PulteGroup (PHM) Q2 2025 earnings call transcript

Thank you, Jeanne. Good morning, and thank you for joining today's call as we look forward to discussing PulteGroup's second quarter operating and financial results. With me today are Ryan Marshall, President and CEO, Jim Osowski, Executive Vice President and CFO, and David Carrier, Senior VP of Finance. As always, a copy of our earnings release and this morning's presentation have been posted to our corporate website at PulteGroup. com.

We will also post an audio replay of this call later today. I would highlight that today's presentation includes forward-looking statements about the company's expected future performance. Actual results could differ materially from those who justify our comments made today. The most significant risk factors that could affect future results are summarized as part of today's earnings release within the accompanying presentation. These risk factors and other key information are detailed on our ICC filings, including our annual and quarterly reports.

Now let me turn the call over to Ryan Marshall. Ryan.

Good morning, and thank you for joining our call. As always, I appreciate the opportunity to update you on PulteGroup and our work in delivering outstanding business results. PulteGroup's earnings release details another quarter of positive financial performance as the company delivered strong closings, gross margins, and overhead leverage. Consistent with such results, we also continue to realize high returns as the company generated a return on equity of 23% for the trailing 12 months ended June 30. In a few minutes, I'll turn the call over to Jim for a detailed review of the numbers. Our results demonstrate that in an operating environment that has grown more challenging, our diversified and balanced operating model offers strategic benefits to help sustain performance.

In this competitive operating environment, we are reaping the advantages of being diversified across all buyer groups, particularly our industry-leading position in serving active adult buyers. Specific to this group, I am pleased to report that we are experiencing a great response to our newest DelWeb and DelWeb Explorer communities as buyers embrace the active lifestyle at the core of both brands. As it relates to this part of our business, I would highlight that along with being among our higher-priced homes, these homes typically represent our highest margin closings. Along with a broad customer base, we have geographic breadth and market diversity that are again proving their value.

Our business results continue to demonstrate the benefit of having large and stable operations in the Midwest, Southeast, and Northeast. As these work to offset some of the more challenging market conditions the industry is facing out West and in Texas. And I'm pleased to highlight the relative strength of our Florida operations displayed in the quarter, as net due orders increased 2% over last year. Beyond Florida, remaining a beneficiary of long-established migration patterns in this country, we have exceptional land positions throughout the region. I would also highlight that our operating teams across Florida are second to none, and I truly believe we are seeing the importance of having such experienced leadership in place.

And finally, our ability to serve both the buyer who needs the immediacy of an in-production spec home, as well as the buyer seeking to build a more personalized home from scratch, remains an important competitive advantage. The former allows us to effectively serve the first-time buyer and use our national rate incentive, while the lotter allows the buyer to select a lot and options that they value most, which in turn provides margin enhancement opportunities for us. Through the first half of 2025, we realized an average of $109,000 of options and lot premiums, which is an important driver of PulteGroup's superior gross margins. With half the year, including the important spring selling season now complete, I thought it would be useful to offer a few high-level comments on the demand dynamics we have been experiencing.

Over the past few quarters, our industry has routinely referenced demand conditions being volatile, and that remains the most accurate description of buyer activity in the first Within a market demonstrating a typical seasonal pattern from month to month, we do see days of strong demand, followed by days displaying a step down in sign-up activity. Feedback from would-be homebuyers indicates a variety of concerns ranging from affordability and the inability to sell an existing home to a slowing economy and the fear of potentially losing their job. In sum, I think consumer confidence is uncertain at best, and confidence is something difficult to solve with a lower price or higher incentive. This is where our disciplined approach to the market focuses on capturing incremental volume without giving up too much price.

