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D.r. Horton (DHI 1.17%)
Q1 2023 Earnings Call
Jan 24, 2023, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Good morning and welcome to the first quarter 2023 earnings conference call for D.R. Horton, America's Builder, the largest builder in the United States. There will be an opportunity to ask questions on today's call. [Operator instructions] I will now turn the call over to Jessica Hansen, vice president of investor relations for D.R.

Horton.

Jessica Hansen -- Vice President, Investor Relations

Thank you, Paul, and good morning. Welcome to our call to discuss our results for the first quarter of fiscal 2023. Before we get started, today's call includes forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Although D.R.

Horton believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to D.R. Horton on the date of this conference call, and D.R. Horton does not undertake any obligation to publicly update or revise any forward-looking statements.

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Additional information about factors that could lead to material changes in performance is contained in D.R. Horton's annual report on Form 10-K, which is filed with the Securities and Exchange Commission. This morning's earnings release can be found on our website at investor.drhorton.com, and we plan to file our 10-Q tomorrow. After this call, we will post updated investor and supplementary data presentations to our investor relations site on the presentations section under news and events for your reference.

Now, I will turn the call over to David Auld, our president and CEO.

David Auld -- President and Chief Executive Officer

Thank you, Jessica, and good morning. I am pleased to also be joined on this call by Mike Murray and Paul Romanowski, our executive vice presidents and co-chief operating officers; and Bill Wheat, our executive vice president and chief financial officer. The D.R. Horton team delivered a solid first quarter, highlighted by earnings of $2.76 per diluted share.

Our consolidated pre-tax income was $1.3 billion on a 3% increase in revenue, with a pre-tax profit margin of 17.5%. Our homebuilding return on inventory for the trailing 12 months ended December 31st was 39.5%, and our consolidated return on equity for the same period was 31.5%. Beginning in June 2022 and continuing through today, we have seen a moderation in housing demand due to affordability challenges caused by the significant rise in mortgage rates, coupled with high inflation and general economic uncertainty. Despite these pressures, we still closed over 17,000 homes and sold more than 13,000 homes in what is typically the seasonally slowest quarter of the year.

We have seen increased sales activity in the first few weeks of January. While higher mortgage rates and economic uncertainty may persist for some time, the supply of both new and resell homes at affordable price points remains limited, and the demographics supporting housing demand remain favorable. We are well-positioned to navigate the current challenging market conditions with our experienced operators, affordable product offerings, flexible lot supply, and great trade and supplier relationships. Our strong balance sheet, liquidity, and low leverage provide us with significant financial flexibility.

We will continue to focus on turning our inventory and managing our product offerings, incentives, home pricing, sales pace, and inventory levels to meet market, optimize returns, consolidate market share, and generate increased cash flow from our homebuilding operations. Mike.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Earnings for the first quarter of fiscal 2023 decreased 13% to $2.76 per diluted share, compared to $3.17 per share in the prior-year quarter. Net income for the quarter decreased 16% to $958.7 million on a 3% increase in consolidated revenues to $7.3 billion. Our first quarter home sales revenues were $6.7 billion on 17,340 homes closed, compared to $6.7 billion on 18,396 homes closed in the prior year. Our average closing price for the quarter was $386,900, up 7% from the prior-year quarter and down 4% sequentially.

Paul.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

During the quarter, we continued to sell homes later in the construction cycle to better ensure the certainty of the home close date and mortgage rate for our homebuyers, with almost no sales occurring prior to start of home construction. Our cancellation rate for the first quarter was 27%, down from 32% sequentially, but still elevated from our typical levels. Our net sales orders in the first quarter decreased 38% to 13,382 homes, and our order value decreased 40% from the prior year to $4.9 billion. Our average number of active selling communities increased 4% from the prior-year quarter and was down 1% sequentially.

The average sales price of net sales orders in the first quarter was $367,900, down 4% from the prior-year quarter. We are continuing to offer mortgage interest rate locks and buydowns and other incentives to drive traffic to our communities, and we are reducing home prices, where necessary, to optimize the returns on our inventory investments. Our second quarter sales volume will depend on the strength of the spring selling season, and we currently expect significantly higher levels of net sales orders in the second quarter as compared to the first quarter based on historical seasonal trends, current market conditions, and our inventory of completed homes available for sale. Bill.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Our gross profit margin on home sales revenues in the first quarter was 23.9%, down 440 basis points sequentially from the September quarter. On a per-square-foot basis, home sales revenues were down 4% sequentially, stick-and-brick cost per square foot increased 2%, and lot costs were flat. The decrease in our gross margin from September to December was in line with our expectations and reflects the increased construction costs we incurred during 2022, along with higher sales incentives and home price reductions. We expect both our average sales price and home sales gross margin to decrease further in our second quarter of fiscal 2023.

We are continuing to work with our trade partners and suppliers to reduce our construction costs on new home starts. We are making progress in these efforts that we do not expect to see much benefit from lower costs on homes closed in fiscal 2023. Jessica.

Jessica Hansen -- Vice President, Investor Relations

In the first quarter, our homebuilding SG&A expenses increased by 6% from last year and homebuilding SG&A expense as a percentage of revenues was 7.8%, up 30 basis points from the same quarter in the prior year. We are controlling our SG&A during this market transition while ensuring our platform adequately supports our business. Paul.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

We slightly increased our home starts from the last quarter to 13,900 homes and ended the quarter with 43,200 homes in inventory, down 21% from a year ago and down 7% sequentially. Twenty-seven thousand and eight hundred of our homes at December 31st were unsold, of which 7,100 were completed. We are focused on improving our housing inventory turnover. With more completed homes now available for sale, we expect our mix of homes sold and closed in the same quarter to increase back toward our normal historical levels.

