Q3 2025 Smith Douglas Homes Corp Earnings Call
Speaker #3: Good morning , and welcome to the Smith Douglas Homes Corp. third quarter 2020 Earnings Call and Webcast . All participants are in a listen only mode .
Speaker #3: After the speakers remarks , we will conduct a question and answer session . To ask a question at this time , you will need to press star followed by the number one on your telephone keypad .
Speaker #3: As a reminder , this conference call is being recorded . I would now like to turn the call over to Joe Thomas , Senior Vice President , Accounting and Finance .
Speaker #3: Thank you . Please go ahead , sir .
Speaker #4: Good morning , and welcome to the earnings conference call for Smith Douglas Homes Corp. . We issued a press release this morning outlining our results for the third quarter of 2025 , which we will discuss on today's call and which can be found on our website at investors Smith Douglas Homes Corp.
Speaker #4: or by selecting the Investor Relations link at the bottom of our home page . Please note this call will be simultaneously webcast on the Investor Relations section of our website .
Speaker #4: Before this call begins , I would like to remind everyone that certain statements made on this call , which are not historical facts , including statements concerning future financial and operating goals and performance , are forward looking statements .
Speaker #4: Actual results could differ materially from such statements due to known and unknown risks . Uncertainties and other important factors as detailed in the company's SEC filings .
Speaker #4: Except as required by law , the company undertakes no duty to update these forward looking statements . Additionally , reconciliations of non-GAAP financial measures discussed on this call to the most comparable GAAP measures can be found in our press release located on our website and our SEC filings .
Speaker #4: Hosting the call this morning are Gregory Bennett . The company's CEO and vice chairman and Russell Devendorf , our executive vice president and CFO .
Speaker #4: I'd now like to turn the call over to Greg .
Speaker #5: Thanks , Joe , and good morning to everyone on the call today in the third quarter of 2025 . Miss Douglas Holmes continued to execute on its long term strategic plan of being the builders choice for home buyers in key markets throughout the South .
Speaker #5: Our operating philosophy is straightforward , but hard to replicate thanks to our operating discipline and culture . We focus on providing our customers with quality homes at affordable price , while maintaining tight cost controls and leading cycle times .
Speaker #5: We also avoid much of the risk associated with homebuilding by controlling most of our lots and land through option agreements and by sustaining a strong balance sheet .
Speaker #5: These are key elements of Smith , Douglas strategy , and we believe they lead to superior shareholder returns over the long term . For the third quarter of 2025 , we generated pre-tax income of 17.2 million and earnings of $0.24 per share .
Speaker #5: Home sales revenue came in at 262 million on home closings of 788 , and an average selling price of 333,000 . Gross margins on homes closed averaged 21% for the quarter .
Speaker #5: These results were in line with our previous guidance and demonstrates our ability to accurately forecast and execute on our stated objectives . Net orders for the quarter increased 15% year over year to 690 homes on the sales pace of 2.4 homes per community per month .
Speaker #5: Despite some tailwinds for mortgage rates trending down largely in the quarter , overall demand stayed soft , which we believe is an indication that the buyer psyche and consumer confidence are the main headwinds facing our industry .
Speaker #5: Financing incentives remain an important sales tool in getting buyers to move forward and purchase , and we expect this to continue into the fourth quarter .
Speaker #5: We continue to emphasize our approach of pace over price , as we believe our operations run more efficiently at or near full capacity .
Speaker #5: We made further progress establishing a foothold in our new markets in the third quarter . We began vertical construction on homes in Greenville market , started generating interest lists for our communities in Dallas market and expect Gulf Coast Market to be up and running in the middle of next year .
Speaker #5: These markets nicely into our business model and will be key contributors to our volume goals in the coming years . Cycle times in the third quarter were consistent with the second quarter at 54 days , excluding our Houston division .
Speaker #5: The efficiency of our operations is a key differentiator for our company , and it is a discipline we practice every day . It is a system senior management has developed and refined over decades in the home building business , and one that requires the coordination of our employees , suppliers and trade partners .
Speaker #5: Overall , I am pleased with how our company has performed in the third quarter and believe we made further progress towards becoming a large scale builder in the southeast and Southern United States .
