Thank you. Joining me on the call today is Robert H.

Schottenstein, our Chairman, CEO and President, and Derek J. Klutch, President of our mortgage company.

First, to address regulation for disclosure, we encourage you to ask any questions regarding issues that you can material during this call. Because we are prohibited from discussing significant non public items with you directly.

And 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.

I will now turn the call over to Bob.

Thanks, Phillip. Good morning, and thank you for joining us today.

We are pleased to report solid second quarter and first 6-month results. Despite continued challenges in the broader economy, choppy demand, economic uncertainty, rising interest rates, and the impact of the conflict in The Middle East, we are very proud of our results.

For the second quarter, we sold a second quarter record 2.39 thousand homes. 15% better than last year.

And for the first 6 months, we have sold 4.74 thousand homes 8% better than a year ago. Pretax income from the quarter was $105 million.

Though down 35% from a year ago we were very pleased to post a pretax income percentage equal to 10% of revenue. Pretax income for the first 6 months $194 million also equating to a very solid 10% pretax income percentage.

And we were pleased to generate a 10% return on equity for the second quarter. Contributing to our solid returns was the second quarter gross margin of 22%.

Which includes $4 million of inventory charges. Notably, excluding those charges, our second quarter gross margins would have approached 22.5% which is slightly better than our first quarter gross margins.

We closed 2.21 thousand homes in the quarter down 6% compared to a year ago. And for the first 6 months, we have closed 4.12 thousand homes down 5% from last year.

Revenue for the quarter $1.1 billion down 9% from last year. Our second quarter record due contracts resulted in a month sales pace average of 3.4 homes per community compared to a pace of 3 per community a year ago.

We ended the quarter with 234 communities and remain on track to grow our 26 average community count by about 5%. In terms of product mix, we have seen a slight increase in the sale of our move up product.

Specifically, during the quarter, our Smart Series which is our most affordable line of homes that caters primarily to the first time buyer. Accounted for 43% of company wide sales This compares to 52% a year ago.

We believe the primary driver of our solid sales results is well located communities and excellent product. At the same time, we continue to use mortgage rate buy downs as our primary incentive.

And given the current rate environment, we will continue to promote with such buy downs for the foreseeable future. Approximately 78% of our second quarter sales were spec homes, roughly the same as the first quarter.

Our rate buy down program is targeted to both spec homes and to be built homes. The to be built buy down program appropriately features a longer term rate lock.

Our mortgage company had a terrific and very strong second quarter, capturing a record 96% of our business. We continue to see quality buyers for the most part in terms of creditworthiness with average credit scores of 748 an average down payment of about 15%.

We feel very good about all 17 of our homebuilding markets. We expect to have a very solid year in Columbus, Cincinnati, Indianapolis, Chicago, Minneapolis, Orlando, Dallas, Charlotte, and Raleigh.

Tampa, which historically has been 1 of our top performing markets, is currently somewhat challenged in terms of the macro environment within the Greater Tampa market. As is Sarasota.

Our newest markets, Nashville, and Fort Myers Naples, are beginning to gain very important traction. And will no doubt be important contributors going forward as we gain scale each of those 2 new markets.

Now, to more specifically address our markets, our division results in the second quarter were led by Columbus, Chicago, Minneapolis, Raleigh, and Charlotte. New contracts for the second quarter in the Northern Region increased by 16% while new contracts in our Southern Region increased by 14%.

Biggest increase we saw was in The Carolinas, The Midwest was up across the board followed closely by Texas, and our sales in Florida were also up. Our deliveries in the Northern Region decreased by 8% compared to last year's second quarter and represented 40% of our company wide total.

Our Southern Region deliveries also decreased by 5% over last year and represented 60% of total deliveries. We have an excellent land position.

Our owned and controlled lot position in the Southern Region decreased by 15% compared to last year and increased by 24% in the Northern Region. 40% of our owned and controlled lots are in the Northern Region while 60% are in the South.

Company wide, we own approximately 23 and a half thousand lots which is roughly a 2.5-year supply. In addition, we control approximately 25.7 thousand lots via option contracts resulting in a total of slightly more than 49 thousand owned and controlled lots which equates to about a 5-year supply.

Our balance sheet continues to be excellent. Highlighted by S and P's recent upgrade of our credit rating to BB+.

