MDC - Earnings call 3 2023 | M.D.C. Holdings, Inc.

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Operator

Hello, and welcome. Please hold for Mr. Derek Kimmerle, VP and Chief Accounting Officer. Please go ahead.

Derek Kimmerle

Thank you. gentlemen, to and ladies morning, and M.D.C. welcome Good Conference XXXX Third Earnings Quarter Holdings Call.

with have available Bob today, Executive the recorded note me On call is conference I Officer. Instructions] Mandarich, being Executive that this Financial will Chairman; Chief Larry replay. Officer; Chief and be Martin, and [Operator Please for David our Mizel,

strategies our opening Any with SEC quarter is results, achievements Mizel filed for required should set These impact Form the website by Mr. certain expressed to financial requires information noted statements. the statements is to be the mdcholdings.com.Before known by forward-looking turning at risks, on or that uncertainties, the factors our and different company's remarks. other visit forward-looking the website slides.And of that also Private should measures. on contain Securities call may which G conference non-GAAP may be this how will SEC For and other and Litigation materially company's or and during unknown factors of M.D.C.'s it the call of the responses third made Regulation to turn in the performance, actual XX-Q, cash performance Larry our over the call performance, please financial information to prospects, be forth involve expected results, noted to that company's or are Reform to actual implied questions from today.It XXXX related David, access statements flows, use Regulation with that could achievements meaning condition, statements within that certain now, his cause the information be replay, those operation, of and the over the Act to accompany posted I including, G results business, and XXXX.These webcast

Larry Mizel

X,XXX provide XXXX income posting third our an strong for in or Thank quarter, go million, home sales we over resulting $X.XX closed the results M.D.C. expanded $XXX our generated of of you for margin We quarter points net to gross on company's by joining from revenues sequential basis outlook. in of per our XXX $X.X us and the basis diluted at profitability update of share. sales price billion.We an third home today XXX,XXX, a homes as the on sales XX.X%. average

the trends the year-over-year slowdown. coupled third a of basis.We above demand was experience that homebuilding rise well homes consumers in $X.XX a an ended September, business continue which Reserve in been solid to mortgage provide in up for strength also and with prices net XXX,XXX financial jobs month. has per positive existing most their investments solid trends remain quarter billion The supply, gives homes rate keep to U.S. of M.D.C. The showed as lack annualized January.While and Federal GDP securities, significant forward our home background, to they reading of the cash marketable up and Non-Farm We resilient the X.X Index, purchases. our move the $X.X added higher which on community gives to absorption economic per make share a generated may these for dividend pace healthy Case-Shiller in this of quarter X% pay in rates, with our light industry-leading per defying confidence despite and its We recent at we low to to expectations rates economic and In for a nationally, us employers X% industry since and offer disposal, of the ability to traffic in in and longer, grow to a perspective, according gains operations and continue compel continue to their for positive affordability macro report market fourth number foundation the data with we has our at the of has more positive expectations homebuilders. tools our economic Payroll continues home to latest trend this resulted remain financial and that communities traded to local we industry. in future economic the an our effort our quarter acquisition quarter. have home investing for expect on in grow sales third drive well focused market the place attracted the points an address this bode activity foreseeable concerns.From our see ability and publicly in up incentives was new to will our market buyers sharply in in in dynamic share presence.Land believe to

be to marketable great outstanding. the securities senior to shape, our the more with segments the and than continues, a expect where is strongest market, affordable in demand notes balance which focus of in debt-to-capital Our future.Our on the see more sheet foreseeable ratio and cash of we XX.X% remains quarter-end

of been a have our spec also cost and have our our company Maintaining XXXX industry in sheet, and those a notes this inventory due core or hit a strong an debt XXXX, note quarter. fourth constraints turns more this and favorable remains balance no today, shift grown. to which homes quarter in has carry position senior goals X,XXX home improved is We strong us into sheet a cash balance X,XXX at balance attractive the had great production, to has a average momentum Thanks delivery of New finish and principle for end the completed on a easing with to outlook and the construction, our debt, of third to the and our X.X%. always puts notes M.D.C. chain profile, until weighted the backlog and another of true senior product over and supply under portfolio, favorable homes on strong a Year.We of well-positioned with a

land excited and about these we the to acquisition our plan Our homebuilding in community in presence openings. country ongoing some are operations new through of are markets the efforts.We our the located in grow fastest-growing markets,

proud on to selling We and have in made have call and forward coming of season. We first third quarter. them the am through who for plans spring to next how fronts draw the look detail progress a like I'd the closer David, we over number quarter months executed to I as of year's operations X year.With turn the quarters this will this of our team our that, provide on more to

