Thank you all for joining, and welcome to the M/I Homes second quarter earnings conference call. My name is Brica, and I will be your event specialist operating today's call. During the presentation, you will have the opportunity to ask a question by pressing star followed by one on your telephone keypads. Please press star two if you change your mind, and for operator assistance at any point, please press star zero. I now have the pleasure of handing the call over to our host, Phil Creek. Phil, please go ahead. Thank you for joining us. Joining me on the call today is Bob Schottenstein, our CEO and President. Susan Krohne, SVP and Chief Legal Officer. Derek Klutch, the President of our mortgage company, and Ann Marie Hunker, our VP and Chief Accounting Officer, and Mark Kirkendall, VP Treasurer. First, to address Regulation Fair Disclosure, we encourage you to ask any questions regarding issues that you consider material during this call because we are prohibited from discussing significant non-public items with you directly. As to forward-looking statements, I want to remind everyone that the cautionary language about forward-looking statements contained in today's press release also applies to any comments made during this call. Also, be advised that the company undertakes no obligation to update any forward-looking statements made during this call. With that, I'll turn it over to Bob. Thanks, Phil. Good afternoon, everyone, and thank you for joining us for our call today. At a time of rapidly changing market conditions, we had a very strong quarter, highlighted by record quarterly net income of $136.7 million, which is 27% better than a year ago and a 34% increase in earnings per diluted share. These record earnings resulted in our return on equity improving to 27%. Our revenues increased 8% to a second-quarter record $1 billion, with gross margins improving by 220 basis points to 27.3% and our SG&A ratio improving by 70 basis points to 9.7%, all of which led to a pre-tax income margin of 17.5%. Our backlog sales value at June 30 increased by 9% to a second-quarter record $2.7 billion. M/I Financial, our financial services segment, also contributed to our positive results for the quarter with pre-tax income of $8.7 million. During the quarter, we began experiencing noticeable moderation in demand as a result of the unprecedented rapid rise in the 30 year mortgage rate, combined with continued inflationary pressures and overall concerns with housing affordability. Traffic, both online and foot traffic in our models, has clearly declined from the robust levels we saw throughout all of 2021 and certainly the beginning of 2022. This drop-off in both demand and traffic has impacted our sales. Specifically, we sold 1,820 homes during the quarter, a decline of 20% from the record 2,267 homes that we sold during 2021's second quarter. During the quarter, it should be noted that we were operating at 8% fewer communities on average than a year ago. In the second quarter, we sold 3.5 homes monthly per community, well ahead of our sales pace in any prior second quarter over the last decade, with the exception of last year. Our Smart Series, which is our most affordable line of homes, continues to be very successful and a leading contributor to our sales performance. During the quarter, our Smart Series sales comprised roughly 50% of company-wide sales, compared to 40% a year ago. We continue to see better monthly sales pace, better cycle time, and better gross margins in our Smart Series communities. Now I will provide some additional comments on our markets. We experienced strong performance from all of our divisions in the second quarter, but with particular substantial income contributions coming from Dallas, Minneapolis, Tampa, Raleigh, Columbus, and Charlotte. However, given that we are operating in fewer communities than a year ago, as well as the declining market conditions discussed earlier, new contracts for the second quarter in our Southern region, which consists of nine of our markets, decreased by 21% and decreased by 18% in the Northern region, which consists of the other six markets. Deliveries in the Southern region decreased 13% from last year. Deliveries in the Northern region increased by 4% from last year. 53% of our deliveries came out of the South, 47% from the Northern region. Our owned and controlled lot position in the Southern region increased by 12% compared to last year, and our owned and controlled lot position remained at the same level as last year in the Northern region. 32% of our owned and controlled lots are in the North, while 68% are in the Southern region. While we have over the last year sold through communities somewhat faster than expected, we are on track to open a record number of new communities in the balance of 2022, and in addition to further grow our community count in 2023. We have an excellent land position. Company-wide, we own approximately 24,800 single-family lot or lot equivalents, which is roughly a three year supply. Of this total, 31% of the owned lots are in the northern region, 69% in the southern region. On top of the owned lots, we control via option contracts an additional nearly 23,000 lots. In total, our owned and controlled lots increased 8% year-over-year to approximately 47,500 lots or roughly a six year supply. Importantly, almost half of the lots that we own and control are controlled