For homes we closed this quarter, our construction cycle time only increased by a few days compared to fourth quarter, which reflects lingering supply chain issues. However, we are seeing some stabilization in cycle times on homes we have recently started, and we expect our cycle times to improve during fiscal 2023. We will continue to evaluate demand and adjust our homes in inventory and starts pace based on current market conditions. Mike.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Our homebuilding lot position at December 31st consisted of approximately 551,000 lots, of which 25% were owned and 75% were controlled through purchase contracts. Our total homebuilding lot position decreased by 22,000 lots from September to December. Thirty-two percent of our total owned lots were finished, and 53% of our controlled lots are or will be finished when we purchase them. Our capital-efficient and flexible lot portfolio is a key to our strong competitive position.

We continually underwrite all of our lot and land purchases based on future expected home prices and costs. We are actively managing our investments in lots, land, and development based on current market conditions. During the quarter, our homebuilding segment incurred $4.8 million of inventory impairments and wrote off $19.4 million of option deposits and due diligence costs related to land and lot purchase contracts. We expect our level of operating cost write-offs to remain elevated in fiscal 2023 as we manage our lot portfolio.

Our first quarter homebuilding investments in lots, land, and development totaled $1.7 billion, down 21% from the prior-year quarter and up 16% sequentially. Our current quarter investments consisted of $900 million for finished lots, $690 million for land development, and $130 million to acquire land. Bill.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Financial services pre-tax income in the first quarter was $18.2 million on $137 million of revenues, with a pre-tax profit margin for 13.3%. The lower profitability of our financial services business this quarter was primarily due to lower gains on sales and mortgages, increased competitive conditions, and a lower volume of interest rate locks by homebuyers during the December quarter. We expect our financial services pre-tax profit margin for fiscal 2023 to be higher than the first quarter but lower than the full year of fiscal 2022. During the first quarter, 99% of our mortgage company's loan originations related to homes closed by our homebuilding operations, and our mortgage company handled the financing for 77% of our homebuyers.

FHA and VA loans accounted for 45% of the mortgage company's volume. Borrowers' originating loans with DHI Mortgage this quarter had an average FICO score of 722 and an average loan-to-value ratio of 88%. First-time homebuyers represented 55% of the closings handled by our mortgage company this quarter. Mike. 

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Our rental operations generated $328 million of revenues during the first quarter from the sale of 694 single-family rental homes and 300 multifamily rental units, earning pre-tax income of $110 million. Our rental property inventory at December 31st was $2.9 billion, which included approximately $1.9 billion of single-family rental properties and $1 billion of multifamily rental properties. We expect our rental operations to generate significant increases in both revenues and profits in fiscal 2023 as our platform matures and expands across more markets. For the second quarter, we currently expect no multifamily rental sales and to close fewer single-family rental homes than in the first quarter.

Paul.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Forestar, our majority-owned residential lot development company, reported total revenues of $216.7 million on 2,263 lots sold and pre-tax income of $27.9 million for the first quarter. Forestar's owned and controlled lot position at December 31st was 82,300 lots. Fifty-seven percent Forestar's owned lots are under contract with or subject to a right of first offer to D.R. Horton.

One hundred and ninety million dollars of our finished lots purchased in the first quarter were from Forestar. Forestar is separately capitalized from D.R. Horton and had more than $580 million of liquidity at quarter end, with a net debt-to-capital ratio of 28.7%. Forestar is well positioned to meet the current challenging market conditions with its strong capitalization, lot supply, and relationship with D.R.

Horton. Bill.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Our balanced capital approach focuses on being disciplined, flexible, and opportunistic. We are committed to maintaining a strong balance sheet with low leverage and significant liquidity to provide a firm foundation for our operating platforms during changes in market conditions and to support our ability to provide consistent returns to our shareholders. During the first three months of the year, our cash provided by homebuilding operations was $313.9 million and our consolidated cash provided by operations was $829.1 million. At December 31st, we had $4 billion of homebuilding liquidity, consisting of $2 billion of unrestricted homebuilding cash and $2 billion of available capacity on our homebuilding revolving credit facility.

Our liquidity provides significant flexibility to adjust to changing market conditions. Our homebuilding leverage was 12.8% at the end of December, and homebuilding leverage net of cash was 4.4%. Our consolidated leverage at December 31st was 22%, and consolidated leverage net of cash was 13.3%. At December 31st, our stockholders' equity was $20.2 billion and book value per share was $58.71, up 33% from a year ago.

For the trailing 12 months ended December, our return on equity was 31.5%. During the quarter, we paid cash dividends of $86.1 million and our board has declared a quarterly dividend at the same level as last quarter to be paid in February. During the quarter, we repurchased 1.4 million shares of common stock for $118.1 million. Jessica.

Jessica Hansen -- Vice President, Investor Relations

As we look forward, we expect challenging market conditions to persist with continued uncertainty regarding mortgage rates, the capital markets, and general economic conditions that may significantly impact our business. We are providing detailed guidance for the second quarter, as is our standard practice, but it is still too early to know what housing market conditions will be during the height of the spring selling season, so we are not providing specific guidance for the full year yet. We currently expect to generate consolidated revenues in our March quarter of $6.3 billion to $6.7 billion and homes closed by our homebuilding operations to be in the range of 16,000 to 17,000 homes. We expect our home sales gross margin in the second quarter to be approximately 20% to 21% and homebuilding SG&A as a percentage of revenues in the second quarter to be approximately 8% to 8.3%.

We anticipate a financial services pre-tax profit margin of around 20%, and we expect our income tax rate to be approximately 23.5% to 24% in the second quarter. We are well-positioned to aggregate market share in both our homebuilding and rental operations. Our goal remains to generate consolidated revenues in fiscal 2023 that are slightly higher than fiscal 2022. However, it is realistic to expect that our full year revenues will decline year over year given the environment and pricing actions we are taking.

The low end of our current range of expectations includes consolidated revenues down from fiscal 2022 by a mid-teens percentage, which is unchanged from last quarter. We forecast an income tax rate for the year of approximately 23.5% to 24%. We expect to generate increased cash flow from our homebuilding operations and on a consolidated basis in fiscal 2023 compared to fiscal 2022. We also plan to repurchase shares at a similar dollar amount as last year to reduce our share count during this year, with the volume of our repurchases dependent on cash flow, liquidity, market conditions, and our investment opportunities.