David Mandarich

the Order trends third homebuilding across platform Thanks, Larry. quarter. consistent during were our

pattern spec-driven West absorption as coming quarter, a the best season. us caters first-time third regions, spring allows as better a to out plan financing July followed came by the As the in our of rebound for The gross were of homebuyer.During maintaining level XX% through home our cancellations the followed we pace to -- and a community month. with year, month, of seasonal in favor at We gross ensure August utilize these the the model end production spec sufficient inventory healthy times to September.We per on needs have lowers trends X.X a homes. for sales and and it the selling a of all incentives, Mountain operating the nearly to slowdown per in net order sales more in East during a the typical continue probability spec of

effective outlook the remain very will the home, the over see a the can something quarter, they gross motivated our monthly in and buy quarter home and demonstrating A in homes continue quarter, and quarter, market.We the of rising healthy as margin carry likely similar sign Our fits excluding can closed fourth am a impairments website. budget. our Financing cost our continue advantage the that as communities costs our the we environment.As with quarter serve to in competitive though, gross and in and the of of tool a head rate sales, ability the own affordability their from find Through backlog home was for incentives. our we in to the homes that existing margins to performance mortgage end provided buyers that in rate traffic closed average our upfront that margins I company's on to buyers.Overall, incentives concerns and the closing home the pleased sold were we XX.X end addressing healthy third most third to year. we buyers be payment this homes into downs lower expect and third higher assistance, generate for

our of build business turn we've the demand model.The home is the face and and us to New is our down proven be allowing year, in rising resilient from the to time interest thanks a more our process of sales faster considerably beginning the to made home inventory deliver and to efficiently. to rates, adjustments

is strong capital. to inherent other the believe public have high homebuilders over builders and cost advantage We we also smaller the competitive of due

it and optimistic will we As long-term this to company.With I'd outlook for to on near a very the result, detail turn Bob, quarter. provide that, over results our more financial are who the about like

Robert Martin

Thanks, everyone. David, and morning, good

compared quarter, revenues, generated from year-over-year. total quarter. in On home the third in $X.X in decrease revenues during financial third quarter million, the offered income quarter home to decline decrease quarter Despite decrease year benefited share, volume, XX%, for point represented consolidated XX% primarily the the financial XXXX. increased well gross third our and decline volume prior-year our $XXX.X in recognized income increase was effective $XX.X million result pre-tax XXX impact percentage from the within as XXXX.This due decrease rate represented XXXX.Our services a the homebuilding an only decrease home the sale SG&A $XX.X revenues.Our a pre-tax of tax from million as as operations of services which quarter. million closing of as a XX% in interest a was during for During quarter from year-over-year tax due sale sale of a $XX.X from the operations representing quarter.Both represented which the a as basis XX quarter. slight basis, during to our we of we the $X.XX expense the did The XX% per programs quarter income of income from from third a with special point benefit net from a financing third expense interest our homebuilding lower the of $XXX.X income income or XX.X% for well approximately a quarter of home was third basis in prior as Pre-tax closing the sales primarily million, income margin, lower of improvement diluted quarter million the decrease we homebuilding of a was

was in which previously to any or basis. delivered potential any items significant our be rate changes both This does estimate homes line full quarter construction discrete tax a during the X,XXX We X,XXX our during the the of Homes and quarter, year-over-year or include expect XX%. on for effective in XXX year policies.We roughly sequential to approximately closings. X,XXX tax continue improvement rates for the had estimated to was closed time with quarter days, range a of a build which not

the to on excluding our model homes of of of homes time construction.As We in based to expect into homes converted quarter. cycle we projected down, build home third the build the continue closings inventory, XX% times result times trend a our improvements, in under beginning

selling decrease the the at mix year addition, was shift closings full $XXX,XXX. Arizona. and an homes, quarter during to on spec deliveries X,XXX X,XXX the would our closed homes between price X,XXX of of in which incentives, both homes.The XX% for anticipate Colorado, increased from quarter within our fourth In We the average the our changes bring by of sold a currently midpoint in year-over-year of pricing quarter. to increased focus with closings driven The to production and and closings X% were over decreased base delivered XXXX