pursuant to option contracts, which gives us tremendous flexibility to react to changes in demand or individual market conditions. Before turning the call over to Phil, let me make a few closing comments. Clearly, there is growing uncertainty on a number of macroeconomic fronts, and choppy market conditions are likely to persist for some time. That said, housing fundamentals remain very solid with an undersupply of available homes and extremely favorable long-term demographics. Moreover, as we head into more challenging times, M/I Homes is in excellent financial condition. Our balance sheet is as strong as it's ever been. We ended the quarter with record shareholders equity of $1.8 billion, an increase of 24% over a year ago, book value of $66 per share, cash of $188 million, 0 borrowings outstanding on our $550 million credit facility, and a home building debt-to-capital ratio of 28%. Looking ahead, we believe we are well-positioned to manage through these changing and uncertain times, given the strength of our balance sheet, our low debt levels, our record backlog, our diverse product offering, and our very well-located communities. Phil? Thanks, Bob. As far as financial results, our new contracts were down 12% in April, down 15% in May, and down 34% in June. These comparisons are to last year's record second quarter sales. To our buyer profile, about 55% of our second quarter sales were to first-time buyers, compared to 54% in last year's second quarter. In addition, 51% of our second quarter sales were inventory homes, compared to 44% in 2021's first quarter. Our community count was 168 at the end of the second quarter, compared to 175 a year ago. The breakdown by region is 189 in the northern region and 79 in the southern region. During the quarter, we opened 20 new communities while closing 28. During last year's second quarter, we opened 16 new communities and closed 28. In the first six months of this year, we opened 51 new communities versus 37 in last year's first half. This year, we plan on opening a record number of new communities and ending 2022 with about 200 communities. We started 2,700 homes in the second quarter, down slightly when compared to last year's second quarter, and we started 5,100 homes during the first half of the year. As of June 30th, we had 6,300 homes in the field versus 5,100 homes in the field a year ago, which is up 24%. Our cycle time was flat in the second quarter of 2022 versus the first quarter, and our construction costs overall were up slightly. Revenue increased 8% in the second quarter, reaching a second quarter record of $1 billion, and our average closing price for the second quarter was an all-time record $477,000, a 16% increase when compared to last year's $411,000. Backlog average sale price is $519,000, up from $454,000 a year ago, and our backlog average sale price of our Smart Series is $430,000. Our second quarter gross margins were 27.3%, up 220 basis points year-over-year and up 250 basis points over the first quarter. Second quarter SG&A expenses were 9.7% of revenue, improving 70 basis points compared to a year ago. Our interest expense increased slightly for the quarter compared to last year. We're very pleased with our improved returns for the second quarter. Our pre-tax income was $17.5 million versus $14.7 million last year, and our return on equity was 27%. During the quarter, we generated $195 million of EBITDA compared to $156 million in last year's second quarter. We have $27 million of capitalized interest on our balance sheet, about 1% of our assets. Our effective tax rate was 25% in the second quarter compared to 24% in last year's second quarter. Our earnings per diluted share increased to $4.79 per share from $3.58 last year, up 34%. During the first half of this year, we repurchased 860,000 shares of our outstanding common shares for $40 million. We spent $25 million in the second quarter and $15 million in the first quarter. This leaves us with $108 million available under our repurchase authorization. In the last 4 quarters, we have spent $92 million buying back stock, repurchasing 6% of our outstanding shares. Our current plans based on existing market conditions are to continue repurchasing shares. Now I'll turn it over to Derek to discuss our mortgage company results. Thanks, Phil. Our mortgage and title operations achieved pre-tax income of $8.7 million, compared with $18 million in 2021's record second quarter. Revenue decreased 32% from last year to $19.4 million due to a lower volume of loans closed and sold, along with significantly lower pricing margins due to continued competition for purchase business. The average loan to value on our first mortgages for the second quarter was 82%, compared to 84% last year. 80% of the loans closed in the quarter were conventional and 20% FHA or VA. This compares to 78% and 22% respectively for 2021's second quarter. Our average mortgage amount increased to $384,000 in 2022 second quarter compared to $336,000 last year. However, loans originated decreased to 1,343 loans, which was down 21% from last year, while the volume of loans sold decreased by 16%. Our borrower profile remains solid, with an average down payment of almost 18% and an average credit score of 748. Finally, our mortgage operation captured 77% of our business in the second quarter compared to 84% last year. Now I'll turn the call back over to Phil. Thanks, Derek. As