Speaker #5: Our balance sheet is in great shape and we have several new communities slated to open in the coming months . That should give our sales efforts a boost as we head into our spring selling season .
Speaker #5: Finally , I would like to thank our team members for their continued hard work . Homebuilding is a very competitive business , particularly in uncertain times like the ones we're in today , and you've shown a willingness to go the extra mile for our homebuyers and our company .
Speaker #5: Success . I truly appreciate all that you've done to make Smith Douglas a leading builder . With that , I'd like to turn the call over to Russ , who will provide more detail on our results this quarter and give an update on our outlook for fourth quarter .
Speaker #6: Thanks , Greg . I'll now walk through our financial results for the third quarter . And then provide an update on our outlook for the balance of the year .
Speaker #6: We closed 788 homes during the third quarter , down 3% from 812 closings in the same quarter last year . Home closing revenue was 262 million , a 6% decrease from 277.8 million in the prior year .
Speaker #6: Our average sales price was approximately 333,000 , down 2.6% year over year due to slightly higher discounts and shifts in geographic mix . Gross margin came in at 21% , which was at the midpoint of our guidance range and compares to 26.5% in the prior year .
Speaker #6: Our lower year over year margin reflects the impact of higher average lot costs , which were 27.8% of revenue in the current quarter versus 24.8% in the year ago period .
Speaker #6: Additionally , rising incentives and promotional activity further compressed margins , closing cost incentives , which are included in cost of sales , totaled approximately 9500 per closing , up from 6600 in the year ago period .
Speaker #6: And pricing discounts were 1.8% of revenue , up from 1.2% last year . We utilized commitment programs to buy down interest rates , which we believe helped boost conversion rates .
Speaker #6: During the quarter , we recognized 3.9 million in costs on forward commitments , which is recorded as an offset to revenue versus 185,000 in the year ago period and 0.9 million in the second quarter this year .
Speaker #6: We expect to continue to utilize these rate buy downs through the end of this year to drive sales velocity , as we remain committed to our pace over price philosophy .
Speaker #6: G&A was up approximately 2 million versus prior year and was 13.8% of revenue , compared to 12.3% last year , driven primarily by lower revenue this quarter .
Speaker #6: And increased payroll and associated expenses with a sizable portion of the increase coming from the opening of our new divisions . Net income for the quarter was 16.2 million , compared to 37.8 million in the prior year , and pre-tax income was 17.2 million versus 39.6 million .
Speaker #6: Our pre-tax income in this period includes a $1.6 million charge related to the abandonment of a lot option deal with land seller , which is included in other income and expense .
Speaker #6: Adjusted net income was 13 million , compared to 29.9 million in the prior year . As a reminder , given the nature of our Upsee organizational structure , our reported net income reflects an effective tax rate of 5.9% this quarter , which is attributable to the approximate 17.5% economic ownership held by public shareholders through Smith Douglas Homes Corp.
Speaker #6: and Smith Douglas Holdings LLC . Because the majority of our earnings are allocated to our class B members , which is shown as income attributable to noncontrolling interests on our income statement .
Speaker #6: We provide adjusted net income , which assumes 100% public ownership and a 24.6% blended federal and state effective tax rate . We believe this measure is helpful in evaluating our results relative to peers with more traditional C corporation structures .
Speaker #6: Additional structure and related income tax treatment can be found in the footnotes to our financial statements . Turning to the balance sheet , we ended the quarter with 14.8 million in cash and had 49 million outstanding on our unsecured revolver , with 201 million available to draw our debt to book capitalization was 11.2% , and our net debt to book capitalization was 8.4% , down 370 basis points sequentially from the second quarter .
Speaker #6: This improvement reflects our continued discipline in managing leverage and our commitment to details on our maintaining a strong and flexible balance sheet in a period marked by persistent macroeconomic uncertainty .
Speaker #6: We remain focused on fortifying our financial position to ensure we can navigate market volatility and capitalize on strategic opportunities as they arise . Backlog .
Speaker #6: At the end of the quarter was 760 homes , with an average sales price of approximately 340,000 and an expected gross margin of approximately 20% .