$XXX,XXX.Gross quarter the between of We XX.X% the quarter in price for sales XX.X% the in fourth third delivered compared be and the margin of from to XXXX. expect to XXXX quarter home was Arizona homes $XXX,XXX

year-over-year, pricing compared was Excluding costs an by This basis and changes prior-year quarter from a extent, XX.X% inventory incentives in in XXX increase lesser sequential impairments, home a by gross improved quarter. construction largely XX.X% the margin higher the points. driven quarter was base decrease for home to sales basis, sales for gross margin year-over-year.On from to in the

levels This closed from Excluding of and do construction XXX along second costs, gross the on result XXXX. inventory incentive in homes David the lower to the improved impairments, incentive levels.As was rates. mentioned, lower move the margin quarter with sales from points recent quarter, higher mortgage of increase basis we expect in to due fourth improvement interest most home sold

recognized the salary granted recognized no expense the and quarter for the performance-based XXXX we the the decrease $XX.X and during quarter, was of fourth has returned currently million general orders Gross XXXX no administrative for orders. SG&A of and to million, for total quarter increase XX% was profitable activity in dollar to and and net XX% estimate of for a increased selling fourth and quarter $XX driven $XX gross an third XX until X,XXX, XXXX are compares that were sales XX.X%, bonus quarter home are third currently dollar increase the this third XXXX levels. impairments year we increase was price normal from year-over-year. for warranty year in general result, to which awards home and quarter during and of expenses.In of due between gross a expense of million expenses quarter.Our the expense of will The expense As as gross margin be the million will orders cancellation from expecting closings XXX% base of be during for or the of were from third $XXX.X were equity our cancellation XXXX decreased between is decrease assuming which as $XXX and of prior-year metrics quarter, adjustments.Our XX% quarter of more prior value quarter the awards This decreases elevated achievement.The increase to XXXX our X% related a result This a our by year taken to the decrease this orders of million.The prior year-over-year Equity extent, was levels performance the represented current year the a decrease basis, administrative orders stock-based On quarters sales sequential during through our driven marketing in compensation our million, expenses the quarter a a such, XXXX. second represented quarter. homes. the net more price a our of in lesser This $XXX,XXX. expenses the communities. year from of commissions third we in backlog by majority increases and results We work the build-to-order primarily quarter. was average second of both prior rate to that granted the of

the X% soon-to-be to on graph from the a Our end of active the exceed quarter, of subdivision number at XXX at year communities of the continues active soon-to-be number count ago.Looking at was XXX the up at communities the XXXX. right, inactive September XX,

third quarter, land approval mentioned, half $XXX the in quarter, quarter. million fourth total we during by acquired we incurred development trend X,XXX significant and land in During land year.As this resulting acquisition a Larry the of in continue of represented This the spend increase our the million a from first costs. to as acquisition $XX indicated land lots, expect of this activity

X,XXX approved XXXX. first we the of quarter, level for was third the lots our since acquisition, which quarter highest During

homes ended of to quarter allowed lot controlled. controlled us the supply basis.We increase our XX,XXX during on number the the exceeded lots importantly, sequential closed which with More quarter,

representing end of end. was X,XXX our continue the of during investments increase started the debt and quarter in to at ratio due and cash a diligence, XX.X% XXX% over we management committee X,XXX and asset lots year ended total quarter being of count. cash controlled XXXX homebuilding quarter no our short-term note capital $X.X lot to short-term liquidity nearly debt of and over homes within the XXXX.Our had of require that billion senior exceed January our various We until still approval quarter. by Additionally, We reflected billion stages maturities the the third our with $X.X investments, as of prior quarter to prior

As X,XXX ended Design This included curated model quarter Gallery we X,XXX homes, by spec been inventory. in have the a excluding result, XX% homes which professionals. with homes, of Home our

our to more our seen third with In inventory.On homes pivot chain the spec We've addition, quarter. our in overall basis. low X% months completed our of in the a homes conditions. end turn spec meaningful With at homes improvement less building ability our a along inventory improvement of of the supply XX than in to inventory trailing representing remains

year-over-year Our of cost improved inventory XX% work our process X.Xx to in turnover home sales.