far as the balance sheet, we ended the second quarter with a cash balance of $189 million and no borrowings under our unsecured revolving credit facility. Our capital structure is very strong with our bank line available until 2025 and our senior notes maturing in 2028 and 2030. Total home building inventory at June 30, 2022 was $2.8 million, an increase of $700 million from last year, with our higher backlog being 20% of this increase. Our unsold land investment at June 30 is $1.1 billion, compared to $800 million a year ago. At June 30th, we had $775 million of raw land and land under development and $370 million of finished unsold lots. In 2022 second quarter, we spent $121 million on land purchases and $111 million on land development for a total of $232 million, which was down slightly from last year's second quarter. We have a strong land position at June 30th, owning 25,000 lots and controlling 48,000 lots. We continue to focus on owning a 2-3 year supply of land. At the end of the quarter, we had 91 completed inventory homes, 1,732 total inventory homes. Of the total inventory, 899 are in the northern region and 833 are in the southern region. At June 30, 2021, we had 59 completed inventory homes and 869 total inventory homes. This completes our presentation. We'll now open the call for any questions. Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypads. If you change your mind at any time, please press star two. We have our first question on the line from Alan Ratner of Zelman & Associates. Please go ahead when you're ready. Hi. Nice results, and thanks for taking my question. Thank you. You mentioned last quarter you expected that a drop in lumber was roughly six months away from being reflected in your gross margins. Given the strong sequential rise in 2Q, I'm just wondering if those impacts were pulled forward or if there was more to the large spike sequentially that we should be considering. I'll answer the first part of that and then Phil, I think, can maybe add a little bit more detail. I think we're just beginning to see the drop in lumber reflected in our closing margins. Clearly, most of the homes that we're closing during the quarter, vast majority of them, I would say, did not reflect the, what has now been a pretty sharp decline in lumber. I think that we'll get most of the benefit of that on a go-forward basis. Phil, I don't know if you want to add anything to that. Yeah. Margins are just very, very hard to predict. You know, we have been getting benefit from lumber. Again, a lot of that will be felt in the second half, but other items are still going up. Of course, also about half of our sales are to specs, and we are anticipating we'll probably have to do a few things, perhaps cost of locking interest rates, maybe some buy downs. Who knows what incentives might be there. It's just hard to predict margins, but obviously we're very focused on doing all we can. Got it. Thanks for the color. My next question is regarding some deals you may have under option contract. Are you re-underwriting any of those deals? How are you kind of thinking about options you have under contract to take down lots, you know, in the next three to six months? Great question. Obviously, you know, as market conditions change, you've got to react when both things get better and when things begin to moderate. You know, in terms of the big picture, our focus and approach towards land has not changed and will not, and that is our goal is to secure premier locations. Our goal is to not own more than a 2-3 year supply at any one time. Our goal is to keep roughly half, if not more than half, controlled pursuant to option contracts. Where possible, to buy finished lots rather than take on the risk of development. Those goals existed last year, the year before, and those goals will continue. Having said all that, given the change in conditions on almost any deal that is getting ready to close, we are revisiting the underwriting metrics that were applied at the time the deal was approved. Quite often, we will approve a deal, and then it may go through 6, 12, 18 months of further entitlement or engineering process. Before we're ready to pull the trigger and get ready to close, routinely, we would revisit that. That process is even more rigorous today, with the underlying assumptions being reviewed and in almost every instance altered because conditions on the ground have changed. We're doing, I assume, what you would do if you were in our seat, which is to relook at everything in light of what we know today and what we believe will occur tomorrow, and not hope for things to get better, but rather believe that things may stay like this for some extended period of time. Not all deals are the same. The purchase of 30 finished lots in one bulk takedown at a relatively affordable price is obviously very different than a 400-lot, you know, acquisition, where we take the risk of development over a 3, 4, 5 to 6 year period. In each case, we are applying the discipline of relooking at and seeing if the deals still make sense. We have been able to manage this way since coming out of the Great Recession, and I think that flexibility has served us very well. Quarter in, quarter out, year in, year out. If you look back over the last, you know, seven, eight, nine years, I think you'll see that nearly half, if not more than half of our land position was tied