If we look beyond the day-to-day volatility, the overall demand environment isn't far off our historical pre-COVID absorption paces. Our Q1 absorption pace of 2.7 homes per month was consistent with our pre-COVID averages, while our Q2 absorptions of 2.4 homes per month were just under our 2.6 pre-COVID average. In other words, our demand is reasonable, but we are having to compete for each home sale, and we are seeing meaningful differences in demand strengths and weaknesses from market to market. One of the most encouraging dynamics that I would highlight is that a drop in interest rates does stimulate traffic into our communities and a corresponding increase in sign-up activity. This was clearly evident as rates dropped in the last two weeks of June, as well as at different points during our first and second quarters.

I think this supports our view that people desire home ownership and remain actively engaged in the process. They just need the value equation to work and to have confidence in their financial circumstances to feel more comfortable signing the contract. Given the demand conditions we have experienced in the first six months, and an overall heightened sense of uncertainty among consumers, we have taken actions to adjust our operations to today's market conditions. We made the decision early in the year to slow our land spend, reduce our starts rate, and we have worked aggressively to sell excess spec inventory. We have been proactive and very tactical in responding to demand conditions as they exist in each market. Our focus on achieving high returns doesn't change, but the approach may as we balance the primary drivers of pace and price within each community.

Before turning the call over to Jim, I do want to recognize and thank our incredibly talented team as they continue to deliver the highest quality homes and customer experience while still achieving exceptional financial results.

Now let me turn the call over to Jim Osowski.

Thank you and good morning, as Ryan indicated. While there are challenges within today's housing market, there are certainly positives to be taken from PulteGroup's second quarter results and how we have positioned our business for long-term success. Net new orders in the second quarter totaled 7,083 homes, which is down 7% from last year's second quarter. The year-over-year decline in net new orders for Q2 reflects a 13% decrease in overall absorption pace, partially offset by a 6% increase in our average community income for the quarter. As a percentage of starting backlog, our cancellation rate for the second quarter was 11%, which is consistent with Q1 and only a point and a half increase from Q2 of last year.

Stability in the cancellation rate suggests that most homebuyers remain comfortable and confident in completing their home purchase once they are under contract. Our second quarter absorption pace of 2.4 homes per month was down from 2.7 homes per month in Q2 of last year. The year-over-year differential of roughly 3 homes is fairly constant through the 3 months of Q2.

Said another way, we experienced a typical seasonal trend, and the core demand is simply running at a lower pace this year. Looking at our net new orders by buyer group, the first time and move up buyers were down 9% and 14% respectively from last year, while our active adult business was up 9%. Specific to our active adult business, in addition to the underlying demand among these buyers, we are benefiting from new community openings coming online this year. To be clear, while these active adult borders make up 24% of the total this quarter, they will primarily deliver as 2026 closings. It is fair to say that we are pleased to see the new Del Webb communities being well-received.

Second quarter home sale revenues of $4.3 billion were down 4% for prior year revenues of $4.4 billion. The decrease in home sale revenues was driven entirely by lower closing volume as deliveries were down 6% to 7,639 homes. The decrease in closings was partially offset by a 2% increase in the average sales price of $559,000.

By buyer group, closings in the second quarter were 38% first-time, 42% move-up, and 20% active adult. In the second quarter of last year, the closings mix was 40% first-time, 37% move-up, and 23% active at all.

Given second quarter orders and closing at two, the end of the quarter was a backlog of 10,779 homes, valued at $6.8 billion. In comparable prior year period, the company's backlog totaled at 12,982 homes, with a value of $8.1 billion. In the second quarter, we started 7,220 homes, which is down 11% from the 8,146 homes we started in the second quarter of 2024.

Given the volatility and demand that we have experienced thus far in 2025, we continue to carefully manage our start pace to better align our available inventory with current rate of sale. As such, we ended Q2 with a total of 16,105 homes in production, of which 47% were spec units. On a sequential basis, our inventory of 7,606 spec homes under production is down 3% from the first quarter and down 13% from the start of the year. Based on expected home sales and starts, we anticipate our spec inventory to be within our target range of 40% to 45% of overall units in production by year end.