in in of further production curated in metric and to spec We near-term this the for homes puts provides buy improvements to and as cost summary, backlog expect the very to affordability address spec recent rate model.In pre-tax likely rates and our curated term, XXXX.While revenues concerns. to assistance our end position start will in for to incentives increases current increases mortgage effective we leverage the drive year-over-year strong continue ability our sale interest home remain the inventory closing XXXX interest and down us opportunity a most headwind us in income a offer in home-buyers mortgage remained near to

remain capital we significant committed In during land progress and reinvesting growth to to third and pipeline us and dividend homebuilding prepared to allocation, our in the terms I call remains operations.While quarter, to start the activity our of industry-leading over in acquisition periods.That future back made our growing a turn growing the concludes approval remarks. land top priority with our now for session. operator Q&A our position our we will

Operator

from comes [Operator our from Kim first Instructions] And Stephen Evercore. question

Stephen Kim

the of you were housekeeping those many you the a get end item, can quarter? specs just at wanted all the the as reiterate color. of I how Bob, Appreciate number to you said finished? what And of just had for

Robert Martin

around the finished, for the the I total was specs. I was of the number think, And quarter. believe right of XXX about end number was that X,XXX as

Stephen Kim

right. All that. Got you. if Okay. have we And

Okay.

spec not but much still XX So community. per more about a than XX at -- you're -- running finished community, one you're per specs over little

is level feel an kind of want higher you've that take do you spring of as like that you actually into level So specs? that's of a do the this get optimal selling sort Or you're season? arrived you -- at to --

Robert Martin

of Yes, per we those Once could of for is XX about we up probably also the days and you selling days start call communities We're the that that XX include season for inventory I well. sure is quarter as think community. that selling the the active spring rise it, of said, it, X.X%.All It's it end making the sufficient not your bit right. math as just prepare closer that call yet think active, starting the and between a working do year have to, within, close good XX I are little more, on season. to third spring it's

So that is ongoing.

Stephen Kim

Yes, where that's specs us, terms stand versus of build-to-order? do you great. in gross now margins on Remind the your

Robert Martin

specs, about to I is think, margins. are quite the now going right margins what's built-to-order basis we closer in overall through the specs it And the points quarter this to for few that said, higher. influencing unintentional curated dirt from still cancellations That the specs so still is numbers. XXX specs, resulted actually a had that build-to-order

Stephen Kim

curated a something. And like gone think percentage high, be spec I or you up XX%, quite said your has to

Robert Martin

Correct. -- Of curated. XX% X,XXX are total, the that

Stephen Kim

Okay. encouraging. that's build-to-order, to And closer those margins are

XQ touched incentives, us incentives, customers buy the sort you lastly, into you what as into terms incentives, give -- saw just your quarter know, look to on relative interest end you for sense Okay, change what incentives, the curious as at a you either was a of if XQ. downs, as whole? posture happening, you as could or October, talked of because seeing, particularly to finance towards I a you're of for, we in what's the and about in in But maybe

Robert Martin

I overall in those financing cost downs, the seem that given settle we've QX, a it rates. The incentives, think some the of seen definitely rates movement increased towards of I special to buy bit those it's end offering anytime bit only that, an up normal the a case during for think little the especially incentives. come to we down again.So to in see offered, this financing in special increase QX, see incentives

because to that special quarter. do come mentioned, that of getting close higher David in as through a that many are in So the financing of QX, we level of units incentives the will expect fourth

Stephen Kim

standing units. and Okay, they're Because right. helpful basically that's

movements. Okay, quick Great.

Operator

our question next from from comes Michael And JPMorgan. Rehaut

Unknown Analyst

drove on was for ] just Razi wanted components Congrats if the be the on -- the maybe quarters the and on guys. gross in you Ed maybe out [ I margin the what that to Mike. is respective biggest the This quarter, can impact? driver ask, break

Robert Martin

the that more due level interest a Well, lesser middle bit lesser part just so the little just of quarter. I as cost part of stable of that through, a were, Kim discussing Steve overall, although year, incentives, that's turned incentive, towards had the think bit a the closings, rates running end a in being we're to the towards from I and that they financing

much things some thing.I the we hiccups So were one costs our like, And some of relation still with way that's that started in QX. had our lumber executing example, strategy prior really lumber, due that more for going had to older during the to on think, also of down we through meaningful build-to-order a years, we and come for numbers. to

