Pultegroup Inc/Mi/ Q4 FY2024 Earnings Call

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Pulte Group 4th Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star button followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the call over to Bob Shaughnessy. Sorry, Bob Shaughnessy, my apologies. Please go ahead.

All right, thanks, Calvin. Good morning, everyone, and welcome to today's call. We look forward to discussing our fourth quarter and full year financial results. With me today are Ryan Marshall, our President and CEO, and Jim Osowski, our incoming Executive Vice President and CFO. As always, a copy of our earnings release and this morning's presentation slides have can post it to our corporate website at PulteGroup.com. We'll also post an audio replay of this call later today. I would highlight that today's presentation includes forward-looking statements about the company's expected future performance. Actual results could differ materially from those suggested by our comments today. The most significant risk factors that could affect future results are summarized as part of today's earnings release and within the accompanying presentation slides. These risk factors and other key information are detailed in our SEC filings, including

our annual and quarterly reports. With that said, let me turn the call over to the right. Thanks, Bob, and good morning. We are pleased to speak with you today about how we are running the business and our outstanding fourth quarter and full-year financial results. Before Bob gives you the detailed data relating to the fourth quarter, I thought it would be appropriate to summarize some of the company's many achievements. Multigroup delivered 31,219 homes in 2024, which represents an increase of 9% over last year. We generated record home sale revenues of $17.3 billion. We once again reported industry-leading full-year gross margins of 28.9%, and we were able to do this in the face of increasing affordability challenges through the careful management of product offerings, pricing, incentives, and absorption paces as we sought to maintain high profitability while ensuring we continue to manage our overheads efficiently as our reported SG&A amounted to 7.6% of our home sale revenues, including the insurance benefits we recorded. And we reported strong operating results from our financial services operations, which generated $210 million of pre-tax income compared to $23 million. As a result, our reported net operating margin was 21.3% for the year. No matter how you look at it, our performance this year was outstanding as we have continued to navigate the turbulence in the markets over the last few years. Our performance is a product of the discipline in which we are running the business, which has allowed us to quickly adjust key business practices. Our strong operating performance also allowed us to continue to manage our capital in a manner which leaves us with considerable financial strength. In the year, we generated $1.7 billion of cash flow from operations after investing $5.3 billion in new land. We continued to efficiently increase our land pipeline, putting approximately 43,000 new lots under control. Inclusive of these lots, we now control $235,000. In addition, we returned $1.7 billion to investors, including $1.2 billion through share repurchases, the payment of $168 million in dividends, and $310 million through the early retirement. After all of that, we ended the year with $1.7 billion of cash, and our gross debt-to-capital ratio was 11.8%. We're also very proud of the numerous awards recognizing our company's culture, including being named DeFortune's Top 100 Best Companies to Work For in 2024 for the fourth consecutive year. Looking to the future, it remains our view that the long-term outlook for new home construction is positive. The U.S. economy has navigated recessionary concerns well, employment remains strong, and the interest in new homes remains at high levels. In addition, the structural shortage of housing due to under-building, ever-increasing land entitlement challenges, and ongoing labor availability challenges, together with our expectation for continuing lower resale transactions due to a higher for longer rate fire, leads us to believe that new home supply will continue to be absorbed without a significant increase in standing inventory. Given our constructive views on the outlook for long-term housing demand, we are planning to continue to invest in our operations to support growing our business. Within our operating model, we set our start space to align with the sales environment rather than being based on a predetermined annual production volume. As a result, home buying demand will impact our closing volumes and resulting growth from year to year. While there can be resulting peaks and valleys in our deliveries, our focus remains on investing in our business to grow volume while maintaining high returns. As we've demonstrated for much of the past, allow us to fund our business investment, pay our dividend, and return excess capital to a while maintaining our balance sheet. Expectation of continued financial success is reflected in this morning's announcement that our board approved a $1.5 billion increase with many forecasting interest rates to fall, the economy to stay relatively healthy, and conditions in the job market to remain favorable, there are certainly reasons to be optimistic about having said that affordability challenges and the generally high cost of living are certainly impacting the American consumer. Specific to homebuyers, we believe the recent volatility in mortgage rates, including the current increase back above 7%, has contributed to the recent lower activity levels. Against this backdrop, we continue to carefully monitor our investment and production levels with a view towards generating high returns in our business. Consistent with how we have been managing our business in recent years, we are managing our starts activity with a view towards driving our spec inventory to be more in line with our desired levels, including targeting our total spec inventory to be between 40% and 45% of our total units under production. Let me now turn the call over to Bob for a review of our fourth quarter.