up pursuant to option contracts. While we've had to walk away from very few, we have the right to do so, and that's a good position to be in. Got it. Thanks a lot for all that color. Just if I may, one quick follow-up. I know last quarter you mentioned about 70% of the lots that you purchased were raw. I'm wondering if perhaps you're trying to limit your, you know, self-development exposure, if that percentage has changed at all toward finished lots or kind of how that breakdown has shaken out. Yeah. Yeah. No, that's a great question. I think it depends. Company's in great shape. That said, we're not blind to the fact that things have slowed down. We're being more careful with all of our expenses. We're being more careful with new hires. We're being more careful with land development expense as well as land acquisition and, you know, trying to just see what's happening in the market. We believe firmly that there's an under supply of housing. We believe that long term, the prospect of household formations and stabilization of home ownership throughout the markets we operate in is something that will provide tremendous long-term momentum for housing. I think that is a pretty widely shared view, not just within the home builders, but also within most economists that have weighed in. We think that things long term look really good. Here over this next period of time, until things settle out a little bit, we're going to be more careful. Our land position is very good right now and well-vintaged. Excited about the fact that we're opening up a record number of new communities in the back half of the year, all of which were put into contract on average probably 2-3 years ago, reflecting prices in effect at that time, not prices today, or at least prices before 3-4 months ago when prices started to stabilize. We're excited about our new communities. We're excited to get them open and operating even in the face of near 6% mortgage rates rather than 3% when they were underwritten. We still believe they're exceptionally well located and will sell. I also want to underscore, too, I don't want to sugarcoat. We liked it better when the demand was more robust. Demand isn't dead. We're seeing a sales pace today that I think is much more reminiscent of the sales paces we saw in 2017, 2018 and 2019. That 2.5 to 3 to 3.5 per month rather than 4, 5 and 6 homes per month. So I think that things are maybe resetting in a more normalized way right now, but only time will tell. Thanks again for taking my questions and, congrats on the results. Thank you. Thank you. Thank you. We now have the next question on the phone lines from Jay McCanless of Wedbush. Your line is open, Jay. Hey, good afternoon, guys. Thanks for taking my questions. Bob- Hi, Jay. That was actually going to be my first question was on July. You know, we've heard from some of your competitors that with rates coming down, you know, almost 75 basis points, depending on what you look at, that activity levels, interest levels have started to pick back up. So maybe if you could give some high-level commentary on July and is that 2.5-3.5 on absorption, is that pretty much all your markets across the country or are there some that may be a little weaker or stronger than others? Well, there are markets that are a little stronger and a little weaker, and sometimes it's hard to know whether that's your operation or the macro market. That's always a question that I think builders want to answer with strength of conviction, but may not really know for sure if we're really frank with ourselves. Having said that, I think Austin, which was a red-hot market for most of the last five years, appears to be resetting slightly more than some others. Maybe Tampa under a little bit more pressure too. Seeing really good strength still in Dallas, which remains the largest housing market in the country. You know, as Phil talked about in his comments, the quarter got worse as we went on. Sales were down a little bit in April, a little bit more in May, and then quite a bit more in June. We don't give any forward guidance, as I think pointed out by several of you in the past. I say that with a smile on my face. I don't mean to be snarky. Let me just say this. I think July is looking more like June than April and May. I think things are. You know, in the last two years, or at least beginning with May of 2020, just after COVID first hit and demand just skyrocketed from May of 2020 all through the rest of 2020 and through all of 2021, there was no spring selling season, and there was virtually no seasonality. M/I Homes, like almost every other builder, was limiting sales in almost every one of our communities, whether it was May, March, December, July. I think that historically, the summer months, particularly July, has been a month where things have seasonally been slower. I think some of that seasonality is returning. If that's the case, it seems like it is. I think that there is a little bit of maybe getting used. I don't want to create the wrong impression, but I think buyers are starting to get used to the fact that rates are probably, at least for now, settling in this maybe, you know, 5.375%-6% range and, you know, we'll see how that happens. You know, there has been a little bit of incentivization by some of our competitors, and we've done a little bit too, with buying down rates. You know, we'll see. I think that if I had