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Chairman and CEO Ara Hovnanian attributed the July sales uptick primarily to macroeconomic factors rather than specific company actions, though he noted a slight increase in incentives. Both Hovnanian and CFO Brad O'Connor described August sales as remaining 'choppy.' Regarding gross margins, Hovnanian explained that while a precise timeline is difficult, the company is actively working through lower-margin lots, particularly in slower geographies, and is having success renegotiating with land sellers. He highlighted that newly acquired land parcels have excellent margin profiles. O'Connor clarified that the upcoming Q4 JV consolidation gain is expected to be around $30 million, similar to past transactions, and is included in the pretax income guidance.

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CEO Ara Hovnanian attributed demand volatility to a "flavor of the month" of consumer concerns, such as tariffs or global events, rather than a single factor. He noted that while the Maryland market could be affected by government layoffs, the company's larger Delaware and Virginia operations remain strong. Hovnanian also stated that while resale inventory has ticked up slightly, it remains far below historical norms. He confirmed that foot traffic was lower than expected, but CFO Brad O'Connor added that the most recent week showed a positive increase.

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CFO Brad O'Connor clarified that while the consolidated JV's profits will now flow through the main income statement, new JVs are expected to keep the separate JV income line robust. He noted the consolidated project's margins will align with the company average due to a land basis step-up. O'Connor also affirmed that a ~22% gross margin is a reasonable Q4 expectation, though rising land costs could add pressure in 2025, potentially offset by lower mortgage buydown costs. CEO Ara Hovnanian addressed the ROE question by highlighting the company's superior EBIT Return on Investment (ROI), suggesting that this strong operating performance, which is independent of leverage, will ensure Hovnanian's ROE remains above peers' on a long-term basis.

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Douglas Yearley, Chairman & CEO, stated the pre-COVID spec mix was 10-15%. He confirmed build-to-order margins are north of 30%, with spec margins about three percentage points lower. Mr. Yearley asserted that he does not see a return to a 90% build-to-order model, as the current 40-60% spec range offers capital efficiency and appeals to modern buyers. Martin Connor, CFO, added that the current mix generates excellent returns, and Mr. Yearley noted the strategy of reserving premium lots for high-margin build-to-order homes.

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Executive Douglas Yearley stated it was too early to see a definitive trend from recent stock market stabilization but noted consumer confidence is the primary driver for their affluent buyers. He mentioned modest positive signs like improved traffic quality. On foreign buyers, he said they constitute less than 5% of their business, with no significant change in demand year-to-date, and noted that the Chinese buyer remains particularly strong in California.

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Executive Chairman and CEO Douglas Yearley stated that while they are monitoring the situation, they believe any tariff impact will be 'de minimis.' CFO Martin Connor detailed the JV investments, which include apartment projects, a small number of City Living buildings, and land development ventures with other builders that are structured to be 'breakeven' and hold land off the balance sheet.

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SVP and CFO David Goldberg and Chairman and CEO Allan Merrill defended the guidance by pointing to a growing community count and a commitment to improving the sales pace in Texas from its Q3 low. Merrill explained that while incentives may increase in Texas, the overall margin is supported by a backlog of higher-margin, to-be-built Zero Energy Ready homes. He also stated that he does not believe community cannibalization is a significant issue for the company.

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CEO Allan Merrill attributed the order softness, especially in December, to 'shocking' price and incentive aggression from competitors in Texas and Florida. Regarding the energy strategy, Merrill affirmed they are 'full steam ahead,' stating the commitment is based on building a superior product, not tax credits. CFO David Goldberg addressed impairment risk, stating they see no expectation for material changes and that their land costs are in line with the market.

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Chairman and CEO Allan Merrill explained that the fiscal 2024 absorption pace was unusually low due to an 8% mortgage rate environment and being out of position on spec homes, issues that have since been addressed. He confirmed some land deals were renegotiated but stated a 'wholesale reset' is not occurring as the '25 and '26 pipeline is largely set. Regarding the new administration, Merrill noted they have internalized that rates may stay elevated but see potential for economic enthusiasm from deregulation, while the impact of immigration policy on labor remains unclear.

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VP, CFO & Treasurer Kim Tobler confirmed the Hearthstone business should be modeled based on assets under management. President & CEO Daniel Hedigan addressed the other points, stating that high demand in the land banking space mitigates competitive pressure, and Five Point's uniquely positioned California land allows it to remain patient on pricing despite market softness. Mr. Hedigan also noted that while technology like AI is being explored for efficiency, it has not yet changed development budgets.