In managing specs, we are trying to achieve multiple objectives, including having enough units to meet buyer demand, while still allowing our sales counselors to sell from a position of strength. As the market evolves over the third and fourth quarters, we will be making decisions as to how much production to start as we plan ahead for 2026. Given the recent pace of sales and stage of units under construction, we currently expect to close between 7,200 and 7,600 homes in the third quarter. As it relates to the full year, given our level of backlog and a slightly lower absorption paces we have realized over the past several months, we are refining our full year 2025 closings guide to 29,000 homes.

We still expect the average sales price of closings to be in the range of $560,000 to $570,000 each of the remaining quarters and in turn for the Consistent with our prior guide, we expect our Q3 and Q4 average community counts being 3-5% higher than the comparable prior year period. For our second quarter, we reported gross margin of 27.0%, which was at the top end of our guide. Relative to our guidance, our Q2 gross margin reflects both the benefit of a favorable mix of homes closed as well as the headwind of higher incentives. Incentives are the second quarter of 8.7% of gross sales price, which is up from 6.3% last year, and on a sequential basis, up from 8.0%.

As we assess the back half of 2025, we are affirming a diagram as we expect gross margins of the third and fourth quarters to be in the range of 26.0%, 26.5%. During our Q1 call, we indicated a potential impact of tariffs of approximately $5,000 per unit that it could hit in the latter part of Q4. At this time, we now expect any impacts of tariffs in Q4 to be lower, which will help offset the cost of elevated insight.

While we have reasonable visibility into giving this gross margin guide, I will note that we still need to sell and close a meaningful number of spec homes to achieve our closings guide.

SG&A expense in the second quarter totaled $390 million, or 9.1% of home sale revenues. In the prior year, a reported SG&A expense of $361 million, or 8.1% of home sale revenues, included a $52 million pre-tax insurance benefit recorded in the period. We remain diligent in controlling our overhead costs, and we expect SG&A expense from the full year of 2025 to be in the range of 9.5% to 9.7% of wholesale revenues.

For the second quarter, our financial services operations reported pre-tax income of $43 million, down from $63 million in the prior year. The decrease in pre-tax income for the quarter reflects the impact of lower closing bonds and slightly higher expenses. Capture rate in the second quarter was 85%, compared to 86% last year.

PulteGroup's reported pre-tax income for the second quarter was $807 million. For the period, we reported a tax expense of $199 million, or an effective tax rate of 24.6%. We continue to expect our tax rate to be approximately 24.5%, excluding the impact of any discrete, period-specific tax events. On the bottom line, we reported second quarter net income of $608 million, or $3.03 per share. In comparable prior year period we reported net income of million or per share Prior year results are inclusive of per share related to an insurance benefit from favorable resolution of certain state tax matters Our second quarter earnings per share was calculated based on 201 million deleted shares, which is a decrease of 5% in the prior year as the company continues to execute its share repurchase program.

In the second quarter, we repurchased 3 million shares for $300 million, for an average price of $100.54 per share. Through the first two quarters of 2025, the company has returned $600 million to shareholders through its share repurchase activities.

Along with allocating excess capital back to shareholders, we invested $1.3 billion in land acquisition and development in the second quarter. Through the first six months of 2025, we invested $2.5 billion in land acquisition and development, which keeps us on track with four-year guidance of investing $5 billion in land development. Inclusive of these most recent investments, we have further advanced our land pipeline in two critical areas.

First, we have increased the total number of lots under control to approximately $250,000. Second, continue to make progress in becoming more land-like as option lots now comprise 60% for a total land pipeline. It is gratifying to see the progress we are making towards achieving our target of having a land pipeline be comprised of 70% options and 30% owned lots. In just the past 12 months, we have added almost 30,000 option lots to the pipeline, while reducing our own lot count by approximately 4,000 lots.