to say, I think July is feeling a little bit more like June than April and May, maybe a tinge better. We'll see. You know, we're going to know a lot more here soon, and we'll report it then. Jay, this is Phil. One thing I'll also add, and I'm sure you know this, I mean, the highest priority for us is to get our large, very profitable backlog closed. It's one thing to do incentives when you're starting up a community or when you're closing out. But when you have a large backlog at a strong price, again, you have to be careful before you do a lot of incentives in there because obviously customers in the backlog will come back at you fairly quickly. You know, the good news is we're not having to do much at all. Sometimes maybe an interest rate buy down a little bit, sometimes maybe a few closing costs being covered, but we're not having to do a whole lot thus far to get this backlog closed. That's kind of job one. As Bob said, we're also really excited as we open these record number of stores in the second half of the year. I mean, there it's easier to market price, whatever that is, depending on competition and what's going on in that sub-market, but it's a lot easier to do that as we open these new, we think, well-located, good product stores. Again, every subdivision, you know, is a little different, but, you know, again, job one is to get this backlog through the pipe. Good. That's. Thank you for that. That's actually, I was going to go to that next, Phil. When you think about the deals that you're re-looking at before you go to closing, are you having to be more drastic in terms of lower assumptions on pace or lower assumptions on price? Just kind of maybe which way y'all are having to lean right now, just given what you're seeing on the ground when it comes to re-pricing these deals. Yeah. Lower pace, lower margin, higher development costs if we're developing, bigger contingencies, longer development times, and not much improvement in cycle time. You know, not exactly a royal flush of options. I mean, we're sort of looking at things the way they are today as opposed to where they were. One of the really good things, Jay, is where we are, and everybody tends to talk about percentage options, and it is important, but as we all know, the biggest risk is what you own today. We own 25,000 lots. You know, again, that's within, you know, a couple of years supply. It's not like we have an excess of land right now to deal with. As Bob said, you know, a whole lot of that was purchased, you know, back when prices were a lot better and so forth. We are focused on making sure we only bring stuff on the books that we really need to, that we can get through. Today, you know, we're developing, you know, some smaller phases than we were six months ago, you know, because sales pace is slowing down. There's a lot of different things you can do to kind of manage that investment and that risk, and those are the things we're paying attention to. on that, I was encouraged to hear that your cycle time's flat with, I think you said 2Q versus 1Q. I mean, I know- Exactly You don't have a crystal ball, but if you look at what you've been dealing with supply chain, and especially it sounds like that last 60 days with what's going on, including having to deal with municipalities in that last 60 days, I mean, do you feel like the supply chain issues that you're seeing right now probably stay flat or maybe get a little bit better in the last half or start moving through that backlog a little bit faster? I think there's two pieces to that. They come down somewhere because no one really knows for sure. I think that we're going to start to see just slight. I don't think it's going to be significant, but maybe it will pick up a week, maybe more on the home building side. Home construction side, I think that cycle times will not get worse, and I think they may start to get a little bit better with this slowdown. You know, there's less demand for everything because we're not the only builder that's putting, you know, down the whole industry is. Now on the land development side and the entitlement side, I'm a bit more concerned about cycle times there, which then count back to when you can open new communities. Whether we're buying finished lots from a third-party developer or doing it ourselves, we're all living with sort of the same, you know, processes. We may be able to be a little quicker depending upon who does it. By and large, I'm not so sure about that cycle time. I have less confidence in that one. That one's impacted by more external factors with labor shortages, demands on some of these big dirt contractors, given the big increase in state and federal infrastructure that's going to divert labor and equipment away from residential construction. We'll have to see how that plays out. I'm not being negative or doom and gloom about it. I just think there could be continued pressure there, which doesn't allow it to get better. It may get a little worse. I sure agree with Bob's comments on that. As I said earlier, you know, we have over 1,000 homes more in the field at June 30th than a year ago. During the first four months this year, we pretty much started everything we could because we had to get it in the field to close this year. We could actually end up starting less houses in the second quarter than a year ago in reaction primarily to, you know, the slowdown in business. We