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Executive Daniel Hedigan explained that while the insurance market is a key concern, Five Point's fire-resistant master-planned communities have a proven track record of safety, which should help maintain insurance availability. He noted the product mix has already shifted away from large attached buildings. Regarding San Francisco, Mr. Hedigan stated that engineering for the initial infrastructure phase is underway, with construction expected to begin early next year and last 12-18 months. He confirmed Five Point can finance the horizontal development and is exploring various options for the vertical construction.

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Executive Daniel Hedigan explained that the company aims to replicate its Great Park partnership model, focusing on non-generational projects within California initially, working with a broad spectrum of builders. Hedigan stated that California's acute land shortage supports land values, allowing for price appreciation despite builder incentives, particularly in Irvine. He noted that demand remains consistent for family-oriented communities and has not seen a significant shift away from any particular product segment.

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CEO Douglas Bauer reiterated the strategy to favor price over pace, attributing soft demand to consumer uncertainty rather than affordability for their buyer profile. COO Tom Mitchell clarified that recent margin changes reflect the timing of sales with varying incentive levels. EVP & CMO Linda Mamet stated that home-to-sell contingencies are a disciplined part of their strategy, currently representing 5% of backlog, and are not being used more aggressively.

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CFO Glenn Keeler explained that higher SG&A is a result of both costs from three new divisions that are not yet generating revenue and broad wage inflation, noting the long-term goal is to return to a 10-10.5% ratio. CEO Douglas Bauer added that this is a strategic investment in building strong teams, which he prefers over acquisitions with goodwill. He confirmed they are seeing opportunities for talent and land deals and are being disciplined in their underwriting.

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CFO Glenn Keeler explained that the higher Q3 incentives were on a smaller order base and the overall backlog still contains strong margins, supporting the Q4 guidance. He acknowledged a lower starting backlog presents a challenge for 2025 delivery growth but highlighted the 1,300 spec homes available to capture spring demand. EVP & CMO Linda Mamet confirmed the current spec count is very similar to the 1,372 homes a year ago.

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CEO Phillippe Lord stated that while the company has the inventory to meet prior volume expectations, market conditions create uncertainty. He noted starts are being moderated due to faster cycle times but are also ramping for new communities. CFO Hilla Sferruzza confirmed a rebalancing of capital from land spend to share repurchases, with Phillippe Lord adding that they will continue to buy back shares opportunistically above the programmatic commitment due to the stock's valuation.

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CFO Hilla Sferruzza clarified that the higher average selling price (ASP) is driven primarily by product mix, as the backlog ASP is already higher than Q1's closing ASP. CEO Phillippe Lord added that April's sales trends are consistent with Q1, and confidence in full-year guidance stems from significant new community openings in the second half, not an assumption of improving market conditions or lower incentives.

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CEO Phillippe Lord stated that the current sweet spot is 4-4.5 sales per community at a 22-23% margin, but they would accept lower margins to maintain pace if rates worsen. He confirmed that the path to 20,000 units is expected to be fully organic, supported by recent acquisitions and a strong land pipeline, with no further company M&A required. CFO Hilla Sferruzza reinforced this by highlighting their extensive lot supply.

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CFO Hilla Sferruzza explained that the 'lion's share' of the anticipated Q4 gross margin decline is due to heavier-than-expected financing incentives driven by the current interest rate environment. She noted that while their quick-turn model reflects this pressure faster than peers, they are not currently forecasting margins to drop below their long-term target range.

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CEO Sheryl Palmer explained that while the cancellation rate rose, it remains low for the industry, with drivers including buyers' inability to sell their existing homes and some finding better deals elsewhere. Regarding 2026, she stated that reaccelerating starts is dependent on market conditions, with a focus on responsibly replenishing spec inventory and growing the to-be-built business.

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Sheryl Palmer, Chairman and CEO, stated that financing incentives remain the primary tool and that base price cuts are a last resort, with the approach varying by community. Erik Heuser, Chief Corporate Operations Officer, addressed the land spend, explaining the company is well-supplied for the coming years and is securing more favorable deal structures, such as take-down options and finished lots, which mitigates the impact of reduced near-term cash outlay on long-term goals.