We have $700 million of senior notes that mature during the remainder of fiscal 2023, which we are currently preparing to repay from cash. We plan to continue to balance our cash flow utilization priorities among our core homebuilding operations, our rental operations, maintaining conservative homebuilding leverage and strong liquidity, paying an increased dividend, and consistently repurchasing shares. David.

David Auld -- President and Chief Executive Officer

In closing, our results and position reflect our experienced team's industry-leading market share, broad geographic footprint, and diverse product offerings. Our strong balance sheet, liquidity, and low leverage provide us with significant financial flexibility to effectively operate in challenging economic conditions and continue aggregating market share. We plan to maintain our disciplined approach to investing capital to enhance the long-term value of the company, which includes returning capital to our shareholders to both dividend and share repurchases on a consistent basis. Thank you to the entire D.R.

Horton team for your focus and hard work. We are incredibly well-positioned to continue improving our operations and providing homeownership opportunities to more American families. This concludes our prepared remarks. We will now host questions.

Questions & Answers:


Operator

Thank you. The floor is now open for questions. [Operator instructions] And the first question is coming from Carl Reichardt from BTIG. Carl, your line is live.

You may go ahead.

Carl Reichardt -- BTIG -- Analyst

Thanks. Morning, everybody. I just want to ask about inventory -- unsold inventory. So, about two-thirds of the inventory that you've got now is unsold.

I think, normally, it's about half when I went back and looked. So, I just want to make sure. Are we -- should we be optimistic because you've got product ready to go for the spring? The supply chain perhaps is normalizing a little, which is allowing you to get that ready. Or should we be more pessimistic because you haven't necessarily priced that inventory to move yet? That's my first question.

David Auld -- President and Chief Executive Officer

Well, Carl, as you know, I'm always optimistic. We feel very good about our inventory position. And, you know, through the last three or four quarters, we've limited sales to better align inventory, cost, demand, and our ability to deliver. We are now positioned more in what I would consider a normalized inventory position.

And again, I feel very good about our position and where we're heading into this quarter.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Normally, coming into the spring selling season, we'd be a little heavier than our normal 50% --

Carl Reichardt -- BTIG -- Analyst

Yes.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Specs ratio but feel really good about what we have in front of us right now for demand.

Carl Reichardt -- BTIG -- Analyst

OK. And then I was looking at the market count now, we're about 109 markets and say four years ago, I think you were about 80 or so. That's a lot. And obviously, you all benefited post-COVID by entering a lot of smaller markets that saw a fair amount of demand post the pandemic.

Now that that wave is potentially crested, can you talk about how some of the new, especially the smaller, what I call the tertiary city markets are performing over the course of the last six months, or are they better than some of the major markets, less competitors? Or is that growth beginning to wane now that we've seen a little more return to office back to the large cities? Thanks, guys.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Carl, we've seen these newer markets and secondary markets performing well for us due to limited competition in those markets. We certainly saw, you know, a strong push to all of the secondary markets, you know, with the pandemic and moving people and making them more mobile. But we've been happy with the progression in those secondary markets and glad that we ended them.

David Auld -- President and Chief Executive Officer

You know, Carl, even before the pandemic, we did very well in the smaller markets. And ultimately, it comes back to SG&A and control and the ability to lever houses incrementally at a competitive advantage due to do what anybody else out there is able to do. So, that -- that's been a part of our program, and I think you're going to see it continue to be a part of our program.

Carl Reichardt -- BTIG -- Analyst

Thanks, David.

Operator

Thank you. And the next question is coming from Matthew Bouley from Barclays. Matthew, your line is live.

Matthew Bouley -- Barclays -- Analyst

Good morning, everyone. Thank you for taking the questions. One to ask about the construction cost environment. I think I heard you say at the top that you were making some progress.

But, you know, I'm paraphrasing, but perhaps not expecting to see as much benefit on the construction cost side on homes closed through fiscal '23. Obviously, some of your peers have sort of quantified, you know, some of the benefits they might already be seeing on the construction cost side. So, just curious if you can, you know, parse that out a little bit. As you guys sort of aggregate market share, how should we think about, you know, your ability to press on costs here? Thank you.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

We've been really successful working with a lot of our trade partners in lowering our cost, and we've gotten a little bit of tailwind from -- certainly, from the lumber price reductions that have occurred. But it just takes a while for those cost changes on the front end to actually show up in a closing, especially with the more recently prolonged build times. So, we just -- it's just a function of the calendar working those new cost structures through the pipeline. So, the deliveries we see in '23 were largely all -- you know, first half of the year especially, started in fiscal '22 in a different cost environment.

Jessica Hansen -- Vice President, Investor Relations

And typically, lumber prices go up as we move throughout the spring. So, although we're seeing the benefit from lumber today, as typical seasonality holds, lumber would actually be a headwind against the cost reductions that we are seeing on those new home starts that Mike just alluded to.

Matthew Bouley -- Barclays -- Analyst

OK. Gotcha. Thank you for that color. And then a second one, just kind of following up around the pricing environment.

You know, as you've seen sort of some of your peers of, you know, enacted, I guess, different strategies around pricing versus pace here, and perhaps as we get into the spring, we might expect to see, you know, some builders on the ground, you know, react more aggressively on the pricing side versus I would argue you guys have been, you know, leading that, you know, first, I guess. So, as we get into the spring, sort of what are your expectations or perhaps what are you seeing on the ground right now around, you know, your competition and price reductions? And, you know, would you expect to see sort of another leg lower on the pricing and margin side through all that? Thank you.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

You know, we have still, you know, address our incentives with a balance of rate buydowns, you know, financial incentives, along with adjusting price community by community to, you know, drive the returns that we're looking for. You know, as we enter into the spring selling season, you know, we're seeing, you know, some seasonality that we're happy with as the market starts to lead, and we'll continue to adjust to drive the absorptions, you know, by community.

Matthew Bouley -- Barclays -- Analyst

All right. Thank you very much and good luck.

Operator

Thank you. And the next question is coming from John Lovallo from UBS. John, your line is live.