We ended the second quarter with an all time record $3.2 billion of equity equating to a book value per share of $128. We had no borrowings under our $900 million unsecured revolving credit facility and we ended the quarter with $736 million of cash.

This resulted in a debt to cap ratio of 18% and a net debt to cap ratio of negative 1%. In closing, as we celebrate our 50th year in business, we remain very confident in the long term fundamentals of the homebuilding industry.

Given the quality of our geographic footprint, our strong land position, very well located communities and diverse product offering we believe M/I Homes is well positioned to have a solid 2026. With that, I will turn it over to Phillip.

Thanks, Bob. As far as the financial results, we had record second quarter new contracts up 15% compared to last year.

Our sales were up 13% in April, up 23% in May, and up 9% in June. And our cancellation rate for the second quarter was 8%.

50% of our second quarter sales were to first time buyers, and 78% were inventory homes. Our community count was 34 at the end of the second quarter, consistent with a year ago.

The breakdown by region is 94 in the Northern Region and 140 in Southern Region. During the quarter, we opened 27 new communities, while closing 23.

We currently estimate that our average 2026 community count will be about 5% higher than last year. We delivered 2.21 thousand homes in the second quarter, and about 42% of these deliveries came from inventory homes that were both sold and delivered within the quarter.

And at June 30, we had 5.1 thousand homes in the field flat versus a year ago. Revenue decreased 9% in the second quarter We delivered fewer homes than a year ago, and our average sale price declined.

Our second quarter results included $5 million of land sales profit, versus $3 million in last year's second quarter. We often sell land as part of our land strategy.

Our gross margin was 22.1% for the quarter, including $4 million of inventory charges. Excluding these charges, our gross margin was 22.5%.

Our construction costs were down slightly during the quarter compared to the first quarter and our cycle time improved also by a couple of days. Our second quarter SG&A expenses were 12.6% of revenue compared to 11.3% a year ago Our second quarter expenses increased 3% versus a year ago.

Our increased costs were primarily due to new community openings, and a slightly higher headcount. Interest income net of interest expense for the quarter $3.3 million, and our interest incurred $9.3 million.

We had solid returns for the second quarter given the challenges facing our industry. Our pretax income was 10% and our return on equity was 10%.

During the quarter, we generated $120 million of EBITDA, returned a compared $169 million in last year's second quarter. And our effective tax rate was 24% in the quarter flat compared to last year.

Our earnings per diluted share for the quarter decreased $3.02 per share $4.42 per share last year and our book value per share is now $128. an $11 per share increase from a year ago.

Now Derek Klutch will address our mortgage company results.

Thanks, Phillip. Our mortgage and title operations achieved pretax income of $14.4 million in line with $14.5 million in 25's second quarter.

Revenue increased 3% from last year to $32.3 million due to a higher average loan amount and slightly higher margins on loans sold but offset by a decrease in loans originated. The average loan to value on our first mortgages for the second quarter was 85%, 65% of the loans closed in the quarter were conventional, and 35% FHA or VA.

Compared to 5.15 thousand%, respectively, for 25's second quarter. Our average mortgage amount increased to $405 thousand in February compared to $403 thousand last year.

Loans originated decreased to 1.82 thousand which was down 3% from last year. While the volume of loans sold increased by 6%.

Finally, our mortgage operation captured 96% of our business in the second quarter up from 92% last year. Now I will turn the call back over to Phillip.

Thanks, Derek. As far as our balance sheet, our financial position continues to be very strong.

We have 1 of the lowest debt levels of the public homebuilders. And are well positioned with our maturities.

Our Frankline matures in 2030 and our public debt matures in 2028 and 2030. And has interest rates below 5%.

Our unsold land investment at June 30 was $1.9 billion compared to $1.7 billion a year ago. And at June 30, we had $800 million of raw land and land under development.

And 1.1 billion of finished unsold lots. During the quarter, we spent $131 million on land purchases, and $155 million on land development.

For a total of $286 million. At the end of the quarter, we had 510 completed inventory homes, and 2.84 thousand total inventory homes.

And of the total inventory, 1.13 thousand were and 1.71 thousand are in the southern region. At 06/30/2025, we had 586 completed inventory homes and 2.73 thousand total inventory homes.