Unknown Analyst

it. of Got of what range helpful. That's gross margin top XQ's in kind of guidance, the bottom provided? you to that guys and the And you then gross gets XQ's terms

Robert Martin

on if consumer, reason, QX, consumer. Well, I the rates health whatever would relates interest mortgage for in down saw quarter.I also incentives get of in more rates only a order to it'll consumer, think to of imagine you the conditions the level overall interest during not but that, see result to what that that during you what the increase for psyche rate in fourth market of do continued the in we affordability, know, depend the

move higher saw a to is down, of end If range. the the you stability there maybe towards or be an opportunity even

Operator

our And question Alan Ratner and Zelman next Associates. from comes from

Alan Ratner

prices obviously purchased slowing of cautiousness the when you land half kind in guidance, you aggressive and least actions bit at start and a in like guys I margin kind your with specs is little a of peak and concerned accelerating more taking down, land of higher opposite more the for buying the land pace course look rates.It incentives, term ago, to of rates stuck move one in began If to wouldn't, ago, you're I while know, the of you being high. as get at rise, as the of were, you year a to initially back need took far and this year sure make recent of builders quite And, pace given the actually terms near keeping potential activity whatnot. that in seems hear

I whereas, ability know, So if confident could little you seems bit you through some feel of tone to be rates? and just, when market's of bit, other ago, of builders to withstand might in very unfolding, be you more you cautious the talk conservative compared initially kind the was a seemingly a year to wondering more a why a the headwind taking a now half rising in that were face

Robert Martin

in as year, year, whereas which though were the think a We year course a think, much as result months, consumer increase rates interest the encouraging. some I very was XXX very daunting. believe, naturally, increased is had Perfect. close XXX basis operating And great cancellation it the more continue basis XXX sharp rates, It's a during a this I the points X over question. basis XX%. we a course not of being shocked rate, is of And the ago, was points to of that it's points, this even modest increase, year.So, I to

is traffic supply And inventory consumers activity really of all our continue markets out a is there, see which see ton buy. don't still We each the month, quality see we helpful. is conversions, traffic. good in to of that for available to good across of terms good We traffic,

another we'll season, to course, replace all adds-up pretty of So, spring selling a spring to we selling think we that need healthy healthy land. then that have season.If

of a bit acquisition were activity quite level really QX all. QX at significant the though even periods really moved has activity and So QX land of up from QX, or land not

in to then we of a we're that So market. QX, periods future for rate and activity land solid good run based acquisition upon normal really the more the in land be for just acquisition, will see continued back getting almost

Alan Ratner

I Great. there, the Bob. appreciate thoughts

question the versus know, Second side. on you I just through, you guys sensitivity guess price thinking a have volume

expectation an fourth tick-up quarter. mentioned in You for incentives in a the

same think them you though peers are guys I big between your lot saying margins are a your bit a difference the of and thing. The thinner. is

So and meaningful bit teens. a more the less margins of kind you in a little cushion with to in know, absorb increase incentives presumably here high

-- do point At you you to don't get because that where and much from that? say, or what go on And sit our an how know, you going think sales point want either So more point are a not about margins at standpoint, would discount absorption anymore, back from standpoint trade-off? would what you aggressive we're we incentives? at to below

Robert Martin

be out Well I approach have seasonality, buyers buying season, we so to the to so only there you into think There's in as have impact want many QX, competitive. that of take account. we holiday the we but

selling, price to the are sell. turns at certainly with it another to are the as looking thing.But our what competition, is the margin Certainly, is many important takes equation. velocity how and There So there is end the inventory we one well.

because strike is a we kind teams, go that to know something balance. to teams, demoralizing is our sales, we want nothing to So, next to of down, our We sales that to certainly. to want don't

be as appropriate wouldn't that well. So

time. with us well. point the Not that's having on guess, in being insulates the just that something monetize So remaining if competitive. subdivision see it there's us keeping a land we absolutes, so by for think we're as sure, I we good I our would I that to industry, supply, any in at we're amongst add, really us.Although pressure really given lowest good that's look given a and much subdivision, to got up pace, making also land no guide seasonal at

Operator

from [Operator Patterson Instructions] Truman Research. Our next from question comes Wolfe

