Welcome to today's Taylor Morrison Home Corporation earnings webcast and conference call. My name is Drew, and I'll be coordinating your call today. If you would like to ask a question during the presentation, you may do so by pressing star one on your telephone keypad. If you change your mind, please press star followed by two. I'm now going to hand over to Mackenzie Aron, Vice President, Investor Relations, to begin. Please go ahead. Thank you, and good morning, everyone. We appreciate you joining us today. Before we begin, let me remind you that this call, including the question and answer session, will include forward-looking statements that are subject to the safe harbor statement for forward-looking information that you can review in our earnings release on the investor relations portion of our website at www.taylormorrison.com. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the release and in our filings with the SEC, and we do not undertake any obligation to update our forward-looking statements. In addition, we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in the release. Now, I will turn the call over to our Chairman and Chief Executive Officer, Sheryl Palmer. Thank you, Mackenzie, and good morning, everyone. Joining me today is Louis Steffens, our Chief Financial Officer, and Erik Heuser, our Chief Corporate Operations Officer. As always, I will share our quarterly highlights as well as an update on the market environment and how we are navigating and positioning the company for success. After my remarks, Erik will discuss our healthy land portfolio that remains a source of long-term value, while Louis will provide a detailed review of our financial results. I am pleased to share that our team once again delivered record profitability metrics this quarter, including new highs for home closings gross margin, earnings per share, and return on equity. We achieved these results despite the continued affordability and supply chain challenges facing our industry, as well as the significant impacts from Hurricane Ian. Most importantly, our team members and residents came through the storm safely, and most of our communities and homes under construction did not suffer any damage. However, the abundance of preparation in our storm protocols, as well as the recovery and cleanup needs following the storms, reduced our volume of home closings and sales in our Florida and Carolina markets. We expect the extensive damage and renovation needs will add further complexity to an already challenged supply chain and have impacts on both construction and development for the next many months, which Louis will discuss in greater detail. Nevertheless, our teams delivered 3,050 homes at a record home closings gross margin of 27.5% and an all-time low SG&A ratio of 7.4%. These results drove a more than 100% increase in our earnings per diluted share to a new company high of $2.72. In addition, during the quarter, we strengthened our capital flexibility through a successful expansion of our corporate revolving credit facility to $1 billion and took steps to further reduce debt outstanding, leaving us on track to reach a Net Debt to Capitalization ratio in the mid-20% range by year-end. At the same time, we continued to invest in our shares outstanding with repurchases of $105 million during the quarter. In total, these strong earnings and our disciplined balance sheet management more than doubled our Return on Equity to 26% from 13% a year ago. Turning to the market, as I shared on last quarter's call, we had begun to see shoppers cautiously re-engaging with our sales teams and online tools in July, albeit from abnormally low levels in June. This translated into sequential improvement in net sales orders in July and August. However, activity slowed again in September alongside a re-acceleration in interest rates. In total, we recorded 2,069 net sales orders, which represented a monthly absorption pace of 2.1 net orders per community, both of which were down sharply from a year ago. The slowdown has been felt across our wide range of price points, geographies, and consumer groups. Consistent with trends in the second quarter, our first and second move up segment, which accounted for the majority of the quarter's net sales, has been the most resilient, with particular strength in the Southeast. Within our resort lifestyle business, we experienced pullback in demand as these savvy consumers have taken a wait and see approach to their purchasing decisions and the market volatility. Although cancellations are the lowest in this segment due to their significant financial strength and emotional attachment to their homes. It is also worth noting that our resort lifestyle business is highly concentrated in Florida, so it was most impacted from a sales perspective by Hurricane Ian at the end of the quarter and into October. Lastly, our entry-level communities continued to face the most pressure as we would expect, given the greatest affordability constraints among these buyers. However, we are still seeing healthy traffic activity at these lower price points and are working diligently on qualification solutions. Generally speaking, higher mortgage rates and uncertainties surrounding the economy has pushed many potential home buyers in all consumer cohorts to the sidelines. We continue to believe it will take some time for the market to find its new equilibrium as interest rates have most recently reached as high as 8%. This will require stabilization in pricing as much as an improvement in consumer confidence and buyer psychology, led by clarity in the Federal Reserve's strategy. Accordingly, our approach will remain grounded in our prudent and long-term view of the business. Our playbook is simple, to position ourselves to be opportunistic by balancing pace and price, maintaining healthy inventory levels, and preserving our capital. Let me share the guiding priorities we are focused on. First, as Erik and Louis will elaborate on, we have adjusted our capital allocation to reflect the evolving market conditions by pulling back on land investment and prioritizing the health of our balance sheet. We control an attractive land portfolio, the majority of which was contracted more than two years ago. Second, we will prudently manage our starts pace as evidenced by the moderation in our monthly starts to 1.5 homes per community during the quarter from 3.5 a year ago. At quarter end, our inventory remained healthy with just over 2,500 unsold homes under construction, of which 0.5 per community were finished. Additionally, our teams are engaged with our suppliers and trade partners to reduce costs and rationalize expenses to current market conditions, with success likely to be based on each market's total starts activity. The rationalization of our operating structure, option SKUs, and floor plans over the last couple years has greatly streamlined our business for improved efficiency, and we will continue to press ahead on production-oriented opportunities, and our teams are in a position with additional permits on hand should the market shift, as we expect it will in time. Lastly, on the sales floor, we will responsibly respond to market pricing and competitive pressures