a -- a where continue our I we development just work. day-in, them bring us and day-out, or a up they to deal partners great with let's developing know then it's Well, when they mean highest building industry. bring relationship be time of of is execution It's to relationships there's the trust level anybody of And housing it through deal maintain the in any and over build from going work. kind that to hard market. a

on transparency. work work. that magic no a make there's -- It's happen. It's it's That's hard it. little So year. to all to continue going but better trust, relationships. to wand -- It's we're just next to Try get building

to best road your right. back Well, All of luck on XXX,XXX.

Alex. Thanks,

next for Mike from coming question Markets. Your RBC is at Capital today Dahl

for Thanks my question. morning. taking Good

didn't you of could box underwriting too back ago Just but into two offense. or aggressive might versus today I'm elevated lot on way you have deals quarter the the somewhat have not sense markets kind of a still improved, they I Yes, makes in on walk would what expecting the a wondering, things current probably have you you your follow guess I'm necessarily on couple maybe pencil that think A of would option in thought flexibility you now what come call, book the clearly, they quantify existing side. be. you some as you portfolio, deals note prior? already kind on might Any write-offs. and that getting think up comments the ballpark your from

many We at our for and of have or deal point sense and time. any difficult this tell you, to to teams work partners, opportunity it anymore, with contract It now leading and global deals our ways what work might. can have to be and doesn't any in under out really to get us fell looking hard aggressively would market. was evaluation to falling find operations so ways work get as out think David increasingly we finished lots have to we said, these anytime development to that those landowners to are an to produced lots are make for days, bring deals I the

transparency years achieve relationships that. really XX us evaluation doing and the over a built we've process constant this help the it's So of and

it. Got

question, second then And capital on Okay. allocation. just

you're With or the buy dollar buyback a moving the much would necessarily of two it have the obviously, as ago. that based quarter guide, doesn't in stock as terms on figure

that flow a of the when dollar do move of thinking on, share I count the level year targeting think as and about we what's So keep more more Or you'll the should net -- cash incremental sheet we're either to certain figure? allocation you dilution guess and balance you reduction? back or capital expect targeting expectations, goes that offset

stock the as hear complain the our a impact invested dollars the both about repurchase and at count, you share on higher looking we're with will for obviously, -- always price never sure It's Yes. well and respect me activity. to as

day, the that it's investing. end dollars but we're -- So of

levels. thought look cash our we our of look our then chance we prospects we improving had at liquidity that versus our our projections our share the the are flow, forward at flow earnings, projections increasing improving extent look look increases and cash to at levels, what are at we we repurchase so And previously going that

something in as is for investment to we'll and we're and expect year our guiding we needs the our of be, rest constantly to level of at same of reevaluating. now, to the as where But that's the still but and capital dollar looking the invest business, right around our positioning there as last year be

you. Thank Okay.

Jay McCanless Wedbush. Your is from next coming at question

taking Thanks morning. Good my questions. Great. for

what is streak? about So the that presuming could but that average talked headwinds communities that about if this further to talk and I fifth earlier, just continuing a right in David, this my now selling little right, guess, are I you kind growth, I'm of the And you where trajectory? row math maybe count have growth remaining quarter is up bit lot I a the support think think been year-over-year. have

market have going Mike It's of lots be pick to it's the take. It's where I some to market, opportunity up yard. earlier, said lumber tell what consolidating, on finished can pursue that role controlling aggressively. We're an Kind kind you. to like going or of to we

the control you ability meet capacity, lots, the control you the If capacity. to

-- more much start set much is would the look kind anticipate thing. production to the When I continue time There's a open count of community, it to But decline. absorption, the we of which better So every understand pace sold at are immediately, because market, it kind efficient is a stability operation. and drive was from ability the committed declining an good normalizing. market out the

to guess, our you're see community move a say, I So going to that's think long way do continue count loans I on. -- yes, to

historically, the could what was intra-quarter? quarter that you us pre-COVID, homes Okay. of And sell close second fiscal percentage a remind Great. you for have. question fiscal It the third I guess is high-class I and to and problem have, would the

bit, and really and more it A kind is a the of XX% homes we of the sold sell which high. XX% at quarter, our a range on time, which position somewhere to bounces dependent intra-quarter be XX%. and really of lot very normalized inventory close would were just between at That closed our doesn't seasonality. able why have this quarter, same whole It's and quite around is

think So but replicate elevated, when the expect XX%. we we don't be could about still to necessarily QX, it

position. than going Well, better quarter this into backlog much our - is better much

So.

Yes.

Okay. Appreciate Thank Great. it. you.

Again, be normalizing. things just feel to

end We for turn session, call the over I have reached Auld question-and-answer of remarks. and now the to closing the David will

to finally, to and today and time We look quarter compete call producing results D.R. again forward the speaking the with you solid in to in July. to Holly. congratulations continue day. Continue to win our Horton quarter. team And on share everyone's you, every a appreciate second third Thank entire

you time. participation. lines concludes at today's disconnect your you this may for This your conference, and Thank