Truman Patterson

be of want any finish thinking you margin of a lending Are update a to lots you're able developers. when to today, the something the what just you market? understand to what given come underwriting kind high kind front, some all in specifically understand on land pricing, the of and are the finding and a really one, to Just teens? on gross tightening we perspective? underwrite, level land actually seeing to builders private to and First from you're Should deal trying general

Robert Martin

saying, that we and quarter. the Yes, finished were during by what of guess, bought start I'll I what majority -- lot the off we fortunate deals approved we were

In close was -- I XX%. fact, it to think

we some deals. for is It there seen out deals, lot So, generally competitive have speaking. finished

So underwriting be as won't there terms the IRR. XXXX nearly an the many applies of still in I future.From margin rule in and imagine standpoint,

development finished, go actually you I the immediately, something say building for deal that high risk kind you're houses you start Although the and is where for into can taking all would truly potentially. of teams that off that table, would

depends right all quickly. most during on in now, quarter deals deal. But can done are closings that relatively the ones sales we've the that add So, of the

Truman Patterson

got recent trends be Got term or could is This give across, update kind outperforming you but metros move, or Understood. near of given little some of rate an areas go on October your underperforming focus, maybe and demand a you. you, been the helpful. bit relatively would regions just, then perhaps which have

Robert Martin

seasonality, And has think with line I well. it's normal think we moving October very patterns. been healthy. October, it's in really for Considering So seasonal along

So that's October.

the more I where for absorption of regional to resilience the base for rate challenge. of consumer are maybe bit the it's the it third one every a and focus, all think our speaks markets there terms X.X credit a is to of quarter, In regions know see interesting out we markets.There

some see that Orlando, see Phoenix, example, you you of think Las that of in for Vegas. I in some

those through we've areas affordability.That have with closing think I a programs, offering sensitivity to said, been typically programs. our able that those financing manage kinds and special to of and costs it So are

or location impacted I disproportionately impacted. that know as one any strikes me So, particularly don't there's that

Operator

a question with from from Ken proceed we'll Seaport. And Zener

Kenneth Zener

So, that a take the million about interest this $XX guys the rate, it, Is all to going like income think quarter. in forward, being you I fair just equal? else

Larry Mizel

Bob?

Robert Martin

just cash now, those invest For speaking, to capital into ties additional we're it interest smidge. course, of down bring rates hoping broadly and certainly, to balances some assets move our homebuilding maybe where a of more to

to those to going earn rate. But now, it like continue So right X we're are a factors. the healthy seems

Kenneth Zener

Yes, rate. a Yes, finally. good

you're strategy? that Could you're more relates spec that seeing. the more it starts perhaps broadly, Yet that then decision your to, are and So, fourth seasonal, bias. orders talk what Things about exceeded or you about have your is thinking in you a quarter as more XQ.

Robert Martin

Yes, the shy QX were during starts just X,XXX. of

they selling of And thinking think where are at their be what pretty net that houses, I to their specs. our selling So about we point.We going they majority have I to for being the at making did still easily is, be exceed spring highs, the right and time spring that amount season still at highs, decades consumers for with And rates at it's our And the least recent think this sure that consumers. season. know we're important for rate of orders. interest buy know able means inventory to

inventory the to we have that place end year. in to So, want

the So differential. that's why you see

Kenneth Zener

something the you. that rate, Do you for -- that Was late back, and and have think here David. can which I that's was couple that a have question. first XXs, you And makes make sense? chime given experienced, in -- about follow-up a let's questions Do others to Because my perspective say, I interest couple here? shift the yes, the in, of sense. does your

So I apologize.

David Mandarich

Well, commitments mortgage that and actually, rates if experienced time, you to were XX. the I at Jimmy And, years, Larry, know, we that did were Carter that you've to XX got XX.X. forward

seems President. when -- to like good is a was -- market this this compared Carter so pretty So,

Kenneth Zener

then as related single the I Well, price the inflation know, of of there's things, obviously October you But, there, low variety exceeding that, know, and, -- prices them housing home to you one dollar bottomed 'XX. in out consider digits. the believe, you in were metrics a

real know contacts how One Sure, prices because a explain. a mortgage, buyers, influences you any for big on but prices lot that Do influenced the have differences that. were is eye, had -- carriers basis. that of I to to in it faster of you now appreciating pay past of one are than the was appreciating the

moot -- I So it's my kind of point in opinion? a

David Mandarich

a lot. was of What's today, a not XXs in happened shortage actually lot the happening late and there houses so -- of onlyâ€¦. What was