John Lovallo -- UBS -- Analyst

Good morning, guys, and thanks for taking my questions. The first one is you mentioned the first few weeks of January saw increased activity. Can you maybe just elaborate a little bit on that and maybe frame it sequentially or year over year? And how were incentives in the first few weeks of January relative to December?

Jessica Hansen -- Vice President, Investor Relations

Yeah. So, we talked about on the call that we do expect to see normal seasonality in terms of the move from Q1 to Q2 sales. And so, what we saw in terms of the increased sales activity in the first few weeks of January was a positive early indicator. It is still too early to ultimately say what's going to happen this spring, but it gave us the confidence to say that we could see normal seasonality, which typically would be about 50% up from Q1 to Q2 in terms of net sales orders.

We also did see a slight improvement. It's only a few weeks, which doesn't make a quarter, but we've seen a slight improvement in our cancellation rate in January as well, which also helped give us the confidence to say an increased level of net sales orders in Q2 versus Q1.

John Lovallo -- UBS -- Analyst

Got it. That's helpful. And then maybe if we talked just about cash flow expectations. It seems like it's going to be pretty robust here when you're buying back stock, paying dividends, paying down 700 million in debt.

So, maybe just your expectations for cash flow and what the expectation for rental investment might be.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah, we still expect increased cash flow from our homebuilding operations in fiscal '23 versus fiscal '22. You know, we saw our inventory step down slightly this quarter. We will be increasing our starts pace as we move into the spring and then adjusting that to what we see in market demand. So, we may not continue to see the same pace of cash generation as we did in our first quarter, but we do still expect to see robust cash.

And then we're going to continue to take our balanced approach to deploying that, first and foremost, to the homebuilding business, next to the rental business. We will still see a substantial increase in our assets in the rental business this year. We were not guiding to a specific growth number there quite yet for fiscal '23 because we're still evaluating the market and evaluating investments as we move through the year, but we do expect that level of inventory to increase while we see a significant increase in revenues in that business. And then past that, we will continue to pay dividends and continue to repurchase shares.

We expect to repurchase shares at a similar dollar volume as last year, which would indicate greater than $1 billion of share repurchases for fiscal '23. And then finally, on the balance sheet front, while we're very pleased with our leverage level, we do have $700 million of senior notes that mature in fiscal '23, 300 million in February, 400 million in August. And currently, just given the overall environment and our cash flow expectations, we're preparing to pay those debt maturities off with -- from cash, but obviously, we'll evaluate the capital markets along the way to determine whether we want to refinance or not. But right now, preparing to pay those from cash.

John Lovallo -- UBS -- Analyst

Great. Very helpful. Thank you.

Operator

Thank you. And the next question is coming from Stephen Kim from Evercore ISI. Stephen, your line is live.

Stephen Kim -- Evercore ISI -- Analyst

Great. Thanks very much, guys. Lots of good information. I wanted to follow up on, I think, Matt's question regarding the cost negotiations, though.

I think last quarter, you had suggested that you could see the benefit starting to -- certainly, from repositioning your product, at least, to benefit you by your fiscal third quarter. I was just wondering whether or not that process is maybe taking a little longer or if that was sort of separate from your comments on the labor and product negotiations. And then in your answer to him, I think you also sort of mentioned or volunteered that, you know, you were sort of assuming lumber costs were going to increase, and I just wanted to get a sense of how much of an assumption are you -- how much of an increase are you assuming you might see in lumber? Are you sort of just conservatively modeling it might go like halfway back to where it was last year? Just give us a sense for what you're incorporating in your outlook for lumber, knowing that you don't know yet, obviously.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Most importantly, we don't know. And we're taking probably a conservative stance and looking at the fact that, seasonally, in a normal seasonal environment, we do see lumber costs increase through the spring. And if we do -- are seeing some normalized demand coming back with the spring selling season seasonality, we'd expect that to drive lumber prices higher, which would offset some of the efforts we've made on like-for-like cost reductions. We have been able to get new product starts out, new home starts out that are more reflective to today's environment, smaller homes, more affordable homes that should help.

But in terms of a like-for-like cost benefit increase, it's -- this is going to take a little while for that product to move through the system in a material way.

Stephen Kim -- Evercore ISI -- Analyst

I didn't hear a number there, Mike. I was getting ready to write a number down. I didn't hear a number. You want to give us a sense or, you know, sort of like how much of the way back you're sort of thinking lumber might increase? Yeah.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

We don't have a sense for a number, Steve. I'm sorry. We're not that good at predicting. We're just taking a conservative approach that, seasonally, lumber tends to go up in the spring and that's probably going to have an impact on our cost and our deliveries later in the year.

David Auld -- President and Chief Executive Officer

It does feels, Stephen, like there is some normalcy returning to the market. And so, you know, you go back pre-pandemic and you look at what happened. Did cost get inflated during the last year or 18 months? Yes. Are we fighting to get that back? Yes.

But, you know, a commodity price like lumber may go up, may go down, may stay the same. But are we going to be conservative in our guidance? Absolutely, we are.

Stephen Kim -- Evercore ISI -- Analyst

Yeah. No, no complaints here. And I'll say that if lumber goes up because of normalization, I think everyone will take it. In regards to your lot count, I noticed that your owned lot count in numbers, you know, numbers of lots went up a little bit, I think, quarter on quarter.

It had declined, I believe, you know, in the last two quarters preceding that. So, I'm curious, are you -- or at least in the last -- yeah, the last -- sorry, the last two quarters preceding that. Are you -- do you feel like your lot cost -- sorry, your lot owned will increase from here, or do you think we might actually see a further reduction in your actual number of owned lots? Just try to give us a sense of what that number might be. Not in your supply but more like in absolute units.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Yes, Stephen. You know, we have worked hard for the lot position that we have and the relationships that we've built. And with those developer relationships, we're continuing to -- it's still hard to get a lot on the ground. And so, you know, our lot count as a percentage of volume and total numbers we expect to continue to increase.

You know, and some of that will depend on what we see with the spring selling season and through the rest of fiscal 2023. But we don't expect that to go down. And, you know, we expect to see potentially our own lot supply as a percent increase marginally, you know, through this market.

