Lennar Corporation (NYSE:LEN) Q2 2023 Earnings Call Transcript

And we’ll have to wait and see in the third quarter if we’re right or not. But I think we feel pretty confident that we know where the market is, we know where the strength is, and that’s what we’ve solved for.

Jon Jaffe: I would only add one point, Stuart. I think you covered it well. And that is remember, Mike, we have a lever that the resale market doesn’t have. So it starts with the fact that there’s record-low inventory in resale, as you know. But we can buy down mortgage rates where the resale market can’t. So if we need to accelerate our sales pace when the market is giving us, we have that lever that we can pull, that’s at our disposal.

Mike Rehaut: Right. No, no, that all makes sense. I appreciate that. I guess, secondly, and I apologize if I missed this from earlier, but I was just trying to — I would love to get a sense of current incentives and discounts as a percent of sales. You kind of highlighted over again or a few times during this call, the mortgage rate buy downs. But just holistically, when you look at either buy-downs or other types of incentives or discounts, where are you today versus a quarter ago? And if — how you’re kind of expecting perhaps that trend, especially if ASPs are kind of steady. And you’ve kind of alluded to in your opening remarks perhaps some consumers having stretched finances, and perhaps the rate buydowns are part of a solve there. But just trying to get a sense maybe how incentives and discounts on a total basis have trended so far this year and how you’re thinking about it going forward?

Stuart Miller: Okay. So Diane, why don’t you go ahead and give some color on that? And we’ll fill in.

Diane Bessette: Yes, Mike. So if you look at incentives and what we delivered in the first quarter, it was 10.2%, and that went down to 8.4%. So I think you’re seeing a nice sequential decline. And all of that is just tied to being able to make homes affordable for people, so it all tied into the narrative that Stuart and Jon and Rick just went through. As I think about — as we think about the rest of the year, that — again, that’s kind of our lever, right? It’s adjusting prices and it’s using incentives to make those homes affordable. So we’ll see how that goes. We haven’t given guidance, but we definitely saw a downward trend from Q1 to Q2.

Stuart Miller: All right. Why don’t we go ahead and leave it there. Mike, thank you for your questions. And I want to thank everybody for joining us. We’re pretty enthusiastic about how our business is navigating sometimes turbulent waters. And we look forward to reporting in our third quarter how things have continued and progressed. Thank you for joining.

Operator: That concludes today’s conference. Thank you all for participating. You may now disconnect your line, and please enjoy the rest of your day.