Kenneth Zener

tied it's to on side, theâ€¦ news or the On capital

David Mandarich

have side for yes But side X.And interesting in builders. we you new are sales you home. living we're the that on so, lot houses, Because is what's home people a we're mortgage new with under we're many -- and so people they're of got different about, sidelines, in because competing if other On rate a today. existing they have have and think time of competing lot a --

the as of So kind know, by the well you that, -- and are of picking up filled that a resales. sales new home now builders bigger home was percentage

Kenneth Zener

you you And you inventory think -- bad. them odd, last right. one. what bottles lot let's down back well, start going X,XXX will now to of of orders -- are year-over-year, have be to This if my are Because you unfortunately, about That I going very of XX% to be would there's Yes, if you're be your good. circle and the parallels, get for? up it's a guess.But are this your them some such. I if orders start holding, even I'm question. Do back some so think given We're units yes. out sequentially? And --

poised nicely to call anyways, your XX, And X,XXX, XX your using inventory even are inventory be units know, X,XXX units. you if So up it, maybe XX, example. year-over-year,

you talk next simplistic as that logic why indicator your appropriate? year. to would out to XX forward that start decision would a Could be imply your plan year? XX,XXX approach not to upon X,XXX about up next If that units what you with be XX, based inventory your units close at Or XX, would wrong

David Mandarich

been you versus models. I it's starting to right, With over it we yes, It's excluding closings ratio know when And at but lot a our that where calculate X:X inventory over time, facts, inventory, -- if I with it. really, roll loaded inventory think you're question for you a I we of that sure. a starting think -- going look

that if opportunity do a north us of XXXX. for unit in in end up we end to the year higher volume it So, year, then X,XXX the number gives

They times sure back. that Of course, the depends revert to cycle don't that making improve. are continuing on

we've the all think And have of a lot I done necessary. land We good there. activity get to

of line are cycle inventory up certainly when speaking. and turning backed that's times sense, your thinking more So that faster, generally by makes improving

Kenneth Zener

the inventory Yes, But front -- back about unit 'XX. 'XX. mean, impressive you I half I certainly certainly it's just mean, what But of you know of think -- the builders are. is half implications don't about know I the 'XX. that know And pretty the

Operator

a I question And proceed Alex will from Barron with from Housing Research Center.

Alex Barrón

happen rate [ the Yes. the payment and ], backlog? closings what either average average it terms average buyer, curious have average looks if of what I was your during recent statistics guys income, in to down average cycle is interest your like for in you your

Robert Martin

rate. most think I average I XX% XXX, guess the the cycle interest average that the the average was was and down recent backwards, payment. LTV

income So not for our QX, if those for that occurred we in about mortgage handy. I'm X% were sure at company. closings number

Alex Barrón

Okay. yes, because relatively just quintile the think speaking can buying the income would Maybe it's days. touch base household a offline we know thing buying average is to interesting it's see these be home because it's the if home, to a to another upper one

buying okay? actually, just what know I'd you're to curious as So, that's income household be averaging

Robert Martin

one for debt average point was of about XX%. -- income one, that Yes just reference

periods. in with is line that prior been it's So what in

Alex Barrón

are by down of for than are roughly, terms it. And of and what rather rate incentives? advertising you other the actually of buying or people many commitment down going guys rate Got type by a how forward some in

Robert Martin

majority buyers or are at to to tell down Not can or their on using degree close average rate the and in all initial I to X% we're and X.XX% QX. conventional get everybody or the would to getting either say payment closing is X.XX% government way get the down, now as Right you X.XX% incentives, on of costs the to from down their vast X.XX%. some cost

Operator

to closing Bob for turn And session. any would to this concludes the remarks. like I Martin our question-and-answer conference back over

Robert Martin

to call, on look our after to earnings. for you we release everyone you forward again speaking the the Thank with of and being QX

Operator

has And the now for Thank attending concluded. presentation. today's you conference

You may now disconnect.

M.D.C. (MDC) 26 Oct 232023 Q3 Earnings call transcript