We spent $50 million in the second quarter repurchasing our stock and have $120 million remaining under our current board authorization. Since 2022, we have repurchased 19% of our outstanding shares This completes our presentation.

We will now open the call for any questions or comments.

Hey, guys. Good morning.

Really strong results.

Good morning, Alan.

Tough market. Hey, Bob.

So, you know, I was, I was intrigued by the comment you made about the maybe the somewhat modest mix shift toward more move up this quarter. And I was curious if you could maybe expand a little bit on that in terms of what is kind of going on under the hood there.

I mean, is this a concerted effort you guys are making to target that segment of the market and, a function of maybe new community openings or changing in product type? Or was this more just a function of where the demand was in the quarter?

And I have a follow-up from-- I think yes, I think it is a great question.

I think it is a little bit of both. I think there is a little bit more demand there.

We have always been really strong with our move up market. I am not going to act like this is a new phenomenon for our company.

We, you know, we have pretty much got our Smart Series, and then everything else. And the everything else has always been very strong.

I will say that in select markets, we have strategically and we began this some time ago, probably 18 to 24 months ago, look to find more locations where we could sell the more the move up market because we just thought there would be better demand for it, and we think we do a good job of executing. So I think that when you sort of shake it all out, it is a little bit of both.

And the other thing is I will say this, that over the last number of quarters, I think that some of the more high priced or move up land opportunities pencil better in terms of underwriting. We underwrite based on current conditions.

Always a bit of a guess. If it was an exact science, you know, they would not need any of us.

But in that context, it in select markets, and there is a number of examples, the move up stuff just seems to be penciling better. And we find sites that we think are opportunistically exciting in terms of perhaps more infill and so forth.

So it is I hope that answers the question.

Yeah. No.

That was great. Appreciate the added thoughts there.

So, yeah, I am guessing this might be related, but, you know, what I wanted to pivot to next was the gross margin, which good to see some sequential improvement there.

I was hoping you can kind of drill into the drivers of that. You mentioned cost being down a little bit quarter over quarter.

Is there any mix impact from move up as well in that Maybe slightly. But okay.

You know, I think our costs I know a couple builders mentioned they had a 5% improvement in cost. We did not see that much.

And when we say improvement in cost, it is not apples and bananas. it is apples to apples.

I mean, we have not despec or changed any of the fit or finish. We probably got 1, 2, 3% improvement depending upon the market.

So that is helped a little bit. You know, there is a lot of uncertainty still and we were pleased to see margins slightly improve or at least not get any worse.

You know, I really think-- look. I know-- let me say it this way.

If it were not for mortgage rate buy downs, industry wide, from the best performing builders to the worst If it were not for mortgage rate buy downs, the sales environment would be bleak. I think everyone knows that.

But having said that, I wanna emphasize something that I said. The primary driver for our sales is our well located communities.

If it was all about rate buy downs that all of our communities would be performing at a high level. We have got communities that are selling at a very strong pace and at premium margins.

Because they are well located. And you know, the 22% is an average.

We got 234 communities. A very meaningful number of the communities are well north of 22, 23, 24%.

And our divisions, particularly the more mature ones, and I tried to single some of those out, that are performing at a high level. Are posting very credible margins in this environment.

Better than we would have expected And, look, you never know whether a community is going to perform as good as you hope it will. We have just got a lot of we have got a very healthy percentage of what I would call what good performing communities and most of that hunch back to location, but obviously, it is also the quality of the product.

Alan, just to add a couple of things. This is Phillip.

We open 49 new stores the first half. If you look at the average sale price in those 49, looks like it is about maybe $5.75.

Our backlog right now is about $5.40. So it is, you kind of focused a little more on the high price point.

As far as, you know, margins and cost pressure and those type of things, you know, our finished lot cost compared to a year ago is up about 8%. But, you know, you are always market pricing but we try to make sure we open these stores the right way.

And do not get too far ahead of ourselves and really try to get pricing power where we can. that is really, really important to us.

You know, having said that, you know, as you know, 30 year fixed rate at par right now is in the 7% range. So there are pressures on the cost of those buy downs and so forth.

But, again, it is a subdivision by subdivision business. And that is what we will continue focusing on.

Thank you so much for that added detail, Phillip. Good to hear your voice as well.

And thank you very much. Thanks, Alan.

Good morning, everybody.