do have a lot more houses in the field. Every market is a little different. You know, we have almost double the amount of specs. Now, we feel great about that. You know, only 100 or whatever are finished. We are, as we open these new stores, you know, putting some specs in those. Our Smart Series, which Bob talked about being half of our business, which has you know stronger pace and stronger margin. We tend to have a few more specs in our Smart Series. We're also doing a few more attached town home communities than we were a year ago. And again, those tend to generate a few more specs. We do have more houses out there. We'll carefully manage that level based on what our sales and closing pace is. I agree with Bob, and I'm not sure we'll get much more improvement as far as cycle time, but we have been making some progress. All right. Yeah. On incentives, I guess, where were incentives this past quarter versus last year? Is everyone still just doing rate buydowns? Are you starting to see some actual dollar incentives start to move in there, you know, small price cuts, things like that from you guys or your competition? Yeah. You hear every now and then about a builder here or there that's offering a big commission to Realtors to bring traffic to their models. By and large, there hasn't been the kind of cutting and running, thank goodness, on a widespread basis we saw back in, you know, in the days leading up to the Great Recession. I think one of the reasons for it is not just because of discipline, but I think most of the large builders, and certainly this is the case with us, have zero callable debt. We're not overly long on land. We're not desperate. We're not frightened, and have very strong balance sheets. Ours has never been as strong as it is today. Considerably stronger than it was back then, to say the least. On the other hand, most of what we've seen, and we've done a little bit of it too, is in our case, primarily directed, as Phil said, job one is to get the backlog closed and primarily directed it where needed to get people to the closing table. If we have to give up, you know, a point or two or whatever, maybe a little more in bringing the rate down so that they can get the house closed, we think that's money well spent. We prefer not to, and contractually we're not obligated to, but we just think it's good business. Phil, I don't know if you want to add anything on the estimates of exact percentage. Quantify that. Anywhere from 2, 3, 4%. You know, that's probably not that far off. I wouldn't say it's that widespread, though, with us. It could change, but so far we haven't felt the need to just go slam out and offer a bunch of financing across the board. We're trying to let things settle a little bit. We're just trying to understand with more clarity exactly what's going on each week in the field. All right. Last one. If this is just more of a seasonal slowdown than anything else, can we expect post Labor Day, kind of that small bump in traffic that we used to see in a normal year for, you know, especially in the southern areas of the country? Look, we hope so. I don't know. I mean, we'll know when we know, right? Historically, yes. That was a better period seasonally. If we're returning to more seasonality, we should see that. We have a lot of people in our organization that strongly believe that we'll see that. What I do know is, A, we're opening up a lot of new communities. B, we have a lot of excitement in terms of, you know, lists and so forth of people that have heretofore expressed interest in buying in these new communities. You know, as these come online and we open them, we'll see if that enthusiasm converts to contracts. I do think that shock of rates almost doubling in less than 100 days, I think that's beginning to, you know, wear down a little bit. There's still. Even though inventory levels are higher now than they were at the end of the first quarter in every single one of our markets, still nowhere near where they should be by historical standards. There's still a real shortage of homes. I guess I'm more optimistic than not that we'll see an uptick here in the fall, and we'll just see how it plays out. We're prepared to deal with it regardless. I mean, we've been doing a lot of things, obviously, as far as training our sales team, refreshing them on getting back to basics, shopping, blind shopping our sales teams. Sure on a subdivision-by-subdivision basis that we understand what our competition is and what's being offered. We're making sure when we open these communities, you know, we have the right product, et cetera. Jay, we've been doing a lot of things, especially the last, you know, couple of months. Digital marketing, leads, how we handle the leads and so forth. A lot of effort here for sure. You know, but hopefully, we're going to see an uptick. It sounds great. Thanks, guys. Appreciate you taking all the questions. Thanks, Jay. Thanks, Jay. Thank you, Jay. We now have Art Hogan of B. Riley Wealth Management. You may proceed with your question. Thank you. Thank you for another great quarter, guys. Thanks, Art. In terms of the spending of $125 million of land each quarter, I was curious if you think, given the pricing scenario that you've laid out and the incentives and the fact that prices actually may decline a little bit or not grow, if you think you can make. Obviously, I don't think you can make