“We are also beginning to see some building costs come down beyond just lumber, which continues to steadily drop.”

Why this grade

Management had committed to non-lumber building costs beginning to decline; before that commitment came due, they revised the characterization down to costs merely stabilizing (flat), with only lumber actually declining. Stabilized is a lower bar than 'coming down,' so the earlier commitment was not met at the point it was revised.

Deviation basis: qualitative shift from 'declining' to 'stabilized' cannot be expressed as a percentage

In context

“potential buyers in many markets were on the sidelines, we chose not to aggressively chase the market down over the past six months. Also, because of our build-to-order model, we did not have to take dramatically lower prices to clear a large inventory of spec homes. Instead, we have taken a more patient and balanced approach. In recent quarters, our delivery times for to-be-built homes has been extended in some cases, up to 16 months, which was not acceptable to many buyers. Additionally, building costs have been elevated due to the spike in inflation over the past two years. In that environment, it did not make sense to aggressively drop prices. Thankfully, quota delivery times have started to come down as we work through our backlog and as trades free up capacity in this slower market. We are also beginning to see some building costs come down beyond just lumber, which continues to steadily drop. The opportunity to build faster and at a lower cost may be here. Extended delivery times for our to-be-built homes have also resulted in the market for our spec homes being stronger than normal. With elevated spec demand and as cycle times and costs come down, we plan to thoughtfully replenish our supply of specs in select markets to generate additional deliveries in late '23 and throughout 2024. Community count in '23 and '24 will also drive results. As part of our strategy, we are timing community openings to take advantage of better seasonal opportunities. We are positioning for the spring selling season, where there is typically more demand even in tougher times. We are going back to opening our new communities in perfect white glove condition with decorated model homes, reflecting th”