Jessica Hansen -- Vice President, Investor Relations

And as a reference, again, our owned lot finished percentage is only 32%, which is roughly 43,000 lots. So, we're by no means oversupplied from a finished lot perspective, which is what we're trying to continue to position ourselves for community by community.

Stephen Kim -- Evercore ISI -- Analyst

Gotcha. Thanks so much, guys.

Operator

Thank you. The next question is coming from Mike Rehaut from J.P. Morgan. Mike, your line is live.

Michael Rehaut -- JPMorgan Chase and Company -- Analyst

Thanks. Good morning, everyone, and thanks for taking my questions. I just wanted to, you know, circle back to your more recent trend and demand comments. You know, obviously, you mentioned that the first few weeks of January saw some increased activity, and that, you know, you could see, you know, a typical 50% improvement in orders in 2Q versus 1Q.

That would imply, if we were to take that, you know, just on a straightforward basis, an order decline of only roughly 20% down year over year. So, I'm curious around, you know, if that's kind of -- and I know you haven't given, you know, hard guidance or a range, but directionally, if that's how we should be thinking about things. And also, you know, to this point around the improvement that you saw in January, I was curious also if you can kind of give any color around trends intra-quarter during the past first quarter, if that improvement in January was a continuation or perhaps a change in trend that you saw, you know, during your December quarter?

Jessica Hansen -- Vice President, Investor Relations

OK. During the December quarter, as we mentioned on the call, as you know, Mike, is the seasonally slowest quarter of the year. So, we generally don't extrapolate anything that happens in October, November, and December. And we don't generally give a whole lot of monthly color.

But we felt like based on current market conditions, it warranted talking about the first few weeks of January, and that's what we're pleased with as we've seen what we would typically expect to see as we move through these first few weeks.

Bill Wheat -- Executive Vice President and Chief Financial Officer

In terms of the math that you laid out, if we do see that normal seasonality, yes, it still would result in net sales down year over year but up very nicely sequentially.

Michael Rehaut -- JPMorgan Chase and Company -- Analyst

Right. And secondly, you know, I know there's been a couple of questions around the construction cost and the impact there. I think that's kind of been covered pretty well. You know, obviously, another big part is the gross margin guidance for the second quarter, you're expecting a further decline.

You know, I wanted to also focus, though, on pricing trends in the market. And, you know, if you can kind of give us a sense of, you know, on a total basis, you know, how much net pricing, you know, has come down from, you know, June of last year to today and, you know, how much of that has occurred in the last month or two?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Well, you know, in terms of just pricing, really, our net sales orders in the quarter and the average sales price on that is the best indication. Our net sales order price this quarter is around 367,000, I believe. And of course, we peaked last year, a little over 400,000. So, you're already looking at, you know, roughly a 10% decline in our net sales orders.

And as then we look at our margin guide, you know, going forward, we're taking recent pricing, you know, into effect. You know, we're hopeful that if we see some normal seasonality and normal demand during the spring, that further significant pricing reductions, you know, would not be necessary. But we're going to assess that week to week and month to month as we go through the spring. But our gross margin guide takes into account recent pricing, along with the cost trends that we've already been discussing.

David Auld -- President and Chief Executive Officer

Just to add, it is very hard to put a lot on the ground. It's very hard to build houses. And the overall market is still undersupplied. So, long term, I think we've got a great outlook on what happens in the next quarter.

You know, we're going to deal with the market as it comes. 

Michael Rehaut -- JPMorgan Chase and Company -- Analyst

Great. Thanks so much.

Operator

Thank you. The next question is coming from Truman Patterson from Wolfe Research. Truman, your line is live.

Truman Patterson -- Wolfe Research -- Analyst

Hey, good morning, everyone. Thanks for taking my questions. So, first, has the land market started to capitulate at all on takedown pricing with your alls? ASP is down kind of 8% quarter over quarter, are you actually starting to see the land market correct at all with more meaningful price declines or is it still just too early to tell?

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

I think, generally, it's still a little too early, Truman. Land is typically one of the stickier parts of the process. And as David and Paul both mentioned earlier in the call, it is increasingly difficult to get a lot entitled and on the ground. And so, that is something that has held up pretty well.

But anecdotally, there are situations where we're able to make some progress on the land residual with some of our land sellers, but not broad trends yet, for sure.

Truman Patterson -- Wolfe Research -- Analyst

OK. Thanks for that. And then you all made a recent acquisition in Arkansas. Could you all just kind of walk through the drivers of that purchase? And are you seeing, you know, more small private, their willingness to sell it, you know, at a relatively attractive, you know, valuation kind of pop up given the market slowdown?

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Yeah. The acquisition of Riggins in northwest Arkansas gave us, you know, now, I won't say an entrance into the market, we were in there with a couple of communities, but gave us a solid position and a market that has remained strong with good employment growth and limited housing supply, again, to the earlier question of these secondary markets, a solid market that we are happy to be in. It was a good acquisition and tuck-in for us with a well-established community with a great lot supply. And so, it gave us immediate inventory and homes in progress, well-respected builder in the market that we're happy to have as part of the family.

You know, as far as other acquisitions, we continue to look at those and, you know, where we have tuck in opportunities similar to this. We have things that we would explore, but no broad-based change in how we look at builders in the market.

Truman Patterson -- Wolfe Research -- Analyst

All right. Thank you all. Appreciate it.

Operator

Thank you. The next question is coming from Eric Bosshard from Cleveland Research. Eric, your line is live.

Eric Bosshard -- Cleveland Research Company -- Analyst

Morning. Two things. First of all, the 40% reduction in starts, I'm curious if there's -- what the discipline or logic is in what you're not starting if there's buckets of this? You mentioned trying to change the product a bit to fit a price point. But curious if there's something to learn from how you're making those decisions of where you're reducing starts.

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

A lot of our starts decisions are made within the quarter on the basis of what the sales trends are occurring at that point in time. And certainly through late summer and in the fall, at our first quarter, mortgage rates raking up, cancellations increasing. Looking at our current inventory positions neighborhood by neighborhood relative to two recent sales pieces, you know, certainly led us to slow down our starts. Going into this fiscal this calendar year into the second quarter, seeing some improvement in our cycle time and supply chain issues unsnarling.