Thanks, Ryan. And starting with our income statement, home sale revenues in the fourth quarter were $4.7 billion, compared with $4.2 billion in the prior year. The increase in home sale revenues for the period reflects a 6% increase in closings to 8,103 homes, along with a 6% increase in our average sales price to $581,000. Our mix of closings in the quarter were comprised of 40% first-time, 40% move-up, and 20%. Consistent with our commentary over the last two quarters, the slight decline in the percentage of closings from active adult buyers reflects the timing of recent active adult community closeouts, and we continue to expect a normalization of contribution from these consumers when replacement active adult communities begin opening for sales in the back half of 2020. In the fourth quarter of 2023, closings were 40% first-time, 36% move-up, and 24% active I would note that the increase in our average selling price in the quarter relative to our guide is due primarily to the increase in the relative proportion of our closings from MOOC, which represents a 4% increase over last year's 419 communities and was in line with our prior guidance. Looking at order activity in the quarter, our net new orders decreased 1%. This decrease was primarily attributable to a 5% decrease in sales and a slight increase in our cancellation rate as a percentage of beginning backlog. Partially offset, looking at demand conditions in the quarter, as we noted during our third quarter call, the market in October demonstrated a more typical seasonal demand pattern coming out of the third quarter. This continued through the quarter as consumers faced economic uncertainty related to potential economic changes being considered by the incoming administration. We also noted then, given the macro issues consumers faced today, and we continue to believe that market fundamentals, while still presenting affordability challenges to consumers, are supportive of housing, and that the spring selling season will be the best barometer for today's economic environment. Looking at our quarter activity by buyer group, fourth quarter net new orders decreased 14% for first-time buyers, increased 15% for move-up buyers, and decreased 1%. I believe these activity levels reflect the continued interest of but also show the impact of the affordability challenges. So in closing activity, our quarter end backlog was 10,100, which is down 16% from last year. On a dollar basis, our backlog of $6.5 billion is down 11%. Of the 7,500, we ended the year with 16,439 homes. 53% of our production is spec, including 1,862 finished specs, which, when combined with cycle times that are now largely in line with varsity, puts us in position to meet buyer demand through the year. With that said, in the event that the spring selling season trends toward reduce our pace of spec to better match local selling conditions to help reduce standing. As Ryan noted, our current production pipeline, including between, we currently plan to continue the year with 200, which is an increase

of 5. I would highlight that on a year-over-year basis. Thank you. Ladies and gentlemen, we will

now begin the question and answer session. As we move into the question and answer session, please limit your input to one question and one follow-up to ensure we have time for everyone. At this time, I would like to remind everyone to ask a question, press star, then the number one on your telephone keypad. We will pause just for a moment to compile the Q&A roster. One moment for your first question, please. Your first question comes from the line of John Lovallo

of UBS. Please go ahead. Good morning, guys. Thanks for taking my questions, and Bob, best of luck to you. The first question is maybe just help us with the sequential walk from the fourth quarter into the first quarter and then through the remainder of the year for gross margin. I then 26.5 to 27 in 2Q to 4Q. I mean, how would you sort of bucket the headwinds in terms of maybe working down some of that spec inventory, higher incentives, product mix, and then stick

and bricks and land cost inflation? Yeah, John, good morning. Thanks for the question. The fourth quarter, we feel really good about what our order results were in the fourth quarter, despite it being, you know, a more difficult, you know, the walk from October through December matched what we would consider to be a more seasonal pattern. October being the best, November a little. As we turned the corner into 2025, we saw the, you know, the continuation of what we would expect to be a normal, including we're starting to see some green shoots. There's been some positive order activity first part of February, Super Bowl timing to be the official start, but we're encouraged and optimistic by what we're seeing. In terms of the margin guide, we think we've even delivered what our industry, we noted that 27 margin guide with, we believe based today, we've factored in not only what's in our backlog, but also what we would have inventory for, inclusive of, in May, John, is that those incentives are going to remain consistently than that.

Okay, that's helpful. And then, you know, you're talking about...

