Paul J. Romanowski: I think we have made adjustments as the market has shifted over the last 12 to 18 months and feel comfortable with our trajectory and the product offering that we have. Certainly, as you look across our communities, they’re going to trend inside of the product offering that we have based on rate and monthly payment environment, whether that means that they’re buying up in size or down in size. But we feel like we have a good offering across our markets, and we’ll continue to stay as we need to respond to a monthly payment and interest rates and provide affordable opportunities across all of our platforms.
Eric Bosshard: Great, thank you.
Operator: Your next question for today is coming from Alan Ratner with Zelman & Associates.
Alan Ratner: Hey guys, good morning. Thanks for all the details so far. I got some questions on kind of the spec versus build to order dynamic in the industry right now. You guys being a spec builder, I think, had a pretty strong advantage during the pandemic. Obviously, resale inventory was incredibly tight. The extended cycle time as well, I’m sure it was hard to manage from your side. Kind of gave you an advantage versus the BTO guys in terms of the consumer experience. So I guess my question is now that cycle times seem to be improving across the industry, resale inventory is ticking a little bit higher. Are you thinking about that dynamic any differently, are you maybe contemplating selling earlier in the construction process again, whereas before you were maybe waiting for homes to get closer to completion, are you seeing more competition from build-to-order builders that have kind of shrunk in their construction cycle times, any commentary on that would be great?
Paul J. Romanowski: I think today, we are still seeing people looking for closing with certainty of close date and in that 30 to 60-day time frame based on their ability to lock in interest rate. And so I don’t know that we’ve seen much significant shift from the build-to-order builders being able to deliver a presale into those time frames. We are very comfortable with our inventory position, both in the total homes and in a completed home scenario. It’s continued to play into the shortness of resale inventory across our markets and I don’t expect a significant change for us. We’re going to continue to stay focused on inventory sales and consistent production community.
Michael J. Murray: Even with the decline in existing home sales, they’re still three to four times larger of a market transaction volume than new home sales. So we’ve always tried to position ourselves to compete against those homes rather than just other new home providers.
Paul J. Romanowski: The timing of that sale has been able to move up earlier in our stage of construction just because we have gotten back to our historical norms of months of delivery of our houses.
Alan Ratner: Got it. But in terms of your sales strategy, I mean, I look at your completed spec count, it’s been ticking a little bit higher here more recently. Is that still kind of the strategy to hold these homes off until you’re maybe a month or two from completion to allow the buyer to lock in that rate or are you maybe thinking about kind of pulling that forward a little bit?
Michael J. Murray: We’re allowing — we’re not restricting the sale of homes. Seasonally, you’ll see the completed spec inventory, the completed home inventory tick up through the fall and be positioned that we have houses available for quick deliveries beginning in January for the Spring selling season. So we’re able to deliver the homes that people are coming in and needing in 30 or 60 days. At the same time, with the compressed cycle times, as Paul mentioned, we are very comfortable selling and locking a rate in for a buyer earlier in the production process than we were a year ago for sure.
Alan Ratner: Okay, got you. One last quick one, if I could. Just going back to the charge on the hedge, I just want to better understand this, like we have heard from other builders in the past situations where they would buy kind of forward commitment pools and when rates pull back sharply in a short period of time, those pools would kind of go unused because the market kind of fell below wherever that pool was. Is that kind of what’s going on with you guys or are the mechanics of this much different, I’m just trying to wrap my arms around that better?
Bill W. Wheat: No, you’ve described it exactly. We typically will buy those forward commitment pools really for the next few weeks of deliveries essentially is the plan. We’re not going out very far, but it is a few weeks and so that’s when we say a very sudden sharp change in rates, that can present some exposure there, but it has not occurred in the past, but the circumstances this quarter were pretty unusual in terms of the significance and the suddenness of the rate moves.
Jessica Hansen: And it was really restructuring so it could be used, not that we weren’t going to fulfill the pool. We just had to restructure it so it was usable.
Bill W. Wheat: And then at the end of the quarter, we always have to mark-to-market the value at the end of the quarter. So that’s always a factor there as well.
Alan Ratner: So it sounds like this is an industry phenomenon, not necessarily an important phenomenon, but obviously, we’ll learn more about that in the next few weeks. But I appreciate that. Thank you.
Operator: Your next question for today is coming from Anthony Pettinari with Citi.
