“We project an adjusted gross margin of 29.2% for the fourth quarter, and we are reaffirming our full year guidance of 27.5%.”

In context

“s. We have not seen any change in cancellation rates in the first few weeks of August. We have consistently had the lowest cancellation rate in the industry for many decades, which speaks to the financial strength of our customers and our build-to-order model, where buyers personalize their homes and become emotionally invested. They make a non-refundable down payment averaging $80,000, so they are also financially invested as our low backlog cancellation rate in the third quarter attests, our buyers have remained committed to their new homes even in this uncertain environment. Our backlog consists of homes sold in the very strong pricing environment of the past year. which puts us in a great position to continue to expand our gross margin in the fourth quarter and into fiscal year 2023. We project an adjusted gross margin of 29.2% for the fourth quarter, and we are reaffirming our full year guidance of 27.5%. Turning to market conditions. As our third quarter progressed, we saw a significant decline in demand as many prospective buyers step to the sidelines in the face of steep increases in mortgage rates, significantly higher home prices, a volatile stock market and rising inflation. Buyer confidence was also impacted by the nonstop headlines about a softening housing market and by a general sense of uncertainty regarding the future direction of the economy. All of these factors led to a market change in psychology and buyers remain cautious through the summer months. As a result, our net signed contracts were down approximately 60% in units compared to last year's historically strong third quarter. On a dollar basis, signed contracts were down 44% year-over-year as contracts in the third qua”