Sorry, if I could add one thing. Sure. Hear that in the guide we gave on ASPs. But I would note that land costs are over a year. So that's the primary driver.

Understood. That's helpful. Thank you. And then you guys mentioned sort of normal seasonality. And then you talked about some green shoots. I mean, when we think about the first quarter absorption, I think historically it's been, you know, like 40 percent positive sequentially into the first quarter. I mean, is that is that a reasonable guide as we look into the spring selling season here?

Yeah, John, we haven't given a guide. So I think we'll, you know, we'll leave the comments kind of as we've made them to this point. But we're encouraged by what we're saying.

All right. Thank you, guys. Good luck.

Your next question comes from the line of Carl Reichardt of BTIG. Please go ahead.

Thanks. Hey, guys. Congratulations, Bob, and welcome, Jim. Bob, sounds like you're going to be busier in retirement than you were even as a CFO based on all the stuff you're going to be doing. I'm not sure how that happened to me, Carl. Yeah, fair enough. You talked about incentives, I think, 720 bps this quarter up a bit. Can you talk about the difference between MoveUp Active Adult versus the first-time buyer? Is the spread between the incentive you're using on both really wide or is it relatively narrow?

Yeah, Carl, it's interesting. We haven't provided that level of granularity, but I'll offer, you know, clearly the first-time buyer who is focused on monthly payment more than, say, move up an active adult gets a richer look. And so especially if it's a government-type loan, you know, we've got programs that are for conventional end-gubbies. So those are typically going to be a little bit more expensive. When you get to that move-up buyer, you know, there might be other incentives that get mixed in with it. You know, we're trying to, again, meet their desires as well as their financial needs. And then when you get to the active adult buyer, you know, a lot of them are taken small or no mortgage at all. So the incentive package looks a little different there. And that's not inconsistent with history, right? I mean, that's always been the case.

Okay. Thank you, Bob. I appreciate that. And then, Bob, in your remarks about leverage, you used a word I hadn't heard in a while, which was transaction. And I haven't asked this in a while, but Ryan, we've talked in the past about your potential interest in M&A or lack thereof. There's been a lot of movement there on the public to private side. I'm curious as to whether or not that it becomes potentially a more interesting opportunity for you, given the value of the stock on a relative basis, but really also the desire to want to grow the business long term, especially via the new vehicles you'll be using off balance sheet as you go forward. So love your comments on that.

I would summarize it by saying our views really unchanged. changed. We've always been open to kind of M&A activity with, you know, the strong kind of caveat, we prefer to grow the business organically. But we look at a lot of things. Looking at a tally sheet that we use, I think acquisition opportunities last year, most of them pretty small. And you'll note that we didn't do any of them. So we remain open on ROE. And we want to, you know, we want to stay. I appreciate it, Ryan. Thanks a bunch, fellas.

Your next question comes from the line of Stephen Kim of Evercore ISI.

Please go ahead.

Yeah, thanks a lot, guys. Appreciate it. Just a first question, I guess, relates to the gross margin. Actually, before I say that, welcome, Jim, and best of luck to you also, Bob, and also our best wishes for Jim Zimmer as well. My first question on margins, taking the gross margin first, if we look at your guidance that you've given, I'm curious whether that trajectory over the year assumes any benefit at all from having more active adult communities by the end of the year, or is that margin benefit likely to be only seen in fiscal 26? And can you give us a sense for what you think the sort of the long-term sustainable growth or operating margin you feel comfortable with this?

Thanks for the question. As it relates to gross margin and active adults specifically, the replacement communities will start to come online toward the middle part of this year, middle to end part of this year from a grand opening and starting sales, which means the majority of the margin benefit won't be felt until we do. And then we haven't given kind of that long-term kind of outlook, long-term view in terms of where margins can influence that. But we have given, you know, a full year guide for this year, which, you know, we feel good about given.