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Chairman and CEO Sheryl Palmer identified the first-time buyer segment as requiring the most significant incentives due to affordability challenges. Chief Corporate Operations Officer Erik Heuser added that land and new home competition is also highest in these markets. Regarding the land market, Heuser noted that while demand has softened slightly, the primary benefit has been increased flexibility in deal structuring rather than absolute price reductions.

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Chief Corporate Operations Officer Erik Heuser stated that while there might be some correlation for other builders, Taylor Morrison's unique positioning comes from its pride in core locations. Chairman and CEO Sheryl Palmer added that differentiation is stronger in move-up and active adult communities. Regarding inventory, Erik Heuser explained the increase was part of a planned growth strategy and that inventory dollar growth should moderate as their asset-light land approach takes further hold.

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CEO Robert Francescon clarified that land renegotiations are more about structuring deals and pushing out takedowns rather than significant price cuts, which are not widespread. CFO J. Scott Dixon noted the Q2 impairment was specific to five closeout communities and that the market would need to deteriorate significantly for more impairments. He also clarified that impairment tests exclude SG&A costs.

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CFO John Dixon confirmed the incentive increase is a prospective measure recently implemented in response to the market volatility and consumer pause observed in April. He affirmed that the stable full-year absorption guidance of 2.8 is predicated on the strategy of using incentives as needed to achieve that pace. CEO Robert Francescon addressed tariffs, stating that while they see no immediate impact, they are aware of potential future disruptions and are working on mitigation plans.

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Financial Officer John Dixon responded that the spec model allows them to right-size inventory to demand and that they are bullish on the spring selling season. He mentioned levers like moderating square footage to maintain affordability. Regarding labor, CEO Robert Francescon stated that while it's early, they have not seen any impact on their job sites or cost structure to date and are in a 'wait and see' mode.

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Chairman and Co-CEO Dale Francescon clarified the outlook for similar absorptions applied to Q4 as a whole compared to Q3. Co-CEO Robert Francescon addressed the storm question, stating there was no material negative impact on closings or operations, and no significant damage to homes, thanks to modern building codes.

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Robert Schottenstein, Chairman, President & CEO, provided a detailed geographic overview, noting that Midwest markets slightly outperformed the Carolinas, Florida was a mixed bag with Orlando stronger than a softer Tampa, and Texas markets like Dallas and Houston have softened but remain strong. He stated that gross margins are beginning to level off, with mortgage rate buy-downs being the main headwind, and he does not foresee another significant drop. The June order uptick was attributed to a brief improvement in buyer sentiment when it appeared interest rates might fall.

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CEO Robert Schottenstein explained that demand by price point remains stable, with the first-time buyer 'Smart Series' accounting for about 54% of sales. Geographically, he noted Tampa is rebounding after a struggle, while markets like Indianapolis and Chicago are strong. Regarding spec homes, Schottenstein stated they constitute 50-65% of sales, a balance the company prefers, with margins typically 150-200 basis points lower than to-be-built homes. Derek Klutch, President of the mortgage company, added that the spec strategy is managed on a subdivision-by-subdivision basis.

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CEO Robert Schottenstein stated that Texas markets feel stronger than Florida, with Tampa being the most challenged. He confirmed the continued use of rate buydowns, which are critical for sales, and noted the company is maintaining its spec home strategy, as specs are essential for offering attractive, short-term financing incentives. Executive Phillip Creek added that rate buydowns are more cost-effective on homes closing within 30-60 days, reinforcing the spec strategy. Schottenstein explained the margin compression was due to the increased cost and usage of rate buydowns, which rose from one-third of buyers in Q3 to half in Q4.

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CEO Robert Schottenstein affirmed the strength of M/I Homes' diversified product offering, noting that sales were split 50/50 between the 'Smart Series' and move-up products, which provided stability. He stated there is no planned strategic shift, as the current mix is performing well. Regarding margins, Schottenstein conceded that 27% gross margins may not be sustainable long-term but does not foresee a significant decline, citing strong performance in many communities even with incentives. He believes margins will remain comparatively strong versus peers, though some slight downward pressure is possible depending on market conditions and interest rate movements.

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President and CEO Paul Romanowski explained that incentives have been choppy and were increased to maintain sales pace and meet annual guidance. EVP & COO Michael Murray added that starts were aligned with sales, and noted a shift towards more heavily incentivized FHA products, but has not seen a significant impact from student loans.