Relative to peers, our land options are differentiated in that the vast majority of Pulte's land options are with the underlying land seller or one-off transactions with a select number of land bankers. And assessing each and every land transaction, we would strike a balance evaluating the cost versus the risk mitigation opportunities that result from optioning the land parcel. As Ryan noted earlier, in an operating environment that has become more challenging, we are adhering to our disciplined business practices while making any needed adjustments consistent with our focus on generating strong cash flow and high returns. Consistent with this focus, we continue to expect cash flow generation for 2025 to be approximately $1.4 billion. Looking at the balance sheet, PulteGroup continues to maintain a strong and highly supportive financial position.

At the end of the quarter, we ended the quarter with $1.3 billion of cash and debt-to-capital ratio of 11.4%. Adjusting for the cash balance, a net debt-to-capital ratio at quarter end of 2.8%.

Now, let me turn the call back to Ryan for some final comments.

Thanks, Jim. As I discussed at the outset of this call, beyond the overall volatile demand dynamics, we are seeing meaningful differences in relative buyer strength across our portfolio. More specifically, in the second quarter, we experienced very positive demand conditions in key markets in the Midwest and Southeast, including Cleveland, Chicago, Indianapolis, Charlotte, and the Coastal Carolinas. I would also call out the positive net-new order numbers realized in Florida as our operations grew orders 2% over the prior year. Within the state, gains in our central, west, and southwest markets were partially offset by softer numbers in our northeast and southeast Florida operations. We fully appreciate there is inventory on the ground and builders are competing hard, but we are selling from exceptional communities following years of hard work to assemble an outstanding land pipeline.

As shown in this morning's press release, we are experiencing less favorable demand out west and in our Texas markets. Within these geographies, we are seeing some of our biggest challenges in Dallas, Boston, and our northern and southern California markets, most notably among move-up buyers. While these are very different markets serving different buyers and price points, they do share some commonalities. These are markets that have realized significant price appreciation in recent years and have a meaningful tech employment component within their local economies. Given the tremendous variation in market conditions, it's so important to have experienced operators who know what actions are needed. In some markets, this means raising prices, starting homes, and pushing aggressively to get new communities open.

In other markets, it means slowing starts, focusing on selling finished inventory, and taking the opportunity to retrade or even exit land deals. With an average tenure approaching 20 years among our division presidents, we have experienced leaders running our operations. And finally, before opening the call to questions, I want to note a press release issued earlier this month announcing plans for Deb Still to retire at the end of this year.

Deb is currently the Vice Chair of Pulte Financial Services, but if you have had any involvement with Pulte over the years, you know Deb is a force in the mortgage industry. We and the entire lending industry have benefited from Deb's four decades of insightful leadership, tireless work to make the industry better and more accessible to all homebuyers.

On behalf of our board, the company, and the shareholders of Polby, I want to thank Deb for the success she has delivered and the foundation she established, and upon which we will continue to build going forward.

Now let me turn the call over to Jim Zimmer. Great.

Thanks, Ryan. We're now prepared to open the call for questions so we can get to as many questions as possible. During the remaining time of this call, we ask that you limit yourself to one question and one follow-up. Jeannie, if you would again explain the process, we will open the call for questions.

Yeah, John, we did see a real positive response from the consumer the last couple of weeks of June when rates came down. As we highlighted in the prepared remarks, it drove extra or incremental traffic into the communities, and we saw good conversion out of that incremental traffic. So we're certainly encouraged by the consumer response. July, you know, I would tell you July has been a little up and down. There's been just really good days and there's been some down days as well. The first week of July was, I feel like the entire country went on vacation with the 4th of July fell. But, you know, we're encouraged by what we've been seeing the last couple of weeks.

Okay, that's great. And then maybe just on stick and brick cost, maybe how they trended in quarter, and then on the land side, we've heard some signs of perhaps a little bit of relief on the development side of the cost equation. Maybe if you can comment on both of those, it'd be great.