And we feel like we'll be able to start homes and complete them in a more timely fashion this year. So, we didn't -- we are trying to meet our starts out a little bit to more closely match our sales demand right now.

David Auld -- President and Chief Executive Officer

And, Eric, I think it's just indicative of the entire industry and lessons learned in the last downturn. I mean, I do believe that there is a discipline around the industry, and it's not just short-term chase every market every day. So, it's -- you know, we're trying to align inventory levels with demand. And it ultimately comes back to if you look at the long-term position of our industry, there aren't enough lots or houses for the population and demand that we see taking place over the next three to five years.

Eric Bosshard -- Cleveland Research Company -- Analyst

OK. And then related to this, the inventory per community number, it looks like it's up. And I guess the follow-on would be the path forward with starts from here is, you know, down 40 a pace you maintain for another quarter and then lift your heads up, or how do you think about the pace of managing the supply path going forward?

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

I think we saw the starts kind of align with our sales pace in the quarter, and I think we're going to look to try to maintain that relationship as -- through this time of the year. As we're seeing good sales demand in the early spring selling season, we'll be replacing those homes with new starts to continue having inventory on the shelf available to sell. We are certainly seeing more homes selling later in the construction process. Certainty of delivery date, certainty of mortgage rate, and payment are big, important factors for our buyers.

And we're also focusing very heavily on recovering our housing inventory turnover metrics and getting more efficient with those inventory dollars. Got to get our returns back up on our housing inventory.

Jessica Hansen -- Vice President, Investor Relations

And so, as with everything, our starts are managed community by community, market by market by our local operators to focus on not piling up excess completed homes that have been sitting there for an extended period of time.

Eric Bosshard -- Cleveland Research Company -- Analyst

OK. That's helpful. Thank you.

Operator

Thank you. And the next question is coming from Anthony Pettinari from Citi. Anthony, your line is live.

Anthony Pettinari -- Citi -- Analyst

Good morning. Can you talk about the tenure of buyers who canceled this quarter? Were those contracts that were signed in fiscal 4Q or maybe even earlier? You know, is there a larger cohort of buyers who maybe placed orders in the fall but are still at risk of cancellation with rates rising? Just wondering if you can give any color around kind of cancellation trends there.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

I think as you've seen our cancellation trend moderate and cancellation rate moderate, you know, we have younger backlog that have signed contracts more recently. As Mike spoke to, you know, certainty of home close date and mortgage rate is very important. So, as we have cycled through, you know, and we're improving our housing inventory turns, I think that's where you're seeing our reduction in cancellation rate.

Anthony Pettinari -- Citi -- Analyst

OK. That's helpful. And then just in terms of renegotiating prices for homes in backlog, has that sort of normalized or died down now that rates have stopped rising and, to your point, cancellations have come down?

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Hopefully, with the rate stabilization we've seen, we'll see stabilization in incentives and pricing environment going forward.

Anthony Pettinari -- Citi -- Analyst

OK. That's helpful. I'll turn it over.

Operator

Thank you. The next question is coming from Buck Horne from Raymond James. Buck, your line is live.

Buck Horne -- Raymond James -- Analyst

Hey, thanks. Good morning, guys. I wonder if I could dive in a little bit more on the incentives that are out there, you know, the tools that you're using out in the field. It sounds like a lot of builders are having some success with a mortgage rate buydown program where you're buying down or fixing the mortgage rate below market for -- sounds like for the life of the loan.

It seems to be popular out there. I'm wondering if you could maybe elaborate on are you using mortgage rate buydowns. How does that mechanically work? And kind of what does that cost you in terms of, you know, upfront, you know, margin hit or as a percentage of sales?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah, Buck. You know, we do, as a ordinary course, use mortgage rate buydowns, and many of those are for the life of the loan. That's been a program we've had in place for quite some time. The costs do vary from time to time, depending on market conditions and timing of when you, you know, tie up those positions.

But that's something that we try to make sure that we have in the toolbox for our salespeople to be able to offer an attractive mortgage rate to buyers who come in.

Buck Horne -- Raymond James -- Analyst

OK. Would you say that that's the most effective sales tool at the moment is a buydown or are you using some other level of incentives?

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

It's going to vary community by community and over time as to what the most attractive incentive is. And we try to put a lot of tools in our division operators' hands to make the best decisions about what's going to motivate and drive their realtor and buyer traffic in their communities and excite our sales agents with a reason to call and a reason to drive some traffic this week. So, it might be a little bit of pricing adjustment on a few homes. It might be the rate buydowns.

The mortgage financing incentives have been very popular, very heavily utilized. You know, and it might be that supply chains working back out, that we're back to washer dryer Wednesdays. I mean, there's plenty of incentives out there that we're going to use to drive a pace to hit a return we need to hit at every given neighborhood.

Buck Horne -- Raymond James -- Analyst

OK. Thank you. And one quick separate topic, on single-family rentals and the -- sounds like the guidance quarter over quarter is slightly lower in terms of projected sales of single-family rental homes. I wonder if that's strategic to kind of hold back the pace of those sales.

And just curious, you know, what the demand is like in the marketplace for -- you know, or the pricing for stabilized SFR homes these days?

Bill Wheat -- Executive Vice President and Chief Financial Officer

It's just timing of projects and when they'll be ready, completed, and ready and through a sale process. We just have fewer this quarter ready to close than we had this past quarter.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

And the first quarter benefited from a few projects that were lined up to close in the fourth quarter of fiscal '22, had some storm impact, and delayed some timing of a few closings there. So, that 1Q number was probably a little higher than the original production sales schedule we set up for.

Bill Wheat -- Executive Vice President and Chief Financial Officer

The business model is still complete, lease up market and so.

Jessica Hansen -- Vice President, Investor Relations

And you're starting to see some level of closings each and every quarter, but it is still choppy here in the earlier stages, and we would expect that to become more consistent over time as we get further along with the lots and the houses we have under construction.