Speaker #6: Monthly sales per community went from 2.5 in July to 2.8 in August , and 2.0 per community in September . In we saw that average stay constant at 2.0 sales per community .
Speaker #6: Turning to our fourth quarter outlook , we expect to close between 725 and 775 homes , with an average sales price between 330,000 and 335,000 .
Speaker #6: Gross margin is projected to be in the range of 18.5 to 19.5% , while incentives will continue to pressure margins , we are maintaining discipline in how and where we deploy them .
Speaker #6: We ended the third quarter with 98 active communities , and expect to see that number remain approximately in line during the fourth quarter .
Speaker #6: We're actively opening new communities across multiple divisions and remain focused on supporting a stable and scalable growth platform . Before I conclude , I want to reiterate that while we're pleased with our results through the first three quarters of the year , our outlook does include several risks .
Speaker #6: As always , our ability to achieve these results will depend on maintaining an adequate pace of sales , bringing new lots and communities online and scheduled , and managing cost pressures , particularly in labor and materials .
Speaker #6: Additionally , broader macroeconomic factors such as inflation , employment trends , interest rates , and consumer confidence could create headwinds to demand and impact the timing or volume of sales and closings .
Speaker #6: We remain focused on executing what we can control and believe our land light model steady operations and financial strength , position us well to navigate these challenges over the long term .
Speaker #6: With that , I'll turn the call over to the operator for questions .
Speaker #3: Thank you . As a reminder to ask a question , please press star , followed by one on your telephone keypad . In the interest of time , we ask that you please limit yourself to one question and one follow up .
Speaker #3: Thank you . Our first question comes from Sam Reid from Wells Fargo . Please go ahead . Your line is open .
Speaker #7: Thanks so much for taking my question . And also , thanks so much for all the color on the discounts and forward commitment impacts to the top line and margin line .
Speaker #7: It's very helpful . Color . In terms of my question , was just hoping if you could bridge the Q3 to Q4 gross margin and talk through the composition of perhaps incremental price discounting versus forward commitments , it does obviously look like you're planning to close , you know , houses below .
Speaker #7: What's in your backlog . So it would also just be curious in terms of mix of homes you plan to close outside of your backlog during the fourth quarter , too ?
Speaker #7: Thanks .
Speaker #6: Yep . Good , good question . We continue to push on incentives into year end . Really , in an effort to keep that pace over price philosophy .
Speaker #6: I mean , obviously we're really deliberate about , you know , keeping that pace . It's it's real important for the , you know , our operating philosophy , you know , we make more , we lose less at full capacity .
Speaker #6: And so the assumption is that , you know , to continue to to drive pace because it's as I'm sure you would agree , it's the macro environment .
Speaker #6: Is is pretty uncertain . As Greg mentioned , it's a it's really a confidence issue with our buyers . We've we've been able to to solve the rate issue for , for some time now .
Speaker #6: But it's it's , it does seem like it's just becoming a little more difficult to get buyers , you know , across the finish line .
Speaker #6: So we're going to continue to push on rates . We introduced a really attractive , you know , 3.5% fixed rate on some some older specs .
Speaker #6: And so that's that's really kind of the assumption , you know , we have seen costs of those forward commitments come down a bit in in recent months as , as rates , overall rates have come down .
Speaker #6: But so we're just making an assumption that we'll we'll continue to push incentives . And you know , we plan for the worst and hope for the best .
Speaker #7: That's all helpful . Ross and Ross . And then maybe just switching gears a little bit on 2026 , I know you're not providing guidance , but would just love any high level commentary on directionally where we should be thinking about community count , especially in the context of all , you know , some all the new divisional openings and then also just some perspective on lot costs , especially if the composition of your geographic mix changes .
Speaker #7: Thanks .
Speaker #6: Yeah , sure . Yeah . We you know , as I'm sure most , most other builders , most companies , it's real difficult to provide any sort of guidance in the 2026 .
Speaker #6: I think if we if we did , it would it wouldn't be , you know , right of us just it's so uncertain right now .
