Jessica Hansen: Yeah, so a little bit of it was just core inclusive of just a very modest pickup on the incentive front in terms of the forward commitments and the interest rate buydown because you’ll see when we put out our supplemental guidance, that kind of core margins up about 20 basis points. And then we also had a little bit less of an impact on warranty and litigation this quarter. Those are the two kind of biggest pieces of why there was a sequential increase.
Eric Bosshard: Okay. And then secondly, you talked about it a little bit, but I’m just curious that the effectiveness of the incentives as you moved through the quarter and in the March and April, I suppose. But just trying to figure out the effectiveness in the last comment that was made of as rates moved higher, what do you have to do different with buydowns? I’m just curious how you’re seeing a conversion or closing customers behave relative to incentives relative to buydowns and if you indeed are having to do anything different?
Paul Romanowski: Currently, we’re not doing anything significantly different. We’re responding to the rates and the customers that are in front of us at the time. And they are reacting very positively to the incentive offerings that our teams have crafted for the various neighbourhoods we have out there. So no, we’re not seeing anything with the current range — range of rates we’ve been dealing with right now. We feel like it’s sort of — I won’t say business as usual in this crazy volatile world we’re in. But right now, we feel pretty steady, pretty good about where things are.
Eric Bosshard: Okay. Thank you.
Operator: Thank you. Your next question is coming from Sam Reid from Wells Fargo. Sam, your line is live. Please go ahead.
Sam Reid: Awesome. Thanks so much guys for taking my question. You made a lot of progress here in getting back to your historic levels on cycle times. That said, I mean, one thing that I’m thinking here is you’re also building a more value engineered house today than perhaps what might have been the case pre-pandemic. So the question really is, is there an opportunity to bring cycle times lower versus that historical trend? Or do you really think kind of four months is the steady-state we should be thinking about longer term?
Paul Romanowski: Yes, Sam, we’re pleased to be back at what we deem our historical norm, and you bring up a good point, we are building a more efficient house and it’s been an extreme focus of us to try and pull labor and man hours out-of-the home to reach affordable and maintain affordability. We’re always going to believe there’s upside for improvement in our business. And so we continue to stay focused on our inventory turns and the opportunity to reduce cycle times and be more efficient in the construction process where we can. We’re going to continue to strive for that. We’re not counting on significant reductions from here. We got back to this place and we’ll continue to focus on doing everything we can to drive it down further.
Sam Reid: Got you. And then maybe to touch on order ASP a little bit. It looks like there was a little bit of a sequential lift between Q1 and Q2. I just would like to hear maybe a bit more context on that number. Was there a function of perhaps you know a little bit of a dial back in incentives in early spring? Or were there any kind of geographic or other mix dynamics that might have also driven that sequential improvement? Thanks.
Jessica Hansen: Yeah, it continues to be primarily geographic when you look at our price points. The South Central and the Southeast, which are two of our lower price point markets in terms of average sales price has been a slightly lower percentage of our mix for a couple of quarters now and that continued this quarter.
Sam Reid: Awesome. Thanks so much. I’ll pass it on.
Operator: Thank you. Your next question is coming from Alan Ratner from Zelman and Associates. Alan, your line is live. Please go ahead.
Alan Ratner: Hey guys, good morning. Nice quarter and thanks for taking my questions. First, on the resale market, I’m curious some of your thoughts there. We were starting to see inventories ticking up a little bit in some of your markets more meaningfully than others. And when I think about the spec entry-level model, I think you guys have really benefited from the tight resale market over the last few years. I’m just curious, are there any markets now where you’re starting to see increased competition from resale, maybe more contingent buyers on your move-up product and just more broadly, how you’re viewing kind of the uptick in resale inventory right now?
Paul Romanowski: I still think it’s a very limited amount of inventory that’s available in the marketplace, especially at our price point — affordable price point. That coupled with some of the interest rate incentives that we’re able to offer that for the most part existing home offerings don’t provide, we’re able to solve the affordability problem a little better than some of the existing home sales would be able to do. But we haven’t seen a significant impact on our sales pace to date.
Alan Ratner: Great. Appreciate that. And then second, on the NAR settlement with brokers. I know it’s still very early, but you guys have been one of the heavier users that were friends to the brokerage community, if you will, over the years. I think you view them as an important tool to bring buyers to your communities. And I’m just curious if you’ve given any thought to how this settlement might change the economics there, the relationships you have with brokers. And any commentary you can give would be helpful.
Paul Romanowski: Yeah, Alan, I mean, we think this is going to take some time to play out. You know we work very closely with the brokerage community, and we’ll continue to do so regardless of what direction this takes. I think you are going to see some restructuring, certainly in terms of commissions and it will have some impact, I believe, on the number of realtors that stay active through the market. But we are going to continue to stay close to the realtor community, communicate with them. This is still an emotional buy for people. And we’re also going to stay focused on our digital presence and ability to make sure that we are ahead of the curve in terms of reaching customers through whatever form it takes over the next couple of years.