Sure. Thanks, John. The sticks and bricks, they were at $79 per square foot, so consistent with last year and sequentially the same as Q1. So they're holding firm for us. On the development side, yeah, we're hearing some of the same things, a little bit of opportunity on the development side. You've got trades out there, a lot of heavy machinery. People want to put it to work. So it's encouraging with what we're seeing. Don't really see that coming through in kind of our quarterly results, but as we look forward, You know, we're hoping that we see some benefit from that going forward.

Yeah, Ivy, it's Ryan. Good morning. Good to hear from you. We've made optionality specific with land bankers a piece of our business. Our primary focus is with underlying land sellers and with those individual families or owners that own that land. We think the reason that we like that IV is we end up with a more diversified risk profile, and we also get better execution of price with those underlying land sellers and what it costs us to get the options.

We found that we ran into natural resistance somewhere between 50, you know, around 50 percent was about as high as we could get. And so to get more optionality, we went to the idea of using land bankers in a moderate way. And we think that that's the tool that allows us to go from 50% option to 70% option. And the reason that we've kind of elected this type of mix is we think that it's the best tool to give us risk mitigation, which is the primary thing that we're looking for when we think about optionality.

Certainly, there is a tradeoff. We give up a little bit of margin to get a better return, and we know that return is what creates value for our shareholder. We think that's a second order or a follow-on benefit. The primary benefit we're after with optionality is risk mitigation.

Yeah, we're definitely taking advantage of that where appropriate. Ivy, we value the relationships that we have with land sellers. So, you know, I think we're being responsive to the current market conditions, and I think land sellers recognize that as well. Well, in some cases, we're getting better price and we're closing. In other cases, you know, price might be staying similar to what it was in the underlying contract, but we're getting more time.

And so I think our really experienced operators in the field are picking the lever that needs to be pulled in order to yield the best outcome for the company.

Great question, Heidi. You know, today about 20 to 25 percent of our lumber comes from Canada. The rest of it we're domestically sourcing.

Yeah, you know, hard to say where that ultimately kind of plays out, Ivy. If tariffs double on 25% of our lumber load, we would see, you know, a higher cost load. So, you know, it didn't have an impact. I don't know that it would necessarily be catastrophic. I know there was an article that was out last night or this morning early that was talking about adding significant cost to housing. I think that article likely alluded to the fact that the entire lumber package would be Canadian lumber, which in our case is not true.

Yeah, great question, Mike. You know, as we looked at the quarter, you know, we really just had a different mix, product and geography in the quarter. You know, to give you a frame of reference, there were 1,200 homes that we both sold and closed within the quarter. So, you know, we make assumptions about where we're going to sell them, when we're going to sell them, and what the costs are associated with that. And we fared a little bit better than we thought. So, you know, as we looked at it, you know, incentives were 8.7 on what we closed for the quarter. And, you know, again, the mix gave us a little lift and got us to the top end of our guide.

I don't think anybody believes that's going to last forever, and we're certainly anticipating a tariff load hitting our closings in next year. But, you know, we think for this year it's going to be minimal and mostly in the back half of Q4. So a little bit of the upside, a little bit of upside to our expectations from a quarter ago on that. You can see the sequential lift in incentives. I think you're hearing from some of our competitors as well that are seeing similar elevated incentive loads as we work to solve the affordability equation for customers. And in total, I think that balances out, and we're able to maintain our margin guide, which continues to be the best in the business.

Thank you, Mike.

Yeah, Stephen, it's really around the strength of our land pipeline. We've got 250,000 lots that we control now, which is we're up about 25,000 total lots that we control compared to this time last year, probably even a little bit more than that. So I think our division team has just done an outstanding job putting new communities in the pipeline that are going to be great performers.

The most recent, you know, the most recent quarter that we just reported, our new Del Webb communities are a great example of that. So, and no, I don't think it means that we'll have more owned land. In fact, we've gone the other direction. We own less land, we control more via option, and our option percentage is as high as it's ever been. So I feel like we're doing all the things that we want to do. We continue to think that we have the opportunity to grow this company long-term 5% to 10%. So I continue to reiterate that. And we're seeing in this type of difficult market quality sells. And we have high-quality land positions. We have high-quality homes.