Morning.

You said 78% of your closings were spec. Could you break out the mix between which were spec overall, 78% and the percent that were intra quarter order closings orders and spec, if you would, and talk to the margin difference between those 2 categories.

So do you Well, the cat what we gave you was that from a sales standpoint, the second quarter, 78% were specs. And then as far as deliveries in the second quarter, 42% of the deliveries you know, were sold and closed in the quarter.

We do not give specific diff we do not give, Ken, we do not give specific information on the margin differential company wide between to be built and spec that number varies from market to market. In nearly every 1 of our 17 markets, the margins on to be builts are better.

In some, just slightly. In others, it could be 100 or 200 basis points.

Perhaps more in a couple of, you know, select instances. But in general, the margins are higher on to be built.

And it is just that the differences can vary pretty meaningfully between market to market. And we have really been you know, we continue to manage our spec levels closely as always.

Our improved cycle time you know, it is been improving a couple of days every quarter. As that cycle time improves, that gives us the benefit of not having to have so many specs out there.

You know, when you look at the midyear completed houses and inventory, it is 510. Last year was 586.

So we actually have less completed specs. But, again, having said that, with our cycle time, we help that.

But, you know, the specs are all about you know, trying to be in the on the right lots with the right product. Of course, as you do attached homes, attached townhouses, you know, that tends to create, more specs In general, our more affordable price smart series, we have a few more specs.

But we manage our spec levels very closely.

Thank you very much. And my second question is, it is Bob, it is kind of big picture.

But despite all the industry headwinds, you know, the margins are higher than pre COVID. Generally, for the industry, what we are seeing so far, stable quarter to quarter.

And you guys are actually starting more homes than you have had orders. So what are you worried about in the second half?

You could say the industry in general, into 2027, Given that, you know, it with the rate buy down, benefits you highlighted, it seems that you are somewhat insulated from any near term moves in the 10-year given that you can just buy down. So what is kind of the worry that you see out there?

Thank you.

Well, you know, first of all, we have all seen conditions that are significantly worse than now. I have said during the last several calls that if I had to and I think that our senior management team agrees with this, that if I had to grade or if we had to grade current housing conditions, I think they are above average.

They are not bad. Not they are not really good either.

But they are we have we have seen far worse. And for M/I Homes to be generating a 10% pretax return take that for a long time.

Sign us up. Same time, you have got pretty significant differences in performance across the industry.

Within the builder group. And you know, we are all I think when you look at the balance sheets, for the most part, the builders are in the best shape they have ever been in.

We certainly are. And I think that is true of a number of our competitors.

But you also see some really radically different returns within the large cap and even the mid and small cap builders. Some of that can have a big impact on certain markets where for whatever reason, you may see big discounting going on by certain builders and others have us scratch our head and go, why?

You do not need to do that. Those things have an impact on business.

You know, we are all the demand is not as robust as we would like to see it. I think it is I think it is suppressed by conditions I think there is a massive amount of buyers that are potential buyers that are waiting to join, you know, home ownership.

That are held back by the current rate environment, the uncertainty in the economy, lack of confidence affordability, all the stuff that everyone constantly talks about. So we are really bullish long term But I think right now, the buyer pool is relatively constrained and we are all fighting for those that are out there.

So you know, what each of us do can impact the others. We try to focus on what we think is best for our business.

Look, you know, at the be I think there is just a lot of uncertainty I think we are well positioned to deal with it. Not afraid of anything, and I do not wanna sound arrogant because that is not good.

But at the beginning of this year, I think most people thought rates, you know, might come down through the year. Wrong.

So far. At the beginning of this year, no 1 anticipated the conflict in Iran.

and it looks like it is gonna be with us for a while. And the impact that is had on oil prices and consumer sentiment none of that was foreseeable at the beginning of the year.

Now between now and the end of the year, things will happen that none of us can imagine right now. What we need to make sure of is that we have a very strong balance sheet We do not that our debt levels remain low.

That we focus on the best possible communities that we can buy, keep our land ownership in balance, hopefully not owning more than a 2- or 3-year supply, which we do not. I feel really good about our, as I said, our land position.

Love our love the new communities we are opening. This year that we already have and that are coming on.

That we focus on quality and we focus on the fundamentals of the business. Because that is what is gotten us here.