Buck Horne -- Raymond James -- Analyst

Awesome. All right. Thanks, guys. Appreciate it.

Operator

Thank you. The next question is coming from Alan Ratner from Zelman and Associates. Alan, your line is live.

Alan Ratner -- Zelman and Associates -- Analyst

Hey, guys. Good morning. Thanks for taking my questions. First, you know, I was hoping maybe you could just help me a little bit reconciling kind of the closings results versus the orders.

You know, the closings for this quarter came in well above your guidance. The orders were a bit lighter versus what you signaled in mid-November. And I thought I heard you say that cycle times have been relatively stable, maybe even ticked up a little bit. So, how did you drive the upside to closings without, you know, stronger order activity? Was it just that much of a greater mix of completed sales versus, you know, homes that were a month or two out from completion than you were anticipating? And, you know, I'm sure that ties into the 2Q guidance as well with your delivery guidance above your beginning backlog.

So, I'm just maybe looking for a little bit more color to understand what's going on there.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Yeah. As we see marginal improvement in our inventory turns and home construction times, you know, you're starting to see, and you see that in our numbers, a larger percentage of our inventory homes on the completed side, which allows us to meet the market, which, quite frankly, is available to us today, which is shorter-term close. And so, we're seeing more homes sell and close in the quarter getting back more toward historical norms, and we expect to see that on a go-forward basis with the maturity of the home inventory that we have.

Alan Ratner -- Zelman and Associates -- Analyst

Got it. OK. That's helpful. And second question, kind of related, but, you know, tying in maybe the margin conversation as well.

So, when you look at your 7,000 completed specs, are you able to provide a little bit more detail on how many of those are maybe less than 30 days completed, what's more than 30? And how is your pricing strategy differ on completed specs as it hits this kind of certain threshold? Is there a level or a point where you get more aggressive on price adjustments or do you kind of just look at it more holistically?

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

So, generally, we're talking about a completed spec, we're -- we have a pretty aggressive definition of what's completed. It's when it gets into the final flooring stage. So, typically, from home hitting that completion milestone for us, normal conditions, it's probably going to take between two weeks to four weeks for that home actually to be move-in ready and more likely to the four-week side of that. So, if we look at how many houses we have out there that are kind of aging in the buckets, you know, we have about 190 houses that have been passed our completion date by more than six months -- by six months or more.

So, we still feel very comfortable about the freshness of that spec inventory. And this is the exact right time of the year to have that inventory, especially with the backdrop of very low, you know, existing home sale inventory available in the marketplace.

Bill Wheat -- Executive Vice President and Chief Financial Officer

And that's something we manage very closely. Obviously, we've been building specs for a very long time. We have a lot of discipline around that. And so, we do watch those completed specs as they start to age.

And if they get longer -- if they get longer than 90 days, then yes, we will start to step up the efforts to ensure that we move them. But right now, we still have a very fresh batch of completed specs out there for the spring selling season.

Alan Ratner -- Zelman and Associates -- Analyst

I appreciate that. Thanks, guys.

Operator

Thank you. The next question is coming from Mike Dahl from RBC Capital Markets. Mike, your line is live.

Mike Dahl -- RBC Capital Markets -- Analyst

Great. Thanks for taking my questions. So, the first one, just to follow up on the margin discussion, I understand there's not a lot of forward guidance you're going to give beyond this next quarter and a level of uncertainty. I'm wondering, just as you see it today, as you look at your current orders, as you look at what you're expecting to sell in the quarter versus kind of the timing of some backlog still coming through in that gross margin that'll be reported in fiscal 2Q, how should we be thinking about the likely cadence of margin beyond 2Q? Is it still, you know, barring some quick improvement in the market, going to be lower as you cycle off your backlog into the recent sales as you get into fiscal 3Q, or any color on that?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah, Mike. We're only guiding to Q2 margin. And the reason we're only guiding to Q2 margin is we don't know what margins -- or what the environment will be beyond Q2. The spring selling season, obviously, we've got some early, you know, encouraging signs.

But we don't know what their conditions will be at the height of the spring selling season. So, we have visibility to where our margins and our sales and our backlog and our pricing and our costs are today heading into the quarter, but even Q2 has some level of uncertainty to it. We would expect to sell and close, you know, 40% of our closings in the same quarter in the coming quarters. So, while we, you know, believe that there's some, you know, possibility of some stability in the market with mortgage rates stable, that could change this afternoon.

And so, to -- right now, we're giving you what we get, what we have. So, our guidance for margins of 20% to 21% is what we can see today for Q2. There is some risk both upside and downside there. I would say it's possible we could beat that range, but it's certainly possible that we may not.

But past Q2, we simply don't have visibility right now.

Jessica Hansen -- Vice President, Investor Relations

We're going to continue to meet the market and do what we need to do to maximize returns community by community.

Mike Dahl -- RBC Capital Markets -- Analyst

OK, fair enough. Then my second question, you know, there's been a lot in the press around, you know, Arizona, in particular, tightening up on some of the water rights and kind of permitting or lack of issuing permits in certain parts of the Phoenix metro area given some of their requirements around water usage. You guys obviously had your Vidler acquisition last year. I think they do have some projects in Arizona.

Can you give us a sense of if the counties or municipalities are just outright refusing to issue permits to certain areas? And does your ownership of Vidler and the projects in those regions exempt you from that? Are you able to still get permits for your client projects? Or any color on what you're seeing there would be, I think, interesting in light of some of the press that's been out there.

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Well, yeah, I think there has been a lot in the press on water, and water is and will continue to be a headwind throughout the West, you know, not just in Arizona. And certainly, you know, our acquisition and integration of Vidler has helped our positioning. And that's really, you know, some benefit to the short term, but mostly a long-term strategic decision on our part, knowing that we're going to head these -- you know, facing these headwinds for the foreseeable future. I don't think there's been a significant change on a local basis.

It's still difficult to get lots on the ground, to get entitlements through the process, and to get those permits. It has been for a while, and that continues. So, we feel good about our position, the lot positions we have in the Phoenix market, and we've got a great team on board there that continues to navigate through that environment.