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President and CEO Paul Romanowski explained that incentives were adjusted throughout the quarter to maintain sales pace and meet annual guidance. EVP and COO Michael Murray added that the lower FICO scores are partly due to successfully incentivizing FHA loan products and that the company has not yet observed a significant impact from student loan repayments.

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President and CEO Paul Romanowski explained that improved construction cycle times allow for a leaner inventory model and that he expects starts to accelerate in Q3. EVP and COO Michael Murray added that any significant cost impact from tariffs is not expected to affect closings until fiscal 2026 and is not a major factor in the current margin guide.

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President and CEO Paul Romanowski explained that improved cycle times allow for a lower inventory level, hence the lower start pace, and that future starts will likely align more closely with sales. Regarding policy changes, CFO Bill Wheat stated the company remains focused on affordability and supplying homes to meet core demand, adapting to administrative changes as they occur without preemptive strategy shifts.

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President & CEO Paul Romanowski responded that the company is well-positioned with lots and inventory to capture demand if the spring market is strong, suggesting the guidance is a flexible starting point. EVP & COO Michael Murray stated there would be no 'sea change shift' away from the spec model, but local operators have the flexibility to do more presales based on community-specific conditions.

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President & COO Robert McGibney defended the strategy, stating it offers transparent value and that the company is happy with the results since returning to its traditional approach. He acknowledged some buyers are drawn to incentives but believes the company's method is effective. On costs, McGibney could not provide a specific breakdown but confirmed the 3.2% reduction includes significant decreases beyond just commodity drops like lumber, driven by divisional efforts.

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COO Rob McGibney stated that while some sales came from past leads, the majority of the uplift was from new traffic generated by advertising the lower, more transparent prices online. Regarding the backlog, he explained that potential conflicts are handled on a case-by-case basis and that overall exposure is considered 'pretty small' because many existing contracts already had unique incentives.

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EVP and CFO Jeff Kaminski explained the guidance reflects a significantly higher number of community sellouts in 2025, with a temporary dip in Q4 before growth resumes. Chairman and CEO Jeffrey Mezger stated it was too early to speculate on the fires' full impact but does not anticipate a major, long-term labor or material pinch, though rebuilding utility infrastructure could cause some short-term community opening delays.

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EVP & CFO Jeff Kaminski clarified that confidence in the 2025 outlook is supported by their forward view on starts combined with significant improvements in construction cycle times, which enables faster revenue conversion. Regarding cash flow, Kaminski stated the focus is on asset efficiency through inventory turn and further reducing build times, which is a major cash generator. He noted the strong balance sheet allows for more shareholder-friendly capital allocation.

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Executive Stuart Miller and another executive confirmed that Lennar is actively underwriting new land deals based on current market information and incentives, with a focus on turning over older inventory. They noted that land sellers are beginning to adjust their price expectations. Regarding second-half margin seasonality, Stuart Miller declined to provide guidance beyond Q2, citing market uncertainty. He emphasized the core strategy of converting assets to cash and redeploying that capital based on the latest market conditions, even if it means accepting lower near-term margins.

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Executive Chairman Stuart Miller attributed the demand softness to a combination of factors, including consumer difficulty in accumulating down payments, hesitancy from interest rate volatility, and seasonality, which required increased incentives. Regarding strategy, Miller reaffirmed Lennar's conviction to maintain sales volume by adjusting prices and margins, using steady production as a lever to rationalize land and construction costs over time, without specifying a hard floor for margins.

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Executive Chairman Stuart Miller explained that Millrose will be a 'mirror image' of current land structures, with the main difference being its permanent capital REIT structure. He anticipates a 'relatively small' impact on Lennar's margin. Regarding the gross margin guidance change, Miller cited several factors: interest rates remained high for much of the quarter, consumer confidence has been slow to recover, and a temporary dip in community count required using incentives to maintain strategic volume goals during the company's operational restructuring.

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Executive Chairman Stuart Miller explained that while he is limited in what he can say about Millrose, he expects its margin impact to be relatively small and similar to existing land bank structures. Regarding gross margins, Miller stated that sticky interest rates early in the quarter, waning consumer confidence, and a temporary drop in community count prompted the company to use incentives to maintain its strategic volume goals, impacting near-term margins.

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