OK, great. Appreciate that. It does feel that, you know, you've sort of maybe some contrary to some competitors have sort of said that you're going to not be beholden to a particular volume level. You're going to you're going to modulate that with demand. And so I would think that you would have a little bit more margin stability than your than your competitors may. which is why I asked the question. Second question, actually, I'm going to shift gears and talk a little bit about the labor side of the equation. Obviously, one of, I think, the additional big wild cards this spring is going to be whether or not we see any particularly active ICE enforcements in the construction industry. And I'm curious if how or if you are preparing your divisions for any potential, you know, raids or maybe more likely, you know, just potential slowdowns. You know, you've made a you've seen we've seen supply shocks before. We saw them during the pandemic. And I think what a lot of investors think is that in a supply shock and inflation environment, spec building offers a lot of advantages because you're not locking in the home price early, you know, and then bearing that cost and margin risk. that could come later. So I'm curious, you've said that you're going to reduce your spec activity, but would you agree in general that in a period of supply shocks that actually spec building can afford some advantages and would you be willing to pivot in some way if you were to see slowdowns

brought on by increased ice activity? Yes, Stephen, it's a good question. Maybe let me first start with it's been a longstanding policy of our company that all of our trade partners and the labor that are on our job sites, we require verified work legally in the utilization for a long time. It'll continue. You know, in terms of kind of impacts to the construction labor, the extent that there are deportation activities, there's no question there'll be less labor available, and that will have an impact. Question on SPAC, Torrey, more benefit. We certainly saw that in the kind of pond. What you've seen from our company is that we are capable of running from the move-up and the active adult buyers that are personalizing their homes, but still gives us enough spec inventory in the first time, some of the margin supply chain shock type. Three today, we're going to work it down into the historical range. If we needed to turn it up a little bit more, I think we've clearly got the ability.

Gotcha. Great. Thanks a lot, guys.

Your next question comes from the line of Alan Ratner of Zellman. Please go ahead.

Hey, guys. Good morning. Thanks for all the great stuff so far. and congrats to Bob and Jim as well. Ryan, I guess first question on the closing guide for roughly flat closings. And you guys have done such a great job of balancing pace and price over the years. So, you know, I understand the interplay there and kind of the perhaps more competitive discounting environment today than maybe we thought we would be in three or six months ago. But I think, you know, you gave kind of a longer-term guide of 5% to 10% growth. And I'm just curious, as you look at where your margins are today, how much margin do you feel like you would need to give up in order to achieve that 5% to 10% growth that it seems like a lot of the industry is targeting kind of entering 2025?

Yeah, Alan, thanks for the question, and we really look at it first and foremost from the way that we're investing in land and new communities. You'll note that we grew community count in 24 by 4%, and we grew our volume deliveries by 9%. As we move into 25, we're projecting for community count to still be in that 3% to 4% range, but we've seen a bit of a pullback on community absorptions given the discounting environment. So we're projecting for in 24, we got the benefit, some home, you know, more homes out of the backlog. I think we were definitely positioning the company from a land investment standpoint to deliver that long-term kind of multi-year growth target. We do believe, you know, as I highlighted in some of my prepared remarks, that from a overall return on invested capital basis, because we're comfortable managing the pace-price balance in a way that now yields the best. The amount of, we'll continue to, we've laid out for 2025.

I appreciate the thought process there. Second question, if we could spend a second talking about Florida. I feel like that's probably a lot of the concern surrounding your company that we hear from investors, just the exposure there about a quarter of your business in Florida. But not only that, I mean, your margins historically in the state have been incredibly strong, and it feels like, you know, with the building resale inventory environment there, concerns over storms and homeowners insurance and just, you know, general softening that if there was a bare point we hear, it's that, you know, you're going to have a hard time sustaining those types of margins in Florida. So kind of a big-picture question on the state, but what are your current thoughts on Florida, and where do you see that business going for you guys going forward?

Yeah, Alan, you know, thanks for the question. Florida's been just a tremendous market for the company. we're, you know, we're in five, we've got five divisions there in most of the major cities in Florida. And our move up and active communities have been, you know, really the driver of the outperformance in Florida. You know, margin and the margin that we generate out of Florida is certainly important. But once again, like you've heard from us a lot, return is the focus. So So whether it's an investment in Florida or an investment in Cleveland, Ohio, we're looking at two of our homeowners in Florida. I'd also note, but I'd note that...

Thanks very much.

Your next question comes from the line of Mike Dahl of RBC. Please go ahead.

Hi, this is Chris on for Mike. Just going back to the 26.5%, 27% gross margin range for this year, is that where you guys are currently underwriting land to on a gross margin basis? or should we still expect some downward pressure as newer land bids just come through?