to maintain acceptable sales paces while also protecting the value of our communities and backlog. As market conditions evolve, we are offering compelling incentives and adjusting pricing to recalibrate affordability and stimulate demand as needed on an asset-by-asset basis, appreciating each community's inventory, duration, competitive dynamics, and targeted consumer groups. In new communities and those with small backlogs, we have aggressively sought to find market with our pricing strategies while taking a more conservative approach in longer-dated existing communities. Combined, these pricing adjustments and incentives have averaged mid to high single digits. As I emphasized on last quarter's call, we strongly believe in the value of using finance as a sales tool by offering generous mortgage incentives versus simply reducing price as the benefit to the buyer is often much greater. This includes a range of tools offered by Taylor Morrison Home Funding, including permanent and temporary interest rate buydowns, extended rate locks, and various financing programs. For many borrowers, the interest rates provided by Taylor Morrison Home Funding are more competitive than what is available broadly in the market, and our team provides solutions tailored to each of our unique buyer's circumstances to maximize the monthly payment savings and overcome cash out-of-pocket obstacles. In addition to helping drive sales with new buyers, our mortgage team has been diligent in working with our backlog customers to lock in their interest rates and secure mortgage qualification. Let me share a little more about what we experienced with our backlog during the third quarter. At quarter end, our backlog of over 7,900 sold homes was backed by average deposits of nearly 10% or over $66,000 per home. Approximately 60% of our buyers in backlog purchased a to-be-built home that they designed to meet their lifestyle needs. The emotional attachment to these personalized homes cannot be overstated as nearly 95% of our third quarter cancellations were for spec homes, the majority of which were sold earlier this year. These factors have helped limit the extent of our cancellations, which increased modestly but remained historically low at 4.3% of our opening backlog versus our long-term average of approximately 7%. These cancellations equated to 15.6% of gross orders, although we believe this metric is less informative at current depressed sales levels. As I always share, our buyers tend to be highly qualified and financially secure. In the third quarter, our home buyers using Taylor Morrison Home Funding continued to display prime credit metrics, including an average credit score of 752 and a down payment of 23%. Additionally, a high teen share of our buyers used all cash to purchase their home, up from a mid-teen share a year ago. The vast majority of our buyers have the financial flexibility to absorb higher monthly payments from a purely mortgage qualification perspective based on the meaningful interest rate cushions I have previously reported that once again remain relatively consistent at healthy levels in the third quarter. As a result, it is not surprising that our recent consumer survey feedback indicates that many of our customers are waiting for visibility on pricing trends, the economy, or their own financial situation before moving forward with a desired home purchase. On the topic of pricing and even more prevalent today, transparency around pricing, I'm delighted to share that we recently unveiled an enhanced end-to-end digital reservation system for to-be built homes in our first community in Florida. You may recall we led the industry's pursuit of digital innovation by being the first home builder to launch a reservation system in March 2021, and now have further cemented ourselves as the leader in this space by self-developing technology that gives home shoppers the ability to build a new home entirely online and then reserve the configuration with a small deposit. Aligned with our commitment to help consumers make informed choices, the reservation system shows an estimated purchase price and monthly payment, both of which update as each selection is made throughout the process. Before placing the reservation on the home they digitally built, customers can go into their shopping cart and review an itemized list totaling their selections and can adjust based on their desired budget. During the third quarter, our spec and to-be built online reservations had a sales conversion rate of approximately 40% and accounted for 13% of our company sales. There is so much worth sharing as we look at the data trends of our last quarter reservations, but a particular unexpected favorite is the consumer mix. We would have expected to see high take-up with our millennial shoppers, and although they do have a slight lead in total reservations, we actually have a fairly consistent mix between millennials, Gen Z, and even baby boomers. Innovation is core to Taylor Morrison, and we know that proactively responding to evolving customer behaviors and interests is simply good business. Now I will turn the call over to Erik to discuss our healthy land portfolio and the conservative stance we are taking for new land spend. Thanks, Sheryl, and good morning, everyone. As we have shared in our last several calls, we have taken an opportunistic approach to land investment over the last two years as we intentionally and prudently dialed back our land spend following our well-timed acquisition of William Lyon Homes in 2020, which added significant depth and breadth to our portfolio prior to the significant run-up in land pricing. As a result, we have been highly selective in new land spend and have remained disciplined to our long-held mantra of investing in prime locations in core submarkets with proximity to job centers, schools, hospitals, and other desirable amenities, all of which are attributes that have historically contributed to more stable land values over time. This opportunistic approach became even more conservative over the last several quarters to ensure that each dollar invested meets our stress-tested, risk-adjusted return thresholds. As a result, still over 60% of our own lots were contracted for in 2020 or earlier, with a weighted average vintage of four years. We began stress testing every deal in 2021, have recently reassessed every deal in our pipeline, and are re-reviewing each land transaction prior to final closing. For deals in process, we are leveraging our strong relationships with land sellers to renegotiate timing, terms, and/or price as appropriate. In fact, for the third quarter, 80% of our contemplated core business land spend progressing through the investment committee was restructured or terminated when underwriting no longer met our required thresholds. This resulted in $7.4 million of pre-acquisition walkaway expenses during the quarter. This highly scrutinizing approach was evident in the nearly 70% year-over-year decline in our third quarter spend on new home building land acquisitions to $102 million, the lowest level since 2016. On the other hand, development-related spend was up over 80% from a year ago and accounted for 73% of total land investment. While