the same returns you were making, but can you make reasonable returns on the land that you've bought in the last 12 months, the $400 million or $500 million worth, do you think? Yes. Good. Yeah, we believe that. We also believe that while things may be choppy for a while, you know, we don't see, you know, any kind of serious deflation with land prices. We don't see that happening. We don't see that anywhere on the horizon. We don't see the risk of millions and millions of homes going into foreclosure like last time or like 2007, 2008, and 2009. The quality of buyers that have entered homeownership in the last three, four years, from a credit standpoint, is probably the best in the history of the country. We've shared this on the last several calls. In our case, our average buyer is putting almost $80,000 down. It's been that way for almost two years. Credit score 740-750. I'm hearing the same kind of relative metrics from the other large builders. The typical conventional mortgage within the home building industry in the last 3, 4 years is probably the safest it's ever been. You don't have a lot of people that are going to get bumped into foreclosure in all likelihood, which helped cause the last avalanche. I think we're in good shape with our land. Good, good. It may not produce 17%-18% pre-tax income, but, you know, historically, anything between 8%-12% was considered outstanding. With reasonable inventory turns, you could get really, you know, strong returns on equity, and that's what we've always tried to do. In terms of the new communities, I assume it's slightly more risky. Are you underwriting towards those lower returns, you know, more or less understanding what you're doing it on purpose as you enter new communities? We always look at what current run rates are as far as absorption pace, ASP margins. Of course, that's been a little bit of a moving target for the last couple of months. Yeah. We have slowed down land purchases. We actually bought less the first half than we had in our internal budgets. Yes, we continue to vet new land we're buying to underwrite it to what's going on now. You know, more of the spend has been the last few quarters toward land development. But again, we're developing some smaller phases. There's a lot of different ways we're going at, you know, trying to control the land risk. Again, with the biggest thing being that, you know, we own 25,000 lots, which we feel good about, you know, trying to stay in that 2- 3 year supply based on current run rates. Overall, you know, we feel really good about the land bank. Excellent. Given that you're not gonna more than likely spend as much, and the shareholders thank you for buying back $25 million worth of stock in the quarter you're spending, which is good. I was curious, given that the quality of the books and the inventory, as you say, is excellent on your books, if you'd be willing to take some of the money that you don't spend on land that you have been spending and put it into more stock purchases a little bit more aggressively, would you be willing to do that? Well, we have been more aggressive. If you look at what we've done, you know, if you go back to, you know, the third quarter last year through where we are now, we bought back about 6% of the shares. We have been getting more aggressive, and that's something we'll, you know, continue to look at. That's obviously driven by a lot of different factors, but it's something we definitely continue to look at. Is it possible that the amount of debt now wouldn't go up or actually could come down as you don't buy as much land and you know you build out the backlog, so actually your cash goes up or your debt goes down into the future? Is that a strong possibility? Well, our you know, our callable debt, our unsecured revolver Right. The balance is zero. Yeah. The cash would have to go up then. Yes. Is the cash about to go up? I'll let Phil answer that. That's driven by a lot of things. It's obviously impacted by the number of houses we close. It's impacted by the amount of specs we build, land we buy, land we develop. It's impacted by a lot of things. You know, as Bob said, we don't have any short-term home building debt out there, and the senior notes are out there for a few more years at very good terms, low rates. We feel good about that. But again, you know, we have been, I think, pretty aggressive, you know, buying stock back. We want to continue, especially in these challenging times, continuing to have low leverage, et cetera. We'll continue looking at stock buybacks just like we have the last couple of quarters. Okay. Chances are that the cash is probably not going to go down. I just want to say that the shareholders have much confidence in you and be able to navigate through these more difficult periods. Keep it up. Thanks. Appreciate it. Thank you, Art. The next question comes from Alex Barron of Housing Research Center. Your line is open, Alex. Yeah, thanks, guys. Phil, I'm pretty sure you gave the starts number, but I probably missed it. If not, can you give us how many homes you guys started in the quarter? You know, how does that compare to a year ago? Generally speaking, what's your thoughts on starting, you know, specs and stuff going forward? Yeah, Alex, what we did is we started 2,700 homes in the second quarter, which was slightly below last year's second quarter. We started 5,100 homes during the