Core Viewpoint - The Trump administration is considering declaring a "national housing emergency" to address the housing affordability crisis in the U.S. ahead of the 2026 midterm elections, with a focus on standardizing local building and zoning regulations and reducing housing transfer fees [1][2]. Group 1: Housing Affordability Crisis - The U.S. is facing a significant housing affordability crisis exacerbated by a shortage of housing supply, rising home prices, and high mortgage rates, particularly in California where the median home price exceeds $900,000 [1][2]. - The U.S. Chamber of Commerce reports a current housing supply gap of 4.5 million units, primarily due to long-term supply-demand imbalances [1][2]. Group 2: Contributing Factors - Complex permit applications, outdated zoning regulations, and rising construction material costs are contributing to insufficient housing construction [2]. - Tariffs imposed on trade partners are expected to further increase construction costs, impacting housing affordability [2]. Group 3: Market Trends - As of January this year, the average home price in the U.S. is $355,000, reflecting a 2.7% increase from the previous year, outpacing wage growth [5]. - Mortgage rates are at a 20-year high, discouraging potential first-time homebuyers, while rental prices have surged, with annual increases rising from 3% to 6.5% since the pandemic [5]. - In 2021, over 42 million U.S. households spent more than 30% of their income on housing, an increase of 4.9 million households compared to pre-pandemic levels [5]. Group 4: Political Implications - Addressing housing affordability is a key issue for Democratic presidential candidate Kamala Harris, who has proposed tax credits for entry-level housing construction and $25,000 subsidies for some homebuyers [5]. - Trump has called for the use of federal land for housing development and criticized the Federal Reserve for not lowering interest rates, which he believes harms the housing market [5].

Financial Data and Key Metrics Changes - In Q2 2025, the company delivered 1,326 homes at an average sales price of $664,000, generating $880 million in home sales revenue [5][12] - Adjusted net income was $69 million or $0.77 per diluted share, reflecting a stable financial performance despite market challenges [6][13] - Homebuilding gross margin, adjusted to exclude an inventory-related charge, was 22.1% [5][13] - The company ended the quarter with $1.4 billion in total liquidity, including $623 million in cash [7][16] Business Line Data and Key Metrics Changes - The company generated 1,131 net new home orders in the quarter, with a monthly absorption rate of 2.5 homes per average selling community [6][12] - The absorption pace varied by region, with the East showing a stronger pace of 3.1 homes per community per month, while the Central region had a pace of 2.3 [13][14] Market Data and Key Metrics Changes - The company noted that the Inland Empire, San Diego, and Seattle markets showed stronger demand, while Sacramento and Arizona experienced softer markets [13][14] - In the Central region, Austin, Dallas, and Denver showed softer demand due to increased supply of both new and resale homes [14] Company Strategy and Development Direction - The company is focusing on balancing pace and price on a community-by-community basis, moderating start pace to normalize spec inventory [6][10] - New market expansions in Utah, Florida, and the Coastal Carolinas are expected to contribute to meaningful growth over time [10] - The company plans to continue prioritizing price over pace to maintain margins and profitability [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the housing market, citing favorable demographics and a persistent supply-demand imbalance [19][88] - The near-term outlook remains challenging due to policy uncertainty and geopolitical tensions affecting buyer confidence [6][10] Other Important Information - The company returned $100 million to shareholders through share repurchases, reducing its share count by 3.5% in Q2 [8][9] - The company has a disciplined land investment strategy, focusing on opportunities that yield the strongest returns in core markets [8][10] Q&A Session Summary Question: Confidence in hitting fourth quarter volume guide - Management indicated confidence in hitting the implied fourth quarter volume guide, supported by sufficient move-in ready and spec homes [21][23] Question: Expectations for incentives and gross margin - Incentives were reported at 7.1% in Q2, with a slight increase expected in the back half of the year [25][26] Question: Details on the impairment charge - The $11 million impairment charge was related to a Bay Area project that failed the impairment test due to challenging market conditions [31][32] Question: Absorption trends throughout the quarter - Absorption started strong in April, peaked in May, and trended down in June, following seasonal patterns [38][39] Question: Strategic approach to pace and price - The company will continue to favor price over pace, citing consumer confidence as a key driver [49][50] Question: Current build time and improvement opportunities - The average build time is currently 115 working days, with ongoing initiatives to reduce cycle times [94][95]