we are closely scrutinizing development plans for both new and existing projects with an eye on managing overall lot inventory, we continue to have meaningful opportunity to monetize our well-ventaged land and maintain competitive scale and positioning across our markets. As we prioritize our balance sheet and cash generation in the current market environment, we recently completed an exhaustive capital allocation review during which we closely evaluated each of our divisions' land acquisition and development budgets and further reduced approved spend relative to our prior forecasts. In total, we now expect to spend approximately $1.8 billion in total land investment for the year, with a strong bias towards development. At quarter end, we owned and controlled approximately 80,000 home building lots, which represented 6.1 years of total supply. Of these lots, we controlled 42% via options and other off-balance sheet structures that enhance capital efficiency and reduce risk. This all-time high percentage was up from 36% a year ago. Our years of own lot supply appropriately moderated to 3.5 years from 4.0 years a year ago. Our landlighter investment approach balances cost of capital with expected returns to determine the optimal financing structure for each investment, and we are pleased with the mix of our land portfolio, both from an owned and controlled perspective, as well as the age and composition of our lots. Finally, let me share a quick update on our build-to-rent operations. During the quarter, we contracted our first project sale, a horizontal apartment community in Phoenix, secured by a meaningful deposit. This transaction will mark an important milestone in the evolution of our build-to-rent business, and we look forward to providing more details upon its closing. With that, I will turn the call to Louis to discuss the company's financial performance. Thanks, Erik, and good morning, everyone. In the third quarter, we generated earnings per share of $2.72. This was up 103% year-over-year due to strong revenue growth, significant improvement in our home closings gross margin, strong SG&A leverage, and a 10% lower share count. We delivered 3,050 homes at an average selling price of $650,000, which generated home closings revenue of $2 billion. This was up 12% year-over-year, but was slightly below our guidance range due primarily to the impact on production and closings from Hurricane Ian. During the quarter, our cycle times extended modestly with trade labor the most common constraint across the country. Municipality inspections, meters, and flooring also continue to be challenges. While beginning to see encouraging signs at the front end of the construction timeline, we do not expect to see back-end construction cycle time improvements until later in 2023. Additionally, based on our experience from Hurricane Harvey in 2017, it will take several months before we gain visibility on construction and land development timelines in Florida, which accounted for nearly 25% of our closings in the first half of the year. These impacts include disruptions in trade labor availability, delays with construction and development timelines, and limited availability on municipality inspections and approvals as repair and recovery efforts are prioritized over new construction. Combined with ongoing supply chain challenges, these uncertainties limit our near term visibility on closings, and therefore we are not providing fourth quarter operational guidance. Turning to margins, our home closings gross margin for the quarter was 27.5%, which was up 630 basis points from a year ago and 90 basis points sequentially. This company record margin highlights the operational enhancements we have achieved since fully integrating and optimizing our acquisitions, as well as robust pricing power captured in prior quarters, which more than offset cost inflation. SG&A as a percentage of home closings revenue was 7.4%. This was down 210 basis points year-over-year and marked the lowest level in our history. Now to community count. We ended the quarter with 326 communities, which was just slightly ahead of our prior guidance range due to fewer community closeouts. Turning to our balance sheet, our capital position remains strong with approximately $1.4 billion of liquidity at quarter end, including $329 million of unrestricted cash and $1.1 billion of capacity in our revolving credit facilities, which were undrawn outside of normal letters of credit. During the quarter, we increased the aggregate commitment available under our corporate revolving credit facility from $800 million to $1 billion. In addition, we issued a notice of redemption on our 5 7/8% 2023 Senior Notes, which will allow us to reduce our gross debt by the full outstanding principal amount of $350 million on October 31. Following this transaction, we will have no debt maturities until 2024. As a reminder, in the second quarter, we retired $265 million of our 6 5/8% 2027 Senior Notes through a successful tender offer. Collectively, these actions will enhance future gross margins by reducing capitalized interest and align our gross debt closer to targeted levels. Our net debt to capitalization ratio equals 34%, down from 41.1% a year ago, and we continue to expect to reduce our net debt leverage to the mid-20% range by year end. Lastly, we repurchased 4.2 million shares outstanding for $105 million at an average share price of $24.92. This represented approximately 4% of the prior quarter's diluted share count. Year to date, we have repurchased a total of 12.9 million shares for $335 million, offsetting our diluted share count by approximately 11% since year end, which we believe is an attractive and accretive use of our capital, given our undervalued stock price that is significantly below our current and expected book value. At quarter end, we had $320 million remaining on our repurchase authorization. To wrap up, let me reiterate that we believe we are well positioned operationally and financially to navigate the current market environment and uncertainty ahead. Our capital allocation priorities are based on a disciplined framework that balances our operational and growth objectives with the health of our balance sheet as we seek to generate attractive returns for our shareholders. Now let me turn the call back over to Sheryl. Thank you, Louis. Let me emphasize that our strong third quarter and year-to-date results reflect the enhanced profitability and overall business effectiveness that we achieved through our unrelenting focus on operational excellence, scale synergies, and disciplined land investment. These internal initiatives and our successful M&A strategy has positioned our company to be resilient and nimble. In addition, our land portfolio is comprised of well-underwritten, well-located land parcels contracted at an attractive low-cost basis. Additionally, our gross margins, bottom line earnings, and returns are at the highest levels in our company's history, and our balance sheet is strong with significant liquidity. Lastly, our seasoned leadership and skilled operators have navigated prior cycles and are well-equipped to guide our company through today's market headwinds. In short, we have