We have been in business since 1.98 thousand. And, you know, so I, you know, I love our position.

As I said, we are gonna have a really good year in the vast majority of our markets. You know, we have got a few places that are struggling right now.

And I think it is due more to the macro conditions than M/I. The unforced errors by us.

You know, namely Tampa, to some extent Sarasota, Certainly, Austin is still crawling its way back. It was red hot for a while.

it is getting a little better. But we had positive sales comps in the state of Texas.

We had positive sales comps in Florida. Our Orlando operation is terrific.

Really strong in the Midwest. Carolinas could not be more bullish.

So I like where we are. I guess the thing is we will remain vigilant and concerned about those things that we cannot anticipate.

And the only thing you can do to ready yourself for that is to keep your balance sheet strong.

Understood. Much appreciated.

Thank you. Thanks.

Hey, Good morning, guys, and congrats on a great quarter. Appreciate all the color so far.

I was just wondering if we could just dive into your thoughts on maybe how the selling environment of the quarter kind of progressed and I am curious just how the gross margins in the current backlog you think are shaping up for the back half of the year, to what degree you can characterize those? And really just kind of what level of incentives did you have to deploy in the quarter to get such strong order results?

You know, Buck, the backlog margin really is pretty consistent. You know, the last few quarters.

You know, almost half of our houses you know, specs are getting sold and closed in the quarter. And I am sure you can, guess that the specs in general tend to have a lower average sale price than the to-be-builts, backlog houses, and so forth.

And, also, the margins tend to be, you know, a little bit lower. There are pressures.

I talked about our, you know, land cost, finished lot being up 8% versus a year ago. And with mortgage rates up a little bit, you know, that puts pressure on that, buy down amount.

Most builders are still very, very competitive you know, on the mortgage rate we are offering. Trying to offset that by the quality of our new communities and product that Bob mentioned.

You know, we expect to open more new stores in the second half than we did the first half. And a number of those that we opened in the third quarter will also generate for us this year.

But, you know, we do not give gross margin estimates. that is just very-- but, you know, as Bob says, we are doing all we can on the cost side and the product side to offset that.

As far as expense levels, you know, our community count is flat at 36 versus a year ago. We do expect that to increase in the second half.

You know, right now, we do have about 3% more people. So, again, you know, we will try to manage those costs and expenses as best we can.

And try to make sure we get all we can get at the margin line.

Got it. Got it.

Helpful color. Appreciate that, Phillip.

And just on the land and the lots under contract, just going back to just highlighting that you have increased the number of lots under contract in the North by pretty considerable percentage, I think, 24%. And then looks like you are letting some of those options burn off in the South a little bit here.

So is that a function of you know, the demand environment from the buyer, or is it just a function Is something changing in the lot availability and then the land market? How do you characterize the strategy and the repositioning of the lots?

Nothing's really changed, Buck. I mean, we focus first and foremost on what we own.

We wanna own a 2- to 3-year supply of land based on current closing rate. Right now, we own a little over 23 thousand lots.

If you look at June a year ago, it was 25. But, again, nothing real significant.

And inside that, you know, 23 thousand or so lots, you know, we like to own a 1 year supply of finished lots. We do not wanna go dark as far as, you know, having finished lots on the ground due to development delays and weather and all those things.

So we feel really good about what we own. As far as off the books and total control, you know, we control right now about 49 thousand.

If you look, a year ago, it was a little over 50 thousand. Really nothing significant.

Things go in and out there. You know, we talked about our inventory charges, you know, of about $4 million.

Less than 1 million of that was deposits and prepaid expenses we wrote off on deals. That we decided not to go forward with.

We also talked about, you know, the lots that we sold, which we do periodically to help manage that, you know, investment level. But those numbers move around a little bit.

But overall, you know, owning 2 to 3 years and controlling 4 to 5 years, that really has not changed. it is just those numbers, you know, move around a little bit.

Keep in mind, if I could just add to what Phillip said, in terms of our total owned and controlled lots, which is just a little over 49 thousand 60% of them are in the Southern Region. Even with all the puts and takes.

Yeah. Yeah.

Got it.

So but, are you trying to rebalance it to more 50-50 going forward? I mean, just the trend seems to be your it is not a top down.

We do not we do not manage it that way. No.

