Alan Ratner: Appreciate the thoughts. Thank you.
Operator: Thank you. Your next question is coming from Collin Verron from Jefferies. Colin, your line is live. Please go ahead.
Collin Verron: Good morning. Thank you for taking my questions. I guess I just wanted to start on the lot in cost inflation you’re seeing. Any thoughts on the magnitude of that through the remainder of the year? I think you said it was tracking in the low-single digits in the most recent quarter.
Bill Wheat: Yeah, I think our expectation is we’ll continue to see moderate increases, I think that low single-digit percentage continuing is in our current, what we can see in our current pipeline.
Collin Verron: That’s helpful. And then just on the lots controlled, it’s moved up again as you concentrate on that land-light model. I guess how much more runway do you think that there is? And any update on the time line of getting there and just thoughts on the right number of the years of land or lots owned?
Bill Wheat: So, I think we continue to look for ways to be more efficient and more capital-efficient in our lot portfolio. 77% is a very controlled number position right now and we’re looking at 62% of our deliveries were on lots that were actually developed by third-parties or Forestar. So, we’re continuing to expand those relationships and seek opportunities to buy more lots from third-parties. I’m not going to put a ceiling on to how far we can take that, but we’ve made a lot of progress. And when you’ve had a lot of success, incremental success takes a lot more work, but that’s what we do every day.
Collin Verron: Great. Thank you for taking my questions.
Bill Wheat: Thank you.
Operator: Thank you. Your next question is coming from Jade Rahmani from KBW. Jade, your line is live. Please go ahead.
Jade Rahmani: Thank you. Are you seeing any changes in terms of investor appetite for single-family rentals and multi-family leaving aside the issue of interest rates? We’ve seen Blackstone, for example, make a couple of quite large acquisitions, wondering what the tone is from the investors you sell to?
Michael Murray: Yeah, I would say we’ve seen a little bit of a tick up in terms of interest and the number of investors out there in the market. They’re still being cautious and rates are where they are and cap rates acting in kind. But I would say that just across the board, we’ve seen a bit of a tick up and have more interested parties in those assets that we have out for sale today.
Jade Rahmani: And a follow-up would be, a lot of these investors are looking for scale in their capital deployment. You’ve already done some large deals. Are you seeing on average the size of deals you’re looking at increase?
Michael Murray: Size per community, not necessarily, but there are large appetites to place dollars at scale into this space.
Jade Rahmani: Thank you.
Michael Murray: There are multiple communities, yes.
Operator: Thank you. Your next question is coming from Mike Dahl from RBC Capital Markets. Mike, your line is live. Please go ahead.
Michael Dahl: Good morning. Thanks for taking my questions. Just a follow-up on Jade’s question on the — on the rental side, revenue is flat sequentially expected in 3Q, you do have more units completed on, I think both single-family and multi-families. Is that a function of — if you have to characterize why it’s not better, is it more the investor hesitancy at this point or is it the conversations you’re having around price don’t meet your objectives for margin and return on those projects.
Paul Romanowski: You know, it’s really a matter of communities, community size and timing of those closings and we’re going to be selective through the process, but we have projects that are done and we’re going to go ahead and monetize those and put them into the market. Not seeing the margins where we would like to see them, but that’s relative, that’s just tied to cap rates and interest rates. But no real significant shift that we’re going to see in terms of up or down and it’s going to be a little lumpy as we look through the quarters because we’re selling whole communities at a time. It’s not one at a time.
Michael Dahl: Got it. Okay. And then shifting gears back to the homebuilding margins. Last fall, when there was a period of significant rate volatility and ultimately rates came down, you had a negative mark-to-market. Jessica, I think you mentioned that lower forward contracts played a role in lower-cost or mark-to-market there played a role in sequential gross margin improvement in fiscal quarter. Can you be more specific around what impact or quantification your forward hedges are having on both the 2Q gross margin? And is that actually a continued sequential benefit in your 3Q guide?
Jessica Hansen: No, I mean, we really think about it, Mike, as last quarter was somewhat of an anomaly. We’re not going to say one-time. I mean, it could happen again, but it was highly unusual in terms of the rate move going up and down so quickly and the timing in which that happened and then a move close to quarter end. And so this quarter when we say minimal impact, I mean, we’ve talked about outside of Q1, it’s been no more than a plus or minus 10 basis point move from a gross margin perspective. And so, hopefully, that will be the case going forward as well, and you won’t see a repeat of what happened in Q1.
Michael Dahl: Okay, great. Thanks.
Operator: Thank you. Your next question is coming from Susan Maklari from Goldman Sachs. Susan, your line is live. Please go ahead.
Susan Maklari: Thank you. Good morning, everyone. My first question is on the material costs. I think, Jessica, you had mentioned that you’re seeing some success on seeing some of those move lower. Can you give more detail on what is coming down and how you’re thinking about that relative to some of the other areas where there may be some inflation that’s coming through? And any thoughts on lumber as well within that?