never been better positioned to weather the dynamics reshaping housing as the Federal Reserve continues its aggressive fight against inflation. To close, I'd like to thank our home building and mortgage teams across the country for another quarter of record performance despite the odds. They are laser-focused on year-end goals and actively working with our homebuyers in today's challenging environment, and I am so appreciative of all of their efforts. With that, let's open the call to your questions. Operator, please provide our participants with instructions. Thank you. We will now start today's Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Our first question today comes from Carl Reichardt from BTIG. Your line is now open. Thanks very much. Good morning, everybody. I wanted to ask a little bit about base price cuts, Sheryl. Are you going into your backlog on BTO product where you're cutting bases and giving them new price? Or how are you managing your backlog where you've got long-dated communities, BTO product that's going to take a while to get out the door, especially given the supply constraints you're seeing? Good morning, Carl. Thanks. Good question. There's not one answer that, you know, would span the entire portfolio. I think as we discussed last quarter, we took very early action to proactively reach out to our backlog. We had to make decisions community by community, as you can imagine, given time in backlog, the competitive environment, the deposits that we held. We looked at it all differently. Generally, I would say what we did with backlog, I'd say, you know, the 95% rule would be that we assisted them with financial incentives to help them lock a loan that mitigated the change they'd seen in the interest rate from when they had gone into contract. When I look across the quarter, we spent somewhere around 15 or 16 basis points across the entire portfolio of 30% of Q3 closings to protect backlog. It was generally around 2% of loan amount, maybe just over 1.5% of sales price, the deals that actually affected the backlog. As I said, very strategic in how we approached them. I think if I look at the quarter and the ones that actually impacted the quarter was about 8% as we looked at all the characteristics of timing, pricing, deposits, all those things. Great. Thank you, Sheryl. I really appreciate that detail. Just on Hurricane Ian's impact, and again, I'm looking at what you produced versus your guide, and it seems like 150-350 homes or so were impacted if you'd gotten to your guidance range. Is that roughly right? Can you talk a little bit about maybe how orders have worked in, it's an important market in Florida, and while it's hard to get homes built, are you seeing some return of traffic to those markets that were impacted by the hurricane, and you expect maybe some opportunities to sell more houses in Q4 because you had a gap where you couldn't sell? Thanks. Thanks, Carl. Yeah, you know, I feel coming out of the hurricane, honestly, we were quite fortunate. It was a very difficult couple of weeks for the teams. Our protocol started, you know, probably late the week of the 20th and then obviously continued into the last week of the month. We generally shut down, have a pretty good cadence around our storm protocols, which honestly protected our communities and our teams. When I look at the damages, Carl, just to hit that as well, you know, we had just under 500 houses. I wouldn't call it damage, but I would say that were affected with insulation, drywall, house wrap, you know, landscaping, really just the tremendous impact of that kind of horizontal rain. We probably saw two weeks in the quarter, the week of the nineteenth, twentieth, and the following week where we really were shut down for traffic. Certainly that affected our our units, our paces, and probably the greatest impact, as we mentioned, on our active adult consumer because that's a good chunk of our Florida business, certainly in Naples and Fort Myers and Sarasota, where we were most impacted. We have returned to a normal business cadence. It took the municipalities a while to get back. I'd say it was late the second week before they really came back to real business. We are seeing a move up in traffic. At the same time, we're starting to move into that shoulder season for the active adult, so I don't think that will keep them away, and I think, as you said, probably some new opportunities. It's hard for me to talk about the hurricane without just a tremendous call-out to our teams because what they were able to overcome, helping not just our communities, but our homeowners and then our team members across the state, the way they showed up in Naples and Sarasota was just so impressive. Hope that helps, Carl. It does. Thanks. I really appreciate that, Sheryl. Thank you. Thank you. Our next question today comes from Matthew Bouley from Barclays. Please go ahead. Hello. You have Elizabeth Langan for Matt today. Thank you for taking the questions. Just to kind of start off, how should we be thinking about incentives going forward, and, you know, what do you think the magnitude could be that they could reach, and how does that kind of balance with, you know, potential price cuts, and kind of finding that equilibrium that spurs demand? Thank you, Elizabeth, for the question. It's a good question. There's a lot to unpack in there, as you might expect. When we think about incentives, as we've talked about for the last couple of quarters, our priority is really about understanding what the consumer needs. I think this is a time, honestly, for our industry to really kind of come together and say, "What's the common sense on how you really approach an environment like this?" Because it's unsettling for everyone, and how do we use the tools that are in the best interest of the individual consumer? Our teams have really had to get into the trenches to understand what will help each individual consumer because you can't just blindly reduce prices. I think the more you just reduce prices, the more the consumer expects us to do. This is a time where we're really gonna sell value, leverage the tools. With that, we will continue to prioritize finance as a sales tool. As we've talked in the past, the two greatest needs our customers have, I think the average consumer has, is help on monthly payment and help with cash to close. By using finance as a sales tool, it allows us to work 2-3x in cost as it would if we just you know, reduced sales prices. Having said that, as we see pricing pressures with inventory building in our market, we have to respond in kind. I think it's a combination. As I said in my prepared remarks, when I look at the impact of using financing as a sales tool, potential incentives on, you know, home of the week or option special deals, as well as any adjustments to base pricing, at this point, we think that's somewhere in the mid- to high-single digits. That will move community by community. In many communities, it's taken a little bit more. In many, it's taken less. We're moving to find the traction that we need to generate pace in each of our communities. Thank you so much. That's really helpful. Kind of switching, I guess touching on the affordability