Mike Dahl -- RBC Capital Markets -- Analyst

OK, great. Thank you.

Operator

Thank you. The next question is coming from Jay McCanless from Wedbush. Jay, your line is live.

Jay McCanless -- Wedbush Securities -- Analyst

Good morning, everyone. So, Bill, going back to what you talked about, looking to close 40 -- or selling close 40% of the 2Q closings. I guess how in, say, pre-COVID times, how -- what would that percentage have been in normal Q2?

Jessica Hansen -- Vice President, Investor Relations

Sure, Jay. Our typical percentage ranges pretty consistently up until the last year or two in the 35% to 40% range. A quarter ago, we were in the high teens. A year ago, it was even lower than that.

And this quarter, we were roughly 34%. So, when we talk about reverting to normal, we started to see that reversion in the first quarter. But we expect that to continue to tick up. So, whether it's actually 40 or closer to the 35, 36, we don't know.

But typically 35 to 40 would be a pretty consistent range for us.

Jay McCanless -- Wedbush Securities -- Analyst

OK. And then the second question I had, you know, assuming you pay down the billion dollars in debt, like you've talked about, any idea of what benefit that might be to gross margin since it's going to be less amortized interest or interest being amortized?

Bill Wheat -- Executive Vice President and Chief Financial Officer

Yeah, Jay. We have 700 million of the homebuilding notes that mature this year. And right now, we plan to do -- to pay those off with cash. That's out of just under $3 billion of homebuilding debt.

So, roughly 25% of the balance would be paid down. That if we do not replace that debt, that would reduce our interest carry in time. That benefit would really primarily be probably noticed in fiscal '24 and beyond because it takes time for the interest to be capitalized and move through the inventory. But it would take our interest carry down, you know, probably 20 basis points, 30 basis points as a percentage of margin over time longer-term benefit.

Jay McCanless -- Wedbush Securities -- Analyst

OK, great. Thanks for taking my questions.

Bill Wheat -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. And in the interest of time today, the last question will be coming from Rafe Jadrosich from Bank of America. Rafe, your line is live.

Rafe Jadrosich -- Bank of America Merrill Lynch -- Analyst

Hi. Good morning. Thanks for taking the question. I just wanted to ask on the rental side, what are you seeing in terms of demand? And margins have been really strong last year and obviously this quarter.

Just do you anticipate any type of normalization going forward or do you think you'll have to hold those properties longer if demand comes down?

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

I think we're still seeing demand for the properties. I think the pricing and the margins we realized on our early project sales benefited from construction in lower construction cost environments, coupled with a very attractive rate environment when we sell those, and that continued to some degree into our first quarter deliveries. We would expect to see some kind of a more normalized reversion to demand to a mean, and I think we'll see our margins come back in line to be closer to slightly above on what we're seeing on the for-sale side, the traditional for-sale side. But our business model is to develop the communities and sell them into the marketplace.

That's what we do best. Finding the land, building the homes, and bringing people to those communities is what we've been very successful with so far. So, still learning, still going to get better. But we do like that business.

Rafe Jadrosich -- Bank of America Merrill Lynch -- Analyst

And then just one more on the -- in terms of the improvement in demand that you're seeing in the quarter and quarter outlook for orders in the second quarter relative to the first quarter. Can you talk about what you think is driving the stronger demand? Is it the fact that mortgage rates have come down a little bit? Is there anything happening with consumer confidence? You know, what's sort of giving you that confidence and supporting the view that we're going to get back to normal seasonality after what's been sort of a very tough housing market at the end of 2022?

David Auld -- President and Chief Executive Officer

I do think the credit markets have stabilized somewhat. Consumer confidence improved a little bit. Job growth continues to be very good. So, you know, overall, if you look at pent-up demand and just a generalized economy becoming less bad, very good signs for housing.

And, you know, we monitor sales, we monitor cancellations week to week to week to week. And so, when we see that trend returning to more of a normalized market, it's hard not to be optimistic that we're going to have a good spring. And so, that's the way we're positioned. And we get up every day and respond to what happens out there in the field.

Jessica Hansen -- Vice President, Investor Relations

Yeah, specific to Horton -- those are the industry reasons, right? Specific to Horton, our inventory position puts us in a more confident place to be able to say we're going to see that pickup with the level of completed homes we have and the stage of construction the homes behind those are at because what we're seeing the most success in today is buyers who do want a home quickly because they can get that certainty of not only close date, but most importantly, interest rate. And so, that is the majority of our buyers today. And that's why we feel very confident and are very happy with our inventory position right now.

Rafe Jadrosich -- Bank of America Merrill Lynch -- Analyst

Great. Appreciate all the color. Thank you.

Operator

Thank you. I would now like to hand the call off to David Auld for some closing remarks.

David Auld -- President and Chief Executive Officer

Thank you, Paul. We appreciate everyone's time on the call today and look forward to speaking with you again to share our second quarter results in April. And finally, congratulations to the entire D.R. Horton team for producing a solid first quarter while navigating changing market conditions, go compete and continue to win every day.

Thank you.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Jessica Hansen -- Vice President, Investor Relations

David Auld -- President and Chief Executive Officer

Mike Murray -- Executive Vice President and Co-Chief Operating Officer

Paul Romanowski -- Executive Vice President and Co-Chief Operating Officer

Bill Wheat -- Executive Vice President and Chief Financial Officer

Carl Reichardt -- BTIG -- Analyst

Matthew Bouley -- Barclays -- Analyst

John Lovallo -- UBS -- Analyst

Stephen Kim -- Evercore ISI -- Analyst

Michael Rehaut -- JPMorgan Chase and Company -- Analyst

Truman Patterson -- Wolfe Research -- Analyst

Eric Bosshard -- Cleveland Research Company -- Analyst

Anthony Pettinari -- Citi -- Analyst

Buck Horne -- Raymond James -- Analyst

Alan Ratner -- Zelman and Associates -- Analyst

Mike Dahl -- RBC Capital Markets -- Analyst

Jay McCanless -- Wedbush Securities -- Analyst

Rafe Jadrosich -- Bank of America Merrill Lynch -- Analyst

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