We manage it all starts within the individual markets. You know, what is the opportunity for Dallas?

Dallas is currently volume is at x. Where do we think we can be in Dallas over the next 2, 3, 4 years?

What are the growth goals? And that analysis occurs with within every single 1 of our markets Some have greater opportunity leave the newer markets out, We are we are really bullish about Fort Myers Naples, and we are excited about finally getting some traction in Nashville.

Right now, both of those each of those 2 markets together are a drag on earnings. Like, we get that.

We are just getting started. But they will not be for long.

But when we look at where we are, you know, we have got you know, we have got growth goals, some more robust than others in every 1 of our markets. that is not driven by region, that is driven by market.

And also just back on land position a little bit, Buck. I mean, this as you probably know, we develop about 85% of our own land.

Now we do not take title to land, you know, unless it is zoned for our use and utilities to the site. But, again, we develop a large portion Having said that, we are now seeing in most of our markets some better opportunities at finished lots.

You know, some are coming from sellers. Some are coming from other builders.

Some are coming from land bankers. So we are seeing a few more of those opportunities that make sense.

And, again, we will take advantage of that because it is, you know, shorter time to get those lots on the books and get communities open. But, you know, we are really we are really happy with where our land position is.

Sounds good, guys. Congrats again.

Appreciate the color. Thanks.

Hey. Good morning, everyone.

Thanks for taking my questions. Wanted to actually keep going Yeah.

Absolutely. I wanna keep going with that thread because, Bob, what you said about move up lots looking better from a an underwriting standpoint, I guess, is that a function of what you think the pace could be?

Is it the lot cost? I guess, what is the driving factor there that is making the move up deals look more attractive than entry level?

First of all, not every move up deal looks more attractive. The ones that-- Okay.

That are being presented to us by our divisions you know, some, just are penciling better. Is it a massive trend?

I would say it is a massive trend, but it is enough to shift things ever so slightly When we when we underwrite deals, you know, there is a number of critical factors. What do you think the sales pace is going to be?

Based on what? what is happening in that area submarket right now?

Why do you think you can sell 3 or 2 or 5 a month, whatever it might be, at what price and at what margins. Those that is the you know, apologies for the cliche, but that is the art of the deal.

that is a lot more art than science goes into that. Yes.

You can look at comps You can see what other builders are doing. But at the end of the day, the long lead times associated with most transactions you know, when you are doing that underwriting, you are at least 6 months, if not more away from when you are gonna open.

And, you know, what are rates gonna be, what is this going to be, what that is gonna be, what is the price of oil. Yeah.

I do not need to get into all that. You guys understand that.

So look, some of the move up pieces are slightly smaller. Some of them are infill.

And, all of those things can contribute to returns. Ideally, we like to get at least a 20% internal rate of return on every land deal that we look at.

But they are not all the same. You will underwrite a finished lot deal on a takedown slightly different than a large bulk raw land deal because the risk is greater.

When you can walk away from a finished lot deal by forfeiting a deposit, you cannot walk away from a raw land deal if you have to bulk take the whole thing. So I mean, all those all those factors go into the analysis or you might take a slightly less return because of the size of the deal or the location.

And, you know, the other thing I will say is this, we have said this a few times, I think, on these calls. Sometime you are wrong when you think you have an a location tied up.

But if you really believe it is an a, you know, we will often squint pretty hard before we will walk away from that. I mean, you know, I have often said, I would I would rather overpay for an a location than to try to steal a b.

Because the a locations are the ones that really produce the results regardless oftentimes of the macro economy.

So the second quick I had, when you look at the mortgage rate buy downs, I guess where are you buying on average down to right now? And, you know, what is rate we seem to get buyers moving?

Our government first of all, our mortgage company and Derek's modest he could use a lot more superlatives when he describes the results. Our 96% capture rate is industry leading.

That should not be lost on anyone. And this is the second or third or fourth quarter in a row we have been north of 90%.

Great mortgage operation. And they are very focused on every day.

what is happening in the market and how to think about rate buy downs. Could not be more pleased with the execution of our mortgage company.

Important part of our business. Right now, our government program for specs slightly below 5.4 and 7/8 30 year fixed.

And, our longer term rate lock and as well as the spec rate for conventional is slightly above 5.

Also, 1 thing there, Jay. Again, I mean, the incentives you need oftentimes are different by every subdivision based on the buyers.