pressures, could you talk a little bit about, you know, what you're seeing in different regions, like maybe specifically in Phoenix and Austin, if those areas are seeing more pronounced price pressures relative to others? Yeah, we can talk about what we're seeing across the business. You know, generally, I'd say Florida's holding up the best, and Southeast along with them. Obviously, beyond the interruption with the hurricane, I think that's where we're seeing the highest paces, lowest cans. Having said that, Florida's probably where we're also seeing the greatest production challenges, maybe with the exception of Phoenix. I'd say Texas is doing okay generally, but as you said, it's slightly different by market. Austin saw the greatest run-up in prices and has significant inventory under production. It's also where we operate at some lower price points, and I think those lower price points are where we've seen the greatest number of cans, as I said. When I think about the West, I think in totality, that's where we saw the pressures first. Once again, similar to Phoenix and Austin, where we've seen some of the highest run-up in prices, and those higher valuations have put the pressure on cans. You know, I think the consumers are behaving a little differently in different parts of the country. It's interesting. If I look at some markets, active adult is our strong point. In other markets like California, we're seeing active adult quite a bit weaker. When I look at a market like Houston, that's where, you know, we're seeing our affordable consumer actually the strongest. It's a lot of work to get them qualified. When I look at Austin, you know, I think our paces are market leading at higher prices because the affordable consumer there is really struggling. Hopefully that gives you a little bit color. Probably, maybe a little also noteworthy is Charlotte, Atlanta probably deserve a call-out with. Those are the two markets where we've actually seen improvement in year-over-year paces. I'd say all of our southeast markets, the CAN rate is well below the company average as well. I think it's fair, Sheryl, for markets like Phoenix and Austin, that those have been driven. Affordability dynamics have changed over time, largely because of positive migrations and some positive things happening in the market related to corporate relocations and, you know, some of the, again, positive in-migration that we've seen. Yeah. No, I think that's right on, Erik. I think bottom line is we can't paint even any market with a single brush, right? It really does come down to submarket and community by community strategy, to take a deep dive so that we can optimize those positions. Thank you so much. You bet. Our next question today comes from Alan Ratner from Zelman & Associates. Your line is now open. Hey, guys. Good morning. Thanks as always for the great information. Appreciate it. Good morning. First question, I don't think you guys touched on this in a ton of detail yet, but pretty remarkable reduction in the G&A expense this quarter. You know, it had been running right around $70 million on a quarterly basis for, you know, as far back as I can see here. This quarter dropped down to the low $50s. I'm just wondering if there was any, you know, specific reason why you were able to to drive that lower this quarter and how sustainable that is going forward. Yeah, good morning, Alan. This is Louis. You know, I'd say our strong ASP for the quarter where it came in at $650,000 really provided a strong leverage. Although I'd say as pricing comes down a bit over time, you know, we'll start to see some increases in advertising and broker co-op. We'll start to see that level, you know, go back up to more normalized levels. I'd say there's really nothing specific to call out. Yeah. I think really the ASP is probably the biggest driver. The G&A piece, though, wouldn't the numbers you're describing flow through the SG&A line? I'm just looking more at the general and administrative, which I think is typically more fixed in nature, unless I'm mistaken. It is, but driven by the ASP, you're going to see better leverage for the quarter. Yeah. The percentage is obviously leverage. As far as cost. Yeah The actual 50, I don't know that there was one specific item, Louis. It was really just, I think, cost controls across the board. Yeah. I'd say nothing super specific. You know, some probably true-ups of different accruals here and there, but, you know, nothing. Not one thing. Material on one item. Okay. Well, certainly if that's sustainable, that would be, you know, certainly very encouraging as revenue potentially comes lower. Second question, I'd love to jump in a little bit to the land disclosures that you guys have been providing just in terms of the vintage of your land. It sounds like you guys have taken a pretty sharp pencil to your whole portfolio and kind of thinking through the future land spend there as well as what you currently control. I think, Sheryl, you mentioned that 60% of your own land are 2020 or earlier vintage. You know, as you kind of re-underwrote all of your land and maybe look at the 40% that has been purchased over the last two years, what are the implied returns and margins on those assets today given the new pricing, you know, that's down mid- to high-single digits on a net basis as you described? I think I'll let Erik run with that one, Alan. Hey, Alan. How are you? Hey, Erik. Good. Yeah. You know, generally, we've been underwriting under recent reporting levels as you think about gross margin. You know, as we've shared, we've really been deploying normalized paces as we think about moving through an entire cycle. We engaged a pretty robust study kind of second, third quarter of last year just 'cause we knew that was an unusually attractive and good time in the market. Really started deploying significant scenarios at that point in time and stress testing. Really the process today and yesterday has been underwriting to truly what the current market is telling us with really some downside stress testing. as we shared, you know, where deals don't work, we've been working really hard to solve the math equation for what does and kind of renegotiating each of those, and in some cases, walking where we need to. Hopefully that helps answer the question. You know, we've been underwriting to slightly where we've been reporting, but also very sensitive to an evolving market. The good news, Alan, is we have a really good landing, so we don't feel the pressure to, you know, get any deal to the finish line that doesn't make sense. That's why I think we've, to your point, taken a really sharp pencil to stuff that's kind of in process and contract and certainly any new deals. This is the time, you know, to kind of keep our dry powder. There will be an opportunity to invest at the right time. Yeah, we're gonna stay very, very aggressive in our expectations at this point. Perfect. I appreciate the extra insight there. Thanks a lot. Thank you. Our next question comes from Mike Rehaut from JPMorgan. Please go ahead. Hi, guys. Good morning. Doug Wardlaw on for Mike. I just wanted to know if you guys could give further insight into impairments. Is that something that you guys have been on, you