Yeah, Chris, we don't underwrite the margin. We underwrite the return. So the margin guide that we've given is for the closing business.

Fair enough.

I guess – so what are you guys seeing this year in terms of – or what are you expecting this year for lot cost inflation and stick and brick inflation?

At 24, we're at about $82 a square foot, so really minimal. As we baked our guide or created our guide for 2025, we, again, expect very low single-digit increases. You know, that's absent any potential impacts from tariffs that are being discussed. But, again, expect very low single-digit. And on the land side, as Bob stated earlier, we're...

That's inclusive, L-block cost overall inclusive.

Appreciate the color.

Your next question comes from the line of Michael Reholt of J.P. Morgan. Please go ahead.

Thanks. Good morning, everyone. And Bob, best of luck. Great working with you. And Jim, congrats on the promotion. First, I'd love to just review, if possible, just a little bit more around the regions, how you feel trends have been. Obviously, there's a lot of concern, as talked about earlier, with inventory levels in Florida, as well as Texas. But just love to get, you know, around your footprint, you know, which markets maybe you would characterize as, you know, better than average versus worse than average and, you know, how things have trended so far in this year.

Yeah, Mike, thanks for the question. I'd start by giving some well-deserved.

They've been incredibly resilient and have performed well.

You know, the discounts that we've had in those locations have been less than, you know, I think it's reflective of the highs and those spots aren't typically as high and the lows aren't typically as low. So Midwest and Northeast has been, you know, a nice bright spot for the company. The other places, you know, I would tell you have been about as expected. We did have a slight decline in our Texas orders on a year-over-year comparison basis. And that's really reflective of what we highlighted with our first-time buyer business being down in the quarter, mostly driven by affordability concerns. And we've got a lot of our business in Texas is oriented against that first-time. And then Florida, you know, I think is the other one that folks are focused on. There's a lot of questions. Our sign-ups on a year-over-year basis in Florida were flat. So, you know, we're in one, you know, Texas and Florida included in this, you know, we're seeing some green shoots and some positive energy from from the sales. We'll continue to look toward the, you know, the spring selling season.

Great, great. Thanks for that. And, you know, second question, you know, I just wanted to circle back to some of Bob's comments earlier on leverage and, you know, kind of, I guess, moving off of that prior gross leverage target of 20 to 30 percent. And it sounds like kind of implying a more persistent, even lower level of leverage compared to that. But just to push a little bit on, you know, how we should think about share repurchase, I mean, certainly, you know, even with, you know, the current trends, you know, looks like your leverage is only going to go further south. And just trying to understand, you know, why shouldn't we as investors or, you know, sell side by side expect some level of a solid step up in Sherry purchase in 2025 that, you know, even with a solid step up, you'd still probably have, by our estimates, even more conservative leverage in 25 versus 24. Is there anything that we're missing? Obviously, I know you like to have some optionality for transactions or other things, but if, you know, lot optioning is only going up, you know, it looks like your balance sheet, even with leverage getting more conservative, could still support a solid step up in share repurchase in 25. So just trying to understand if we're missing anything or if that's kind of directionally the way we should be thinking about it.

Yeah, Mike, it's a fair question. And I think we've demonstrated over the last, gosh, almost 15 years that we're going to be pretty disciplined about this and seek consistency. So we haven't seen a stake, a lot of big swings on equity. Really, the only time we did was back in 2016 and 17, where we bought a lot of stock in a relatively short period of time. But, you know, you go back over the last five years and, you know, what we've been doing is using the cash that we're generating in the business to buy back stock or pay down debt. And so, you know, we don't have any maturities in the next 12 months. So I think, you know, unless we went out and did a tender, which we've done in the past, but unless we did that, I wouldn't expect leverage to move from here. You know, the rate environment tells us how to think about that and the way our bonds trade, obviously. So when we do, you know, if we're buying back debt, it's because it's NPV accretive, right? We want to invest wisely. You know, could the company withstand more leverage? You know, we were never uncomfortable with 20% to 30%. It's just that the decisions we were making were leading us to a lower number. And we wanted to reflect that. We got asked a bunch of times, hey, when are you going to borrow to get inside that 20% to 30%? And our answer was always like, if we have a reason to, we will, and we'll tell you about it. So, you know, we've historically not wanted to guide on share repurchase activities. We've told you we'll think about that. And we haven't yet come to the point of doing that. Maybe Jim will, you know. But, you know, at the end of the day, I guess it's pretty consistent. and is, you know, demonstrating a desire to do more. We just announced a $1.5 billion authorization increase. So, you know, we'll report the news.