Speaker #6: But that said , given you know where we've driven our controlled lot count from the time we went public , you know , just over 18 , 18 months ago , we've we've nearly tripled our controlled lots in .
Speaker #6: And you've obviously seen the growth in our community count this year . We ended the quarter with 98 . You know , which is up substantially .
Speaker #6: So we we have the community count . Next year to , you know , to kind of drive a pretty good amount of growth , you know , again , is , you know , somewhere in the 10 to 20% growth range in community count .
Speaker #6: Absolutely . I think we've got the communities . But but a lot of that is really just dependent on where , where the market is .
Speaker #6: Right . And just making sure that those developers and we get those lots delivered on time . But yeah , it's it's not out of the question to see something in a 10 or 20% community count growth .
Speaker #6: And then but the wild card is really going to be what's the absorption pace ? You know , on on those communities and , you know , ultimately translating into sales and closings .
Speaker #6: So hope that helps . .
Speaker #7: All very helpful . Thanks so much .
Speaker #3: Our next question comes from Andrew Azzi from JP Morgan . Please go ahead . Your line is open .
Speaker #8: Hi , guys . Thank you for taking my question . And appreciate all the color so far . You know , backlog conversions , pretty elevated here compared to your own history .
Speaker #8: And likely to remain pretty high next quarter . Or go higher . Would love to just get some color on how you see that metric trending longer term .
Speaker #8: kind of
Speaker #8: And in any structural factors there that are going on .
Speaker #6: Yeah , I mean , it's all a function of of the current environment where , you know , the competition , everybody's you know , there's there's a lot of specs on the ground .
Speaker #6: That's where a lot of the discounting is taking place . And so that's part of the reason why , you know , we've we've been leaning into forward commitments , you know , from , from a competitive standpoint and specifically on our spec homes to
Speaker #6: know , moving moving through our , our , you know , our assembly line process . So presales have just been it's been a little more difficult to come by from a pre-sale standpoint , because if you think you know those forward commitments , the most cost effective forward is , let's say , a 60 day or less , you know , rate lock .
Speaker #6: And so that's part of the part of what's driving just kind of the industry to a more spec heavy environment . And and you know we are trying to we've offered some pre-sale incentives .
Speaker #6: So I think we're we're offering something though that's pretty unique in trying to move back to more of our pre-sale approach . I mean , we we are focused , let's put it this way .
Speaker #6: We are focused on pre-selling . It's really the environment that's pushing us more to a little , little spec heavy . And so that's why the the resulting backlog conversions are higher .
Speaker #6: But over the last quarter we've really had a heavy focus on getting that incentive into into presales . You know , with the way we're doing lot reservations and such .
Speaker #6: So we expect to go back to , you know , a more pre-sale heavy . Certainly as the environment changes . And I think , you know , specs become less and less as an industry .
Speaker #6: I think that's , you know , our our approach has not changed . We are we are pre-sale focused , it's just the current environment has has kind of pushed us a little more to to specs .
Speaker #6: You know , from a competitive standpoint .
Speaker #8: That makes sense . And then obviously you've seen a lot of growth in your active communities . And controlled lots . You know , could you provide any detail on kind of the geographic distribution of those .
Speaker #8: And how your prioritizing market expansion ?
Speaker #6: Yeah , we we , you know , as we stated , you know , from the time we went , we went public , I mean , we when we enter a market , we want to make sure that we have , you know , that we enter markets where we can gain scale .
Speaker #6: And for us , scale is , you know , we we operate in an our team philosophy , you know , geographic pods .
Speaker #6: And so each each each pod or our team has 200 closings . And so for , for us we like to at a minimum have 400 closings per , per division .
Speaker #6: And and certainly in some divisions we're going to have , you know , in excess of that , you know , some of the larger , larger markets like in Atlanta , Houston , Dallas .
Speaker #6: But at a minimum , you know , we're looking to do at least two full teams . So we are we've been prioritizing or really trying to scale up in those markets where we we have not yet hit that , you know , escape velocity .
Speaker #6: I'll call it , or , you know , that scale . And so you can look at , you know , Charlotte , the Carolinas , Nashville , you know , we're you know , those those are some of the areas that we've we've started to focus and , and clearly we've as you know , we've we've opened a few new divisions .