know, extra alert for? If so, do you have, you know, a quote-unquote watch list of communities you feel are close to impairment? What metrics are you guys looking at that would kinda alert you to a, you know, a potential impairment incoming? Sure. Good question. In Q3, we only had one project across the company that made it to our impairment list. We'd expect to see more of those in the future, you know, as there's always gonna be outliers on both sides of the bell curve. Yeah. However, based on our improved margins, we really don't today see any systematic impairments ahead at this time. As it relates to what gets on the watch list, once a project sees backlogs on a consistent level at 10% or below margins, we start to put it on the watch list. In terms of write-downs, those would occur eventually if the book value exceeds the discounted cash flow, the fair value of the discounted cash flows. So we'll continue to monitor those quarter-over-quarter. Based on our margin profiles today, other than an outlier in that bell curve, we really don't see anything material ahead of us. Got it. Thanks. Very helpful. Lastly, just on construction costs, I know you guys touched on it a little bit. For 4Q, where do you envision that? I know, they've been going down a little bit throughout the past few quarters and, you know, moving into 2023, what are you guys anticipating for those costs? Yeah, sure. We've continued to see pressure on costs. Although as we start to see starts across the industry moderate, we do believe, you know, based on all the calls we're starting to receive on the front end of the cycle time, that over time those costs will reduce. I did wanna point out, however, that, you know, really Q4 and Q1 will still see some of the higher lumber costs that have crept up, you know, during the year. It'll probably really be Q2 until we see material reductions in our average lumber costs. Really, if things continue to track, that would be fairly material in Q2, somewhere around $17,000 an average lumber pack that we'll see a reduction. However, you know, Q4 and Q1, you know, have those embedded higher lumber costs still. Overall, we have really seen, you know, costs, you know, slow down and stop. We've been able to push back on any increases for the most part, and eventually we'll hopefully even see some back-end reductions. That just hasn't been in the cards yet as most builders are pushing so hard to get to their year-end closings. Yeah, I expect we'll be back in a normal environment of bounties by the end of this quarter and some of those things that we've seen all year that we should move on from that as we move into next year. Great. Thank you, guys. Thank you, Doug. Our next question comes from Alex Rygiel from B. Riley. Please go ahead. Thank you. You know, two kind of more general questions. How do you see the weakness in this cycle different from past cycles? Then, you know, in your opinion, sort of what are the more important items that need to happen for demand to stabilize and therefore the macro home building space to reach sort of a new normal at these higher interest rate levels? Hi, Alex. Really good question. I'd say there's nothing about this cycle that mirrors prior cycles for a number of different reasons, and I'm sure you're well aware of just you know, as we look at what we saw coming out of the pandemic. You know, before the pandemic, I would say that demand was good. It really was. We were continuing to improve quarter-over-quarter, year-over-year. When the pandemic happened, that changed everything. When you look at what's happened over the last 24, 30 months, or you know, probably before this last you know, four or five months, we've never seen this level of price appreciation. So that certainly would be one very significant difference. At the same time, we've never seen interest rates double in the course of. Actually more than double in the course of four or five months. Even through that, you know, given the reduction in sales, I would say with the level of price and interest movement, demand has stayed somewhat resilient. You know, I think it's been choppy week to week, and that to me has been somewhat responsive to the most recent news. That most recent news could be Fed news, it could be media, it could be the size of discounts that our customers are seeing in the local markets. I think it's a combination today of certainly we'd have to characterize affordability as being a real issue for many buyers. I would say confidence is equally critical. What do we need to have happen? I think there needs to be some confirmation, confidence on what's really gonna happen with the Fed. Clearly, housing is in the crosshairs on this fight against inflation, and I think he's been very clear about that. What that will take, I think is still unknown. I think there's a range of views out there that says, you know, he could aggressively continue for the next many meetings, or we could see rates start to back up as early as next year. You know, if you look at some of the projections for next year, I think NAHB, I think some of them are show rates somewhere in the 5.5% range. That's quite a difference from where we are today. I think when the consumer can get some confidence, I think that really helps. When I start breaking apart our different segments, you know, our move-up consumer, our active adult, these are savvy consumers who really want to make sure. You know, the old phrase was, you know, this fear of missing out is what drove the market in last year and early this year. I think that reverts today to the fear of not buying at the top. I think once we get some stability and consistency and a real view on the Fed actions, I think that will go a long way. Anything else, Erik? Yeah. I would echo a lot of that, Sheryl. I think, you know, the backdrop really is, you know, comparing it to prior cycles, a little bit of a tenuous affordability condition that we had that we are all sensitive to. But I think, you know, when you think about the speculation that didn't really exist. True As well as the supply levels that were really, relatively light compared to the prior cycle. Those are kind of positive backdrops as we look at those compares. Yeah, you know, as we look at confidence going forward, you know, we wanna see how the supply levels kind of move through the system, rates, we gotta see some Fed stabilization, and then just general confidence. To your point, the good news today is we do see elasticity in the markets. Yeah. Not a buildup of finished inventory like we saw last time, right? Right. Very helpful. Thank you. Thank you, Alex. Our next question today comes from Truman Patterson from Wolfe Research. Please go ahead. Thanks. This is actually Paul Przybylski. I appreciate the color on July, August and September order trends. I was wondering if you might be able to add anything on how October is going so far. You know, I'd say a continuation, Paul, good morning, of Q3. Morning. You know, week to week is a little bit different. I think it's we just continue to see sensitivity to local factors. You know, mostly interest rates. I mean, when we look at what happened to the 10-year last week and rates approaching 8%, that makes its way