We're delivering great customer experience. And all of those things we think yield in the ability to take market share. And so, you know, my comments about being positioned and prepared to do that, we're really alluding to those things.

In terms of pre-COVID vintage land, Steve, what we really have done last, I mean, there's probably a few stragglers here and there, but we're turning our land pipeline every three and a half years. So, you know, we're on fresh land, I think, just like the rest of our competitors. Do we have some bigger, longer legacy communities? Sure, but it's a very small number of our actual closings and a very small number of our total 250,000 locks that we control. So, you know, this myth that, you know, some continue, or this narrative that some continue to push, I'm going to see if I can get that Discovery TV channel Mythbusters to come and, you know, do a show on the idea that our origin performance comes from all land.

It's just simply not true.

Yeah, Matt, good morning. Thanks for the question. We had really good performance with our new Dell Web communities, and as we've highlighted in the prepared remarks, those will be next year closings. We haven't given any kind of a guide to next year's margin. We'll do that as we get toward the end of the year. What we have talked about in the past is when you look at our three consumer groups, the entry-level first-time buyer group, that's our lowest margin performer, our lowest margin buyer group. The move-up communities generate about 200 basis points higher than that, and then we get an incremental 200 basis points out of the active adult communities. So they are, you know, and I mentioned it in my prepared remarks, they are among our higher-priced homes.

They're also our highest margin homes. So, you know, it's certainly favorable to our overall margin performance, and it's part of the reason that we've been highlighting and sharing. Today, the overall mix of our Delaware business is 20%. We'll see that going back to the more traditional 24% to 25% in 26% as these new communities came online, which we're certainly going to see that coming.

But I'd just reiterate, we haven't given a margin guide for 2026. We'll do that as we get later into the year. Understood, yeah. And even still, that was a very, very helpful caller.

You know, as Ryan said earlier, our procurement teams are all over this stuff, best in the business as it relates to it. Similar to my comments a little earlier on land development, you'd hope to see some opportunity. Our teams are certainly working to see what they can do. Again, the $79 a square foot that we have now, these are homes that we contracted six months ago and started. So as we go forward, our teams are certainly pushing for opportunity, and we'd like to see that opportunity come through in the future.

Matt, we have seen, you know, in certain categories, prices come down. You know, we've taken cost decreases. There's been other things where we've had offsetting increases. To Jim's point, you know, we're going to continue to push, you know, to get the best prices that we possibly can so that we can pass that value on to the consumer. Portability is tough out there for everybody, and we want to do everything in our power to pass that savings on to the consumer.

Yeah, labor's available, Anthony. We haven't seen any change there. We continue to be an employer of choice. We've got consistent, predictable work. We pay on time. We pay well and fairly, so I think we'll continue to be a place that will attract available labor. In terms of our cost assumptions, really no change from what we rolled out at the beginning of the year on the labor front.

Yeah, I think the things that we've learned are consistent with what we've shared in previous cycles, so I wouldn't suggest there's a lot that's different today. We're getting a lot of benefit out of cycle time improvements with the amount of work that can be done ahead of time in a factory. We're getting really good product quality. We are certainly getting some efficiencies and economies of scale based on the way that we buy lumber when we are bringing it into the factory as opposed to buying a load of lumber for a specific house. I think there are a lot of benefits that we continue to get from it. It has been an important part of our overall innovation work, and we look forward to continuing to see that part of the business expand.

Yeah, you know, really nothing that I can probably share with you that's different than I think what you're seeing play out, you know, in the news media. We have always and continue to require all the labor that's on our job site to be able to work legally in the country. That's always been the case. We continue to make that a priority. I will now turn the call over to management for prepared remarks.