first half. At June 30th, we have 6,300 homes in the field versus 5,100 homes in the field at June 30th last year, which is up 24%. You know, as I said before, this year, we pretty much had to get things in the field by April to get the houses closed. We were pretty much starting everything we could. We did start less in the second quarter than last year and lower than, you know, the budget internal numbers were. We think we're in great shape. You know, cycle times have kind of flattened out in the second quarter compared to the first quarter. We do have more specs. Don't have a lot more completed specs, but by plan, we have more specs because we're opening a lot more new stores, more Smart Series, a few more attached townhouses. We feel great where we are, but that's something that we will manage very closely, you know, based on sales, getting the big profitable backlog closed. We'll manage it very closely, just like we always do. Okay. I guess, you know, as you approach, if things stay, you know, near the slower levels, are the starts likely to come in similar to that pace or not necessarily? You know, that's hard to project, Alex. It just depends on, I also said, you know, the backlog is closing very well. We're having to do a few things here and there to get people closed because they may have bought when rates were about three. Now and then we're having to buy down the rate or maybe cover some closing costs. But by and large, I mean, job one is to get this very profitable backlog closed. Depending on how that backlog closed, depending on what our sales pace is, you know, again, we'll factor all that in as far as deciding what to put in the field. Got it. Okay. Well, thanks, and good luck, guys. Thanks, Alex. Thank you. We have the final question on the line at this time from Adam Starr of Gulfside Asset Management. Please go ahead when you're ready, Adam. Hi. Really spectacular results. I just had another follow-up question on land and also capital allocation. Are land prices coming down, or are you seeing less competition, striking new land deals given the change in interest rates and traffic throughout everyone's communities? This is Bob Schottenstein. It's a great question. I think that. Clearly, they're not going up in most submarkets. There may be an exception to that here or there, and every market and submarket is a little bit different. In general, the rush for locations and the competition to get deals tied up quickly and rapidly on sellers' terms, you know, as opposed to more even-handed terms, that has begun to change. I don't know that I can identify with any certainty situations where prices have actually come down to the point where it's a trend. There may be an isolated case here or there where something gets renegotiated. Thus far, the short answer to your question is leveling off. I think that most of the builders, certainly this is the case with us, we have a tremendous land position. Don't have to buy anything for a while. Going to be patient, gonna be very selective about what we do choose to take on that's new. Be very market-driven and market-unique to the market strategy. You know, we'll just have to see. I'm not sure that we'll see prices drop. The leveling off would be really good. I think it's needed, frankly. On the one hand, we're thrilled with our average sale price. We're thrilled with the revenue it creates, and we're thrilled with the margins it's produced. I don't think it's sustainable, and it's further exacerbating the affordability problem. It's always tough to thread the needle on these things. Yeah. Thanks a lot for your insightful answer. 'Cause when I look at it, if sales are slowing or plateauing and you've got over three years supply, that three years supply becomes three and a half or four years at a lower rate of sale. You know, and just looking at the trade-off between land purchases and stock repurchases, if land prices aren't going anywhere, I think it's pretty much a lock that your shares which sell way below book value and book value is going up. The trade-off between land and buying back stock is more attractive than it's been. It's been attractive in the past, but it seems to have gotten a lot more attractive and makes a lot of sense because you're buying at a discount to an increasing book value, whereas the land you're buying at current market, it doesn't seem to be changing very much. Yeah. I hear you. You've got enough. Keep in mind also. Yeah. Keep in mind also that, you know, we own and control roughly 48,000 lots. You made my argument even stronger. Right. Yeah. Then about half of them are controlled via option agreements, which allows us to play some offense with whether or not we choose to go forward, renegotiate, buy terms, who knows what. I think there's a lot of levers here, as you point out. Yeah. Well, you're in a great position as long as affordability doesn't get any worse. Exactly. Well, I think that's true of the whole market. Okay. Well, once again, thanks for your performance, and I really appreciate you taking my question. Oh, thank you. Appreciate it. Thanks. Bye-bye. Thank you. As we have no further questions on the line, I would like to hand it back to Phil Creek for some closing remarks. Thank you for joining us. Look forward to talking to you next quarter. Thank you all for joining. That does conclude today's call. Thank you again. You may now disconnect your line.