around, and it instills just some uncertainty in the marketplace. Consumers are comparing incentives and price adjustments across the market. You know, you have a good week and generally I see those as rates stabilize, and then when they shoot up, it absolutely impacts traffic. Okay. Thank you. You mentioned you had a $66,000 average deposit. How does that split? Do you have different deposit requirements between your build to order and spec sales? If you could remind me what is your mix of build to order versus spec? Louis, what's spec? c lose to 50? Yeah. For Q3 our to-be-built versus spec was 40% to-be-built, 60% spec. We started to slowly see an increase in our to-be-built homes as a percentage. Yeah. I would say, I mean, correct me, Louis, if you feel different. I would say that we have a different protocol for our deposit strategy, Paul. I think we try to get 10%. In reality, I would tell you, if you're getting closer to a completed house and the more affordable, that you won't see that full 10%. That could be anywhere between 5%-7%. Certainly waiting on that 10% is we do see higher deposits in our active adult business, and we see a higher percentage of overall cash. You know, the policy around across the country or the approach around the country for just times like this, it's just good business, Paul, is you wanna have those deposits on hand. I absolutely think it's played quite a factor in our 15% cancel rate for the quarter compared to, I think, something much higher across the industry. We do see more of those cancellations coming across spec, so I do think there's that correlation to lower deposits. Yeah. I'd say our teams have done a great job using the deposit as part of the overall negotiation. If we're giving some additional incentives, you know, we've asked for more deposits, which, you know, I think is serving us well, as Sheryl said. Okay. If I could sneak one last one in. Sheryl, in prior cycles, if pricing were to retrench, you know, 10%, just using that as a number, what would the relationship be and the timing you could expect for cost savings from your trades? Do they give you back half of that price, home price reduction? Or is it higher than that? Lower than that? Any good rule of thumb there? Yeah. It's an interesting question. I don't know that I could quantify it specifically. There's just always this timing lapse, as you might imagine, Paul. I mean, right now you've got this lumber overhang, so from a percentage standpoint, because we've never seen the run in lumber that we've seen this time, you're gonna get a higher percentage just there. I mean, you have some still pretty strong tailwinds on the multifamily starts. So a lot of it's going to depend on how quick, you know, what really happens to starts as we move into next year. As you can see, they haven't come through the numbers I think that we may have imagined, but we already are seeing some impact at the front end of the schedule and are being very aggressive with our trades. I would tell you to date, given total starts, it hasn't yielded the numbers that I expect that we'll see as we move into next year. I would expect that we should get a significant piece of what we've lost over the last two years back. My guess is it never comes back out as quick as it goes in. That will take somewhere between 12 and 18 months. That's assuming starts remain depressed. Yeah, I think you probably agree with, you know, costs have been much more stickier this go around as, you know, as the labor availability is so much lower and the supply chain challenges we've seen. It may take just a little longer than historic norms. Yeah. I think the backlogs with our suppliers, manufacturers are still very strong through the first quarter of next year, and labor is still a challenge. It'll be interesting to see which comes first. I think we'll start to see labor on the front end come back down a bit, then we'll see the cost of goods come down and then followed by labor if we really see continued depression in starts. Appreciate it. Thank you very much. Thank you. Our next question today comes from Mike Dahl from RBC Capital Markets. Please go ahead. Hey, guys. This is Ryan Frank on for Mike. Thanks for taking my question. I just wanted to follow up on that about the margins right there. Given that lumber and trade are still going to be pretty high, and you're starting to already decrease ASPs, I know you're not giving guidance, but can we get any sense for the magnitude of sequential margin declines maybe over the next quarter or two? Because it seems like the houses you're selling at right now are probably a few hundred basis points lower on margin, but those obviously won't flow through. Just the cadence to kind of getting there over the next quarter or two. Yeah. You know, as you know, obviously we aren't guiding on margin, but I'd say I'd look at it this way. Last quarter, we guided margins between 25% and 26%. We still believe we're going to be in that range, but probably likely more on the lower end, depending on what our market mix ends up being. The number of specs we end up delivering in Q4, you know, I'd say our full year margins will move slightly in either direction depending upon those items, but within that guidance. But as you said, as incentives increase over time, you know, we'll start to see those margins creep down. We do have a strong backlog going into our Q4, so that's why we feel comfortable at least being within the range for Q4. Over time, we'll start to see that drop down into next year. Okay. You're not expecting any sharp step declines maybe in the immediate future. It might be kind of a sequential or, I mean, a gradual or consistent decline, I should say. I'd say consistent decline, you know, is reasonable. I think Sheryl mentioned earlier that we're seeing mid- to high-single-digit, you know, combined incentives and reductions so far in our orders. Yeah. You know, and a saved CAM is as good or better than a new deal. Because if you think about the numbers I shared, where, you know, we're spending potentially, you know, 1.5% of ASP, 2% of loan amount to help some of our backlog compared to what that would take for a new sale, you know. You look at our backlog going into new year. It's going to take, to Louis's point, some time to bleed in, but the homes that are being sold today are certainly not at the margins that we've reported to date. Got it. Helpful. Last one from me. Just on the buyer qualification. DTIs have crept up to 39%, I think you said, this quarter. I don't know if that's an average or if that's at the end of the quarter. What are you seeing in terms of outright rejections or even fallout out of backlogs just due to an actual inability to qualify? Has those stepped up meaningfully yet? Yeah. You know, you can tell from our CAM rate that it's not as material as you would expect. Once again, if you think about the numbers that I've been quoting every quarter, even though they stepped down this quarter, we still had our average consumer still had a very nice cushion. When we look at straight denials from our shoppers, I would tell you that's just a very, very low single digit. We don't see a lot of those. Once again, I think it's important to separate