Jeffrey Mezger: Well, Alan, I wouldn’t say that we disengaged it all. We’re just being more selective and cautious and you’re right in what you hear, the land prices have been sticky out there and most of the landowners in the markets were in are pretty well healed, and they’re also waiting to see how the market plays out before they do anything. So we have not seen a lot of downward movement in land prices. And as I shared on my comments, we’re owned and controlled through 2024 and into 2025. So we don’t feel the pressure today that we have to do something, but we are encouraging the teams to go tie things up and tie it up with some money and work on entitlements and we’ll make a call on the closing when it comes time to commit to the deal or not.
But we’re encouraging all our teams to go on a land search and go out there and fill in the queue. We’re just not writing big checks unless we’re confident that that asset is going to give us the returns. So I think you’ll see this healthy tension. There’s land available out there, we’re not worried that we won’t be able to support a growth trajectory beyond 2025, but we’re going to stay watchful for a while.
Alan Ratner: That’s helpful. I appreciate that. Second question, it seems like the incentive across the industry that’s been having the most traction are mortgage rate buy downs and it’s definitely something that the new home market has an advantage on over the resale market with kind of the in-house mortgage subs. Are you guys using rate buy downs a lot I mean, obviously with the build-to-order model? I would imagine it’s more costly for you to do a buy down out of three, four, five, six months into the future compared to spec builder that could have certainty of delivery date in the near-term. But how often are you using those rate buy downs? And if so kind of what are you buying the rate down to and what does the cost look like?
Jeffrey Mezger: Okay. Rob, you want to take that?
Robert McGibney: Yes, sure. So, I would say on the €“ we are using the mortgage programs, we’ve got both lock longer term loans or shorter term loans and in some cases buy the rates down. But I would say we’re seeing that become less as the market’s improving and we’ve adjusted pricing to get right in the communities where we don’t have a lot of backlog that gets impacted. So we are using it, it’s selective, it’s not every community, it’s not every customer, we use it where we need to drive the sales. And another benefit that we’re seeing is the cost of those programs is becoming less as well with rates coming down are typical and we offer a couple of different programs, but are typical is buying the rate down to five and seven, eight, and with rates coming down, the cost to do that has fallen along with the cost of the long-term lock.
We can go out 270 days on a BTO sale to lock that. So the cost of both of those is coming down as well as the frequency of needing to use them with the market improvement and overall demand getting better here in the spring selling season.
Operator: And the next question comes from the line of Rafe Jadrosich with Bank of America. Please proceed with your question.
Rafe Jadrosich: Hi. Good afternoon. Thanks for taking my question. I just wanted to follow-up on the second half kind of gross margin commentary. Understand your point that the ASP is locked as a built-to-order builder and the houses are customized. But when you think about some of those incentives flowing through, like what’s the outlook for incentives in the second half of this year versus the first half? And then what are some of like the offsets that you would expect that to get to the flattish sequential gross margins?
