Mike Dahl: Okay, great. Thank you.
Operator: Thank you. The next question is coming from Jay McCanless from Wedbush. Jay your line is live.
Jay McCanless: Hey, good morning everyone. So, Bill going back to what you talked about looking to close 40 — or so and closed 40% of the 2Q closings. I guess, how in, say, pre-COVID times, what would that percentage have been in normal Q2?
Jessica Hansen: Sure, Jay. Our typical percentage, we’re in just pretty consistently up until the last year or two in the 35% to 40% range. A quarter ago, we were in the high teens. A year ago, it was even lower than that. And this quarter, we were roughly 34%. So, when we talk about reverting to normal, we started to see that reversion in the first quarter, but we expect that to continue to tick up. So, whether it’s actually 40% or closer to the 35%, 36%, we don’t know. But typically, 35% to 40% would be a pretty consistent range for us.
Jay McCanless: Okay. And then the second question I had, assuming you pay down the $1 billion in debt like you’ve talked about. Any idea of what benefit that might be to gross margin since it’s going to be less amortized interest or interest being amortized?
Bill Wheat: Yes, Jay, we have $700 million of homebuilding notes that mature this year and right now we plan to do to pay those off with cash. That’s out of just under $3 billion of homebuilding debt. So, roughly 25% of the balance would be paid down that if we do not replace that debt, that would reduce our interest carry in time. That benefit would really primarily be probably noticed in fiscal 2024 and beyond because it takes time for the interest to be capitalized and move their inventory. But it would take our interest carry down probably 20, 30 basis points as a percentage of margin over time — longer term benefit.
Jay McCanless: Okay, great. Thanks for taking my questions.
Bill Wheat: Thanks Jay.
Operator: Thank you. And in the interest of time today, the last question will be coming from Rafe Jadrosich from Bank of America. Rafe, your line is live.
Rafe Jadrosich: Hi, good morning. Thanks for taking the question. I just wanted to ask on the rental side. What are you seeing in terms of demand? And margins have been really strong last year and obviously this quarter. Just do you anticipate any type of normalization going forward, or do you think you’ll have to hold those properties longer if demand comes down?
David Auld: I think we’re still seeing demand for the properties. I think the pricing and the margins we realized on our early project sales benefited from construction and lower construction cost environments coupled with a very attractive rate environment when we sold those and that continued to some degree into our first quarter deliveries, we would expect to see some kind of a more normalized reversion to demand to a mean. And I think we’ll see our margins come back in line to be closer to slightly above on what we’re seeing on for sale side, the traditional core sales side. But our business model is to develop the communities and sell them into the marketplace. That’s what we do best, finding the land, building the homes and bringing people to those communities is what we’ve been very successful with so far. So still learning, still going to get better, but we do like that business.