qualification and desire too. Even though our buyers have the ability to qualify at a higher interest rate, when we look at the cushion that we have, you know, it doesn't matter if we're talking about 400, 450 basis points for our conventional buyers or something probably closer to 275 basis points for our FHA buyers. It's certainly tighter than it's been in prior quarters, but I think as much as anything, it's emotional. You know, it's interesting, when I look at the average interest rate that we're closing our customers at, in the quarter, it was 5.29, and our FHA buyer closed at 4.76. When I look at our backlog and everything that we have locked, and I would tell you that we're in a pretty good place, with 86% of November locked and December over half of our backlog locked. Our conventional buyers are locked at 5.7, so and our FHA buyers are locked at 5.3. Still quite a difference from the par rates that we're seeing in the market, which is really assisting the affordability that you mentioned. Thank you. That was very helpful. That's all for me. Thank you. Our next question comes from Alex Barron from Housing Research Center. Please go ahead. Yeah, thank you very much. I wanted to ask, and I'm sorry if I missed some of these comments. I was trying to take notes. On build time, have you guys seen any improvement at all? If not, you know, are you guys doing anything as far as trying to improve the labor shortage situation, I don't know, by paying subs more than your competitors or something, just to kind of attract people to come and work on the homes. Related to that, you know, what is your average build time, and are you seeing any cancellations because clients are saying, "Well, you know, I'm still in backlog for too long, and maybe I should go buy a house from somebody who's got a quick move-in," or that type of thing? Morning, Alex. Let me take a stab at that and maybe have some people add on. You know, as we mentioned in the prepared remarks, our cycle times have extended slightly during the quarter, probably approximately about 10 days. We have not to date seen any improvements on the back end and really expect Q4 to be very challenging as well as all the builders, as I mentioned earlier, are pushing to finish their years. On the positive note, on the front end, we're getting a lot more trade availability, which over time, we will start to see some improvements on cycle times. But as Sheryl mentioned earlier, I'd say that depends a little bit market by market, where we've seen some very strong multi-family and SFR activity. It's a lot more, labor-constrained in those markets. With lower builder starts, you know, over time, we'll start to see some of that improve as well. Overall, our cycle times this year went up about 1.9 months, and we're currently averaging 9.4 months. It varies pretty widely across the company from a low of 6.5 in Southern Cal to a high in somewhere like, you know- Austin. Yeah, Austin. That's getting close to a year. Pretty wide variety. In terms of trying to get more labor into the market, I know that's an industry-wide challenge, and there are. The LBA is involved in bringing a lot more trades to the home building industry over time. The Building Talent Foundation, more specifically, right? Right. It's been sponsored by the LBA. Yeah. That's gonna take some time, unfortunately. Unfortunately, yes, cycle times today, until we really start to see the supply chain continue to normalize, are going to be elevated. However, over time, we've averaged, you know, been able to turn our assets about 2x a year. Obviously, we're not doing that today. When that does come through the, you know, the business over time, we'll start to see our ability to carry a lot less units at any given point in time. You know, it goes also, Alex, to some of the softer things. I hate to say it, but the trades have a lot of choice today, so they need to be treated with respect. They need to know when they get to the job site, it's ready for them, so they don't have any dead days. They need to get paid on time. All those things matter. They always matter, but they really matter in today's environment. I think we're certainly grabbing our share, but, and to Louis point, feel really good about some of the programs that the ancillary programs that we have for both internal talent as well as helping our trade secure new talent on board train, and it will continue to help us through the full cycle. I think the one question I didn't answer is potential cancellations with the extended construction timelines. I'd say overall not seeing, you know, huge amount, but there are definitely instances where people have to be in a home, and we've seen some people cancel over that. Maybe lastly, on the build-to-rent side, obviously seeing some pressure there, but we're really seeing the benefits of simplicity and cadence and kind of the, you know, efficiency of that model when you only have two or three floor plans. You just can create that kind of cadence. Okay. Well, that's very helpful. If I could ask another one, not sure if you guys mentioned what your starts were for the quarter. Related to that, you know, what is your thoughts around, you know, starting more specs? Some builders have said that customers want specs that can close within 30-90 days. At the same time, we know there's a lot of homes under construction currently. You know, what's your thought around starting more specs versus just working on the ones you already have? What were the specs in the quarter? Yeah, Alex. Yeah, that's a good question. Our starts for the quarter were 1,446 or approximately 1.5 starts per outlet. As we've really worked down our, you know, spec inventories or inventory levels slightly, quarter-over-quarter, our spec units dropped 17% and went from 9.5 average per outlet to 7.8, which is really more in line where we wanna be going forward. You know, so we're pleased. More importantly, we're pleased to only have half a spec per outlet as the consumers have really absorbed those inventory units. Completed, right? Yeah. Spec completed. Yes, spec completed. You know, as our consumers have really absorbed that inventory as it approaches completion. Going forward, I'd say we'd expect that our starts will more closely match our sales pace as we've reached more of a desired spec inventory level. The only thing I'd add to that is, you know, as I said in my prepared remarks, 95% of our cans were on spec units. So we really do believe in this balanced model of allowing a consumer to pick a lot, pick a plan, put all the specifications in the house they want. We prefer not to write deals multiple times and to keep a nice balance of specs, and certainly at the more affordable levels is where you'll see the higher spec counts for us. Thank you. There are no further questions at this time. I will now hand you back over to Sheryl Palmer for closing remarks. Thank you for joining us today. We appreciate the opportunity to share our third quarter results with you. Wish you all a very good, healthy holiday season, and we'll look forward to talking to you in the new year. That concludes today's Taylor Morrison Home Corporation earnings webcast and conference call. You may now disconnect your lines.