When you get into some of our affordable priced communities, you know, they tend to need closing cost help, those type of things. A few customers, you know, do like arms So we offer a wide variety of programs.

We try not just to use a, you know, a shotgun approach and everybody gets this. Our mortgage company is able with their loan officers and our processors to target individual programs, you know, for our customers.

We think that is been very helpful to us.

Okay. that is great.

And then 2 more questions. The first 1, have you seen any positive or negative impact from all the M&A that is been happening, whether it is more availability of those finished lot deals you were talking about or a little less competition.

Any insight or color you guys have on that would be great.

So there is there is a lot going on. And there is a lot going on not just with homebuilder m and a, but we are seeing a lot of activity on the supplier and product side also.

I will say this. So far, I do not think we have seen too much impact.

But it is also we are only in the 1st or 2nd inning of the ink's still wet on some of those deals. So it will remain to be seen.

So far, I do not know if Phillip or you or Derek have any different view. I do not think we have seen much.

Yeah, and for as well as on the supplier side. You know, we have got, we think, excellent long term relationships, national accounts, if you will, with, you know, some of the biggest suppliers and companies in the industry.

You know, and so far, we have not seen much impact there as well.

You know, there is things, Jay. I mean, you know, data center buyers overpaying significantly for certain land.

I mean, is that starting to impact the land market, here and there? You know, data center people, you know, hiring a lot of, you know, subs and suppliers to do work for them, pressures on concrete.

Energy because of that. there is a lot of things going on.

But, again, you know, we think we are pretty positioned with our staffs and our focus and just deal with those things as best you can.

Right. And then the last 1 I had, you know, pretty impressive to see both of your segments driving mid teens order growth in this type of environment.

I guess, has that carried into July? And if we think about the openings that y'all have for the rest of the year, y'all trying to target that same type of balanced growth for the for what we are gonna see in the back half of 2026?

We hope so, but we are you know, we will know when we know. Frankly, I was very pleased you know, to see you know, first 6 months is up 8%.

Obviously, the second quarter was up more than the first. A little bit of volatility month to month as Phillip outlined.

So we think we have got good communities, and that is the primary driver for that. Everybody's buying rates down, but not everybody's business is up.

And you know, you are always trying to balance sick of the term pace and price, I guess. But we are.

And you know, we are we are in the summer right now. it is a seasonally, it is a little bit less robust time.

Excited to move into the fall when you know, at least historically business tends to pick up a little bit, but you know, we feel very good about our sales and, you know, we will see how the year shakes out.

Okay, great. Thanks for taking my questions.

Thank you. Thanks, Jay.

Yes. Thank you, gentlemen.

Good morning. I wanted to ask about the jump in the G&A, I guess, sequentially and year over year, what drove that?

Was that just more of community openings? You are talking SG&A expenses?

Yeah. The corporate G and A.

You know, we are opening more stores and, that generates some additional expenses. You know, we do have, you know, 3% more people than a year ago.

We also are spending, more dollars in the sales area as far as promoting, advertising, and lead getting and all those type things. So that is where those cost increases are coming from.

We felt pretty good. They are only up only 3%, of course, with revenue down.

That drives the percentage up. But stay on top of that as we can as, you know, all time we always have.

Okay. And I apologize if you mentioned it, maybe, but on the gross margin improvement this quarter, was that mainly a reduction of incentives or lowering your costs or just the change in the product?

Or a mix of everything?

You know, it is a combination of things. You know, as Bob said, we have been very pleased with the performance of communities we have opened in the first half of this year.

And we did open 49 new stores. And some of those communities, we opened in the first quarter you know, gave us some closings in the second.

We did have sticks and bricks down a little bit. And, of course, we had locked cost up.

You know, you try to always, you know, price to market but wherever you have pricing, power, which we do have in a few communities, we do that. So it is a combination of things.

As far as rate buy down cost, you know, as a company, we did spend more buying down rates in the second quarter than we did the first quarter. And, again, right now, with mortgage rates up to 7, you know, again, that drives some of those costs up.

But there is a lot of moving parts that go into that gross profit number, but we are really pleased with what we are able to accomplish in the second quarter.

Okay. Got it.

Thank you, guys.

Thank you for joining us. See you next quarter.