Financial Data and Key Metrics Changes - The company reported total revenues of over $1.6 billion and diluted earnings per share of $1.61, with a gross margin of 18.9% excluding inventory-related charges, exceeding guidance [7][30] - Adjusted housing gross profit margin was 18.9%, which is 180 basis points lower than the previous year due to pricing pressure and higher land costs [31] - The company grew its book value per share to over $60, an 11% year-over-year increase [5][39] Business Line Data and Key Metrics Changes - The company delivered 3,393 homes in the quarter, exceeding guidance, while net orders totaled 2,950, a 4% decline [30][31] - The average selling price decreased 1% to $475,700, with lower prices in the central and southeast regions offset by increases in the west coast and southwest regions [31] - Home building operating income decreased to $131 million, or 8.1% of home building revenues [32] Market Data and Key Metrics Changes - The company experienced stability in demand, with a cancellation rate stable at 17% and a monthly absorption pace per community of 3.8 net orders [9][13] - Mortgage interest rates declined by approximately 60 basis points, equating to about $30,000 of additional purchasing power at the average sales price [16] - The company opened 32 new communities during the quarter, marking the highest performance in community openings in over a year [17] Company Strategy and Development Direction - The company aims to return to a historical range of built-to-order homes, which has averaged close to 70%, from around 50% currently [10] - The focus is on optimizing assets to generate the highest returns while balancing pace and price relative to local market conditions [9][11] - The company plans to maintain a disciplined approach to land acquisition, having canceled contracts for approximately 6,800 lots that no longer met underwriting criteria [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed a favorable long-term outlook for the housing market driven by demographics and ongoing undersupply of homes [8] - The company expects to generate housing revenues of $1.65 billion in the fourth quarter and $6.15 billion for the fiscal year [12] - Management noted that while the backlog will be down, it positions the company for similar pull-throughs based on the backlog heading into 2026 [77] Other Important Information - The company returned more than $490 million in capital to shareholders this year, including $440 million in share repurchases [5][27] - The company maintains a strong balance sheet with total liquidity of $1.2 billion and a debt to capital ratio of 33.2% [38][37] - The company was recognized as the only home builder on Time Magazine's 2025 list of the world's best companies, highlighting employee satisfaction [28] Q&A Session Summary Question: Order ASP and its decline - Management indicated that the sequential decline in order ASP is largely driven by mix effects, with more deliveries from lower ASP regions [42][43] Question: Demand and conversion of traffic - Management noted steady traffic but did not see a significant uptick in orders yet, with buyers possibly in a wait-and-see mode regarding mortgage rates [46][48] Question: Fourth quarter gross margin expectations - Management clarified that the strong third quarter gross margin was due to construction performance, not delivery timing [51][52] Question: Revenue outlook for next year - Management refrained from providing specific guidance for next year but indicated expectations for improved affordability and community count [58] Question: Shift back to built-to-order model - Management acknowledged incremental improvements in the built-to-order mix and expected to return to a 70/30 ratio at higher margins over time [64][63]