Alan Ratner: I appreciate the insight there, Stuart. Secondly, I think you kind of touched on it a little bit. You highlighted your can rate peaking in October, but just to kind of be more explicit. Can you just talk about what changes you have seen over the last 3, 4 weeks with the pullback in rates? Have you seen home buyer demand improving? And any pricing power coming back even or maybe a moderation in the need for additional incentives thus far in November and early December so far?
Stuart Miller: So, we’ve seen a combination of increased traffic, greater buyer demand, traffic increase, both on — in the community level and on our website, definitely fewer cams, which we noted. And all of that has just been stabilizing the environment, hasn’t quite led to higher pricing yet, but those are generally happened before you gain some sort of pricing power accounts.
Alan Ratner: And just to be clear, that is incorporated in your 1Q order guidance of down 15% to I think 25 or so percent that incorporates…
Stuart Miller: Yes. That’s the range that we’re expecting at this point in time.
Operator: Our final question comes from Mike Rehaut from JPMorgan. Please go ahead.
Mike Rehaut: First question, just wanted to be clear. I am sorry if I’m not fully grasping elements of the guidance or comments. But on your view around or outlook around first quarter gross margins being the lowest of the year and improving from there on in. Just wanted to be clear that — or perhaps you could articulate a little bit what type of view on price or pricing trends over the next 6 to 9 months does that incorporate? Because certainly, it appears that it’s incorporating some amount of cost relief, I guess, as you’re going into the back half. I’d be curious how much of a basis point standpoint the cost relief is. But more importantly, what type of view on price does that outlook for gross margins throughout fiscal ’23 reflect?
Rick Beckwitt: So from a price ASP standpoint, we’re not assuming any appreciation in the market. That’s what our underwriting is at. That’s what we see out there. To the extent that there’s price appreciation or we’re able to increase our ASP, what we do with incentives and there’s a benefit in the financing market, that’s just incremental upside to what we view will happen in 2023.
Jon Jaffe: Just to emphasize Rick’s point, Michael, if you think about mortgage rate buydowns is really being a very effective tool in making sales in this environment. To the extent that rates come in, the cost of that buy down becomes less expensive and you could see probably potentially the biggest benefit from that if that come in.
Mike Rehaut: So just to be clear then, you’re not baking in, obviously, any price appreciation. But on the flip side, you’re not baking in any further softening in pricing trends from here on in as well in terms of additional incentives or price discounts needed if the market continues to slip from here?
Rick Beckwitt: That’s correct. So, we’re assuming no price appreciation, no incremental price reductions. We think that the incentives that we’ve been offering are good, solid incentives and base prices in order to attract the volume. I think you can see that in the numbers that we’ve been generating. The margin upside throughout the year as we noted Q1 is going to be the low point. It’s really going to come from several things. One, Jon went through the cost side, Jon went through the cycle time, Stuart talked about land and we’re going to continue to value engineer product to the extent that we need to.
Stuart Miller: And to the extent that prices curtail a bit more, some of the embedded cost savings are going to be offsets to that. But I think that we’ve gotten ahead of where prices have been going. And so, we’re looking at kind of a level field right now.
Mike Rehaut: Okay. No, I appreciate that. And I guess just secondly, any thoughts around community count growth as the year progresses? I know obviously, there’s been movement on the lot side and walking away from different amounts of lots on the option side. But oftentimes that might impact one or two years out. So, any thoughts around where the community count might be by year-end ’23 versus ’22?
Stuart Miller: So we rather not talk about community count right now because it’s a very moving picture. You might expect since we’ve renegotiated, repositioned deals that community count could or should grow in the back half of ’23. But I think right now, it’s just too soon to give any guidance as to what those numbers would be.
Stuart Miller: Okay. Thank you, Mike, and thank you, everyone, for joining us. I know that we went on a little longer than normal, but these are complicated times. It’s been a complicated year-end and we wanted to give a lot of detail. Look forward to reporting back in our first quarter. And if you have further questions, give us a call. Thank you, everyone.
Operator: That concludes today’s conference. Thank you all for participating.