Sure. As we look at the quarter ASP in the quarter, what we saw there was both mix and product and geography. If you look at our west business, and Ryan alluded to it, was the softest, and particularly in some of the move-up segments. If you look at places like the California, our two regions out there. So you've got a mix influencing that with some of the move-up, taking a little bit of a step down in some of our higher-priced markets. And then as well, you've got the incentives that are underneath that as well. So primarily the mix, and then as well as the incentives played into the 549, the quarter-to-quarter ASB.

Thanks, Jim.

Thanks, Ryan.

Yeah, Ken, inventory, finished inventory at the end of the year is not a number we guide to. So let me start with that That said you know we have guided that overall spec inventory will be in the 40 to 45 range Our finished inventory today is running a little higher than what we normally like to see We typically like it to be around one and a half one and a quarter to one and a half finished units per active community So, you know, we're probably 400 units north of kind of where we'd like to be optimally. But, you know, on the margin, I just don't think it's moving the needle one way or the other.

But I think our bias would be to continue to work that down.

And then in terms of kind of Florida, you know, as I mentioned in some of my prepared remarks, we're really happy with the performance that we're getting there. And then where those buyers come from, you know, Florida is a big melting pot. And so we see a lot of buyers coming from all over the country, the Midwest, the Northwest, Canada, foreign.

We get buyers from all over the country, all over the world to come into Florida. We also see a healthy mix of folks moving within Florida as well. We can certainly follow up with you on specific numbers.

I think what you'll find is that it's a melting pot of fires. I would also add that you made reference to it being heavy active adult. I mean, there's parts of it. So if you look at our Southwest business, yeah, you may be more active adult, but you get into Orlando, you get up into Jacksonville, you get into Tampa. Pretty well diversified across first time move up and active adult. Again, you obviously get a draw because of the weather down there, but it is... we've built a business with the divisions of the very diversified businesses down there. So it is not just, you know, DelWeb, DelWeb Explorer or anything.

Yeah, Paul, I think the commentary that you've heard from us is that there's actually inelasticity in pricing and that more incentive doesn't necessarily translate into incremental volume. So, we're trying to get incentives to the level where we get the appropriate level of volume, but pouring more incentives on top of that doesn't necessarily translate in the incremental volume that would justify those incentives. So, that's why we've tried to continue to maintain some discipline around what we're doing on the incentive load. I continue to reiterate, we think the opportunity is to bring incentives lower over time. We're clearly not there right now, but I long for the days of more normal incentive loads of 3-3.5%. Hopefully, as we get out into future years, that will become possible again.

And then in terms of kind of where the incentives are, you know, they're everywhere. They're in all buyer groups. They just come in different shapes and sizes. When we're in the, you know, the first-time buyer, those incentives predominantly are in our forward commitments and interest rate incentives and things of that nature. When you're getting into the active adult move-up, they tend to come in the form of either just outright price discounts or lot premium incentives or option incentives or contributions toward financing-related incentives that aren't necessarily forward commitments. So it's fairly consistent. It's just in different shapes and sizes based on buyer group.

Yeah, we really didn't see an impact in the very small portion of our business.

Thanks, Paul.

You know, great question, Susan. You know, we stay very diligent all the time. As we look at our SG&A, you know, we talk with our teams constantly about the discretionary spend that they have. We look at our people costs. So, I think we're running a very effective and efficient business that we have. We reiterated our guide of 9.5 to 9.7%. We still think that's a good guide, but again, it's something we talk about all the time, and I think our experienced operators are doing a nice job in this space.

Yeah, Sue, you know, on ShareBuyVac, the way we operate there is we report what we do in the quarter.

You know, I would reiterate that we've been a consistent buyer of our equity, and we're using it as an opportunity to return excess capital back to the shareholder. So, you know, we did another $300 million in the most recent quarter following $300 million in Q1, and, you know, I think our practice will be to share Q3, Q4 results if they happen.

Thank you.

