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 [5][29]. - 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 [30]. - The company grew its book value per share to over $60, an 11% year-over-year increase [6][36]. Business Line Data and Key Metrics Changes - The company delivered 3,393 homes in the quarter, exceeding the midpoint of guidance, while net orders totaled 2,950, a 4% decline [28][29]. - 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 [29]. - The company maintained SG&A expenses at 10% of housing revenues, with a slight increase from the previous year due to decreased operating leverage [30]. Market Data and Key Metrics Changes - The company experienced stability in demand throughout the third quarter, with a cancellation rate stable at 17% [12][16]. - Mortgage interest rates declined by approximately 60 basis points, equating to about $30,000 of additional purchasing power at the average sales price [14]. - The company opened 32 new communities during the quarter, marking the highest performance in community openings in over a year [12][16]. 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% over more than a decade, from around 50% currently [9][61]. - The focus is on optimizing assets to generate the highest returns while balancing pace and price based on local market conditions [8][10]. - The company plans to continue its share repurchase program and maintain a disciplined approach to land investments, having invested $514 million in land acquisition and development in the third quarter [25][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 [6][14]. - The company is cautious about the current environment, emphasizing the importance of managing costs and aligning overhead structure with delivery volume [5][30]. - Management indicated that the fourth quarter is typically a slower period, and they do not intend to aggressively pursue inventory sales [10][11]. Other Important Information - The company has returned more than $490 million in capital to shareholders this year, including approximately $440 million in share repurchases [4][26]. - The company maintains a strong balance sheet with total liquidity of $1.2 billion, including $331 million in cash [34][35]. - The company was recognized as the only home builder on Time Magazine's 2025 list of the world's best companies, highlighting employee satisfaction [27]. Q&A Session Summary Question: Order ASP decline and its implications - Management noted that the sequential decline in order ASP is largely driven by mix effects, with more deliveries coming from lower ASP regions [40][41]. Question: Demand and conversion of traffic to sales - Management indicated that while traffic remains steady, there has not been a significant uptick in orders, with buyers potentially waiting for further rate decreases [46]. Question: Gross margin expectations for the fourth quarter - Management clarified that strong construction performance contributed to the gross margin beat in the third quarter, and they are being thoughtful about fourth-quarter expectations [49][50]. Question: Built-to-order strategy and profitability - Management confirmed that they are seeing incremental improvement in the built-to-order mix and expect to return to a 70/30 ratio at higher margins over time [61][62]. Question: Inventory-related charges and land environment - Management discussed the current land environment and their ability to find new lots for future growth, emphasizing a selective approach to land investments [75].