But, again, a fair question. I don't know that we've got a complete answer for you. Great. Thanks a lot. I appreciate it.

Your next question comes from the line of Trevor Allenton of Wolf Research.

Please go ahead.

Hi, good morning. Thank you for taking my questions. First question, just back on the finished inventory level, I think if I heard you correctly, your finished spec number implies about 1.9 finished specs per community, clearly above your historical 1% or 1 target, but then you've also moved your model to be more towards spec. You're talking about moving spec production lower going forward, but I think I also heard you suggest maybe it also depends on how demand plays out in the spring selling season. So I guess the question is, have you already started to pull back on your specs? Are you waiting to see how demand shakes out in the spring selling season? And then maybe just some commentary on how you view completed inventory levels in the markets you play in for industry as a whole.

Yes, we've already pulled back on starting. You know, we'll continue to monitor the rate of optimistic about what the spring selling season can provide. We wanted to have some incremental inventory, which we put in, you know, given the softness of Q4, we probably have a little bit more job market.

Yeah, it makes a lot of sense. It's definitely encouraging regarding the spring. And then second question is just on cycle times. How did those trends sequentially? You previously talked about getting under 100 days here early in 2025. Is that the expectation still? And then do you expect to see further improvement beyond that point?

The one thing I would earn 111 days.

Good luck moving forward.

Your next question comes from the line of Matthew Reely of Barclays. Please go ahead.

Good morning, everyone. Thank you for taking the questions. I guess just a couple around the margin. You mentioned kind of finding the right price to move that spec inventory if needed. So I guess just how does that balance with the assumption that you're assuming incentives would stay unchanged from Q4? Like, to the extent that, you know, finished inventory has been rising, would that signal that, you know, we have not found an equilibrium, so the incentives would need to move higher to move those homes? Or is your view, you know, perhaps based on history that, you know, normal rising seasonality of housing demand into the spring, that would be enough that you wouldn't have to alter incentives? So just kind of any color on how you're approaching that. Thank you.

Yeah, you know, Matt, it was a fairly, you know, it was a tough Q3 back at the Q3. You can see the heavier incentive load. So I think the short answer is we believe that a, you know, and Bob mentioned it, but we believe that the incentive load that we had in Q4 as an exit rate is, you know, the volume and the market combined with the healthy economy, combined with spring selling season, And, you know, when we factor all of those things in, you know, we feel good about if they add any more color.

Okay. Thanks for that, Ryan. And then the second margin question is just, I guess, to have, you know, flat or nearly flat gross margins going forward, you know, I guess everything else needs to be kind of flat or offsetting each other sequentially. So you mentioned land up 10% on a year-over-year basis in construction costs. I think I heard you say up low single digits. And I guess you're guiding to delivered ASP up around 3% in 2025. I'm not sure how much mix plays into that. But again, just given those moving pieces and you do have higher lot and construction costs, I mean, what is it that would allow you to hold the margins flat sequentially beyond that first quarter?

Matt, it's basically all of those pieces. You just mentioned we've got about a 3% increase in ASP. that's enough to offset what we're anticipating.

Got it. Thanks, guys. Good luck.

Your next question comes from the line of Rafe Jed Drosich of Bank of America. Please go ahead.

Hi. Good morning. Thanks for taking my question.

Just starting first on the incentives, can you talk about from a regional perspective, were there meaningful differences with the incentive level?

Yeah, Rafe, we don't give that level of granularity. You know, I think, you know, Bob talked a little bit about an entry level move up.

Okay. And then just on the land cost inflation comments, I'm running up 10% right now. Can you just talk about how you would expect that to trend sort of through 25 or maybe even to 26? Like the land that you're contracting today, are you seeing any relief on land prices or even like the horizontal development side? And then just within that, can you remind us how much of your own development you're doing right now and how you expect that to change going forward?

I'll take the last part first. We do the majority of our own development. We directly, ma'am. That's an expertise. In terms of land, Rave, we're literally buying land every day.

Thank you. We're going to end the call there. As always, we're available. If you have any further questions, thanks.

Ladies and gentlemen, that concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.