Michael Baker: Okay. Thanks. Two, please, if I could. One, bigger picture. I think last quarter, maybe it was in the June Analyst Day, you said that you thought the housing market would be down mid to high-single digits in 2023. That was sort of the industry baseline. There has been some indicators of housing being a little bit better. Is that still the way you are thinking about the industry right now, it’s down in that mid to high-single digit range?
Richard McPhail: Well, we have said there are some economists who might call for that. We were uncertain, and that’s really because when you look at supply and demand imbalances in the market, we have worked our way into a structural deficit of housing in North America. And what’s interesting to us is you have actually seen sequential improvement month-over-month in home prices for the last four months. So, I think if you just look at observed data, home prices have for the most part, remained steady versus last year, and so better than many economists’ predictions at the beginning of the year.
Michael Baker: Okay. So – but has your view changed at all or too much uncertainty?
Richard McPhail: We didn’t ascribe any housing benefit to our guidance for 2023. And we think long-term, those supports for home improvement demand are there. And we do think that supply-demand imbalance is an important part of that, along with the aging of the housing stock. So again, we are bullish on the future of this market.
Ted Decker: Yes. I think the big story with housing now as it’s playing out is values have held up. And Case-Shiller just came out with some data and Redfern just – Redfin just came out with some data that, that drop-off in values has been erased and that we are now back to record highs of home values in the United States and sequential improvement, as Richard just said. The near-term story in housing is that with so many people locked in to the incredibly low mortgage rates that there just isn’t a lot of inventory available for sale. So, transactions are at certainly near-term lows in terms of nominal number of houses that are turning over in a percentage of the housing stock. So, many people are below 5%, even at 3% mortgage rates.
So, values are holding if not now back increasing fundamental imbalance again of 2 million to 3 million to 4 million homes. And the issue is inventory. And people are getting used to it. We understand new buyers have sort of digested the increase in mortgage rates to the 7%-ish, but there is just not that much available to purchase.
Michael Baker: Yes. Okay. It makes sense. Sorry, that was one question. The follow-up is this, if I could. You had said – I hate to be so short-term-focused, but August was better than the first half comps. But any comment on August versus the second quarter comps?
Richard McPhail: Again, the first two weeks of the quarter were a little better than our first half comp. We have 24 weeks left. And so we just – we would point you back to our guidance.
Michael Baker: Okay. Fair enough. Thank you.
Operator: Our next question comes from the line of Karen Short with Credit Suisse. Please proceed with your question.
Karen Short: Hi. Thanks very much. So, two questions. The first is when you think about the dynamics on DIY versus the Pro in terms of the impact to your second half comp and then into ‘24, how are you thinking about DIY in terms of recovery? I think it’s pretty clear where you stand on the backlog with the Pro. But I think DIY is a big question in terms of how that customer will feel and is going to feel in the second half.