Probably about 10% the quarter. And then I know you talked about DelWeb a lot, but when we think about the communities coming online, Is the bulk of these new Dell Web communities coming online by year-end, or is it going to go into maybe first half of 26? Well, you saw, Jay, in this quarter, the percentage of sign-ups in the quarter were 23%, 23 or 24% of this quarter's sign-ups. So, typically, from the time we sell until deliver, it's about six months. So this quarter signups will end up being first quarter 26 closings. So what you should expect is that we'll get back into the Dell Web closing mix being about a quarter of our business once we hit 2026.

And we'll see those communities coming in over the balance of this year and next year. I mean, I tell you, a lot of excitement. You know, we've got a couple more that are opening in the Tampa market. First one in Greenville, another one opening in Charleston, another one out in Southern California. So I'd say in the coming quarters, we're going to have a, you know, kind of a good flow of new jet webs coming online.

Yeah, you know, Ray, it typically land development occurs, you know, roughly six to 12 months before you see the closings hit. You know, a typical land development cycle is six to nine Then you have, you know, the home construction period of, call it four months, and then you start to see those closings. So, it depends on how big the phase is. It depends on, you know, there's a lot of variables, but I think if you got savings today at this moment in time, you're likely, you know, back half of 2026 is when you'll start to see the benefit of those lots. closing that had lower land development costs.

Yeah, we think it's a huge growth opportunity for the DelWeb kind of overall brand, and the difference It's between Dell Web Explorer and our traditional Dell Web. The Dell Web Explorers are not age-restricted. The target consumer for that is the Gen X buyer. So think about buyers that are over the age of 45.

They're high on homeownership. They've got wealth. They may be looking to start to make that Semi-retirement type transition, but they still consider themselves to be very young and active, and so they're looking for a community that gives them all those benefits without the restriction of being age-restricted. One, they don't qualify just through physical age. They're not 55 yet. And two, mentally, they don't see themselves or think of themselves as anywhere near the age of 55. And so they love the way that these Delaware communities provide lifestyle, and that's what it's really intended to be. You will see some changes in the programming. So while still heavy on lifestyle, the types of physical activities, the types of physical fitness will be slightly more geared to that demographic.

And then you'll see more in terms of kind of dining and social, almost private club-type dining and social, as opposed to, you know, in our Del Webb communities, you see more large-scale community gatherings. So a lot of similarities with some nuance around how the programming is actually rolled out and implemented.

I'm really happy with what we saw out of Florida. I don't know that I'm terribly surprised. We're just bullish on Florida. And then your comment about buyer groups, the move-up buyer in Florida was up 18% for us year over year. So we were pretty pleased with what we got out of move-up. The active adult buyer performed very well in Florida. I highlighted that the northeast Florida market was a little slower for us. That tends to be a part of the state where we have a little bit more entry-level product.

So I don't know that I would consider it to be down. Rather, that's a buyer group that continues to be challenged by affordability. No matter where you live, the Florida entry-level buyers are certainly not immune to some of those affordability challenges. Overall, though, I'm very pleased with how the inventory has started to clear up in Florida, and we've certainly seen our business perform incredibly well in the most recent quarter.

Yeah, even going back to the go-go days of single-family rental, we wanted it to be a fairly small part of our business. We were targeting somewhere around 5% of our total volume. In terms of what we're delivering today, Buck, it's in that 3-4% of our total volume of single-family rental. On new orders for future business, it's certainly been slower, and those buyers are not as active. But, you know, in the last couple of quarters, we've started to do some more deals, you know, not back to the level we were doing a couple of years ago. But there's activity out there, and we'd expect it to still be, you know, a small part of our business, you know, today and well into the future.

I will now turn the call back over to Jim Zumer for closing remarks. We appreciate everybody's time this morning. It was a busy morning for everyone. We're available for the rest of the day if you've got any other questions. Otherwise, we will look forward to speaking with you on our next turn this call. Thank you.