Speaker #6: Weve divisional central Georgia . So getting central Georgia , which is , you know , really south of I-20 in Atlanta and down to Perry , Macon , you know , that area really focusing on gaining more , more scale out of Georgia in those areas .
Speaker #6: Chattanooga is , you know , we're we've added quite a few positions in Chattanooga and then as we announced last quarter , Dallas is is a is a market that we just entered .
Speaker #6: And Gulf Coast , which right now is , you know , Gulf Coast of Alabama . So those are areas we focused . But clearly where we can take advantage in markets where we already have that , you know , two full teams .
Speaker #6: We will continue to to try and take some additional market share if the opportunity arises .
Speaker #8: Thanks , Ross . Best of luck . I'll pass it on .
Speaker #9: Thank you .
Speaker #3: Our next question comes from Mike Dahl from RBC . Please go ahead . Your line is open .
Speaker #10: Hey . Good morning everyone . You've actually got Steve and Mia on for Mike Dahl today . Thanks for taking my questions . Sure .
Speaker #10: The granular monthly and quarter to date demand trend discussion was all super helpful . Looking ahead , I wanted to ask what you all have built into your assumptions for the forward quarter .
Speaker #10: More so , the extent of how November , December , may compare to what you've been seeing in October and how you see the balance of the quarter sort of shaking out against your historical seasonal patterns .
Speaker #10: Thanks .
Speaker #6: Yeah , we haven't really made any any different assumptions for the balance of the year . I think it's it's it's just a , you know , it continues to be a difficult environment .
Speaker #6: But but you know , we we see a couple of green shoots here and there . You know . So it's not look , it's , it's , it's good .
Speaker #6: Right . It's it's we are we've got traffic . You know traffic's been been decent . You know folks are showing up . You know , people still need and want homes .
Speaker #6: So but the conversions , it's just a little bit tougher , you know , that's why we're leaning into the incentives . But yeah , we're not making any any more , any additional assumption for , for an increase in , in velocity .
Speaker #6: You know , maybe we'll get it . Maybe we won't . You know , we'll continue to , to push , to push on incentives .
Speaker #6: And you know , but we're getting our , our fair share . It's just , you know , it's just too hard to predict right now .
Speaker #6: It's kind of on a week to week basis .
Speaker #10: No for sure that's logical . Thanks for the insight there . And I guess my second question more broadly , I wanted to ask on permits and permitting .
Speaker #10: You've talked previously about at times , you seeing pockets of delays , certain municipal levels kind of depending on where it is . I just wanted to see check in how that's been going for y'all today in general across your markets .
Speaker #10: If there's been any kind of change in that trend, especially given some of the broader enthusiasm around potential relief for housing lately. Thanks.
Speaker #5: Yeah , thanks for the question . I'll take that . We continue to see challenges and and delays in in permitting , you know , both on getting final plan approval to start projects and then getting final sign off on completing projects and , you know , it's and it's pretty widespread .
Speaker #5: It's across all our markets . It's I wouldn't say it's in any market more so than in another . But we excuse me , we do see it .
Speaker #5: Less prevalent in the the areas that may be truly outside of the metros that that are a little hungrier for having some stimulation from , from housing .
Speaker #5: But in more of the central , you know , metro markets , we're still seeing a lot of delays .
Speaker #10: That's super helpful. Again, thanks for the insight, team. I'll pass it on.
Speaker #3: Our next question comes from Ralph from Bank of America . Please go ahead . Your line is open .
Speaker #11: Hi . Good morning . Thanks for taking my question . Can you give us the spec versus built to order mix that was in your deliveries ?
Speaker #11: And then maybe what , like what's in the backlog and then any color about is there a difference in the margin between spec and BTR right now ?
Speaker #6: Yeah , I'd have to go . We might have to get back to you on the the exact percentage . I don't want to quote you something that's wrong , but I would tell you the there was a higher spec count than , than pre-sale in , in Q4 from , from a closings perspective would would be my guess .
Speaker #6: And maybe it's 5050 , but it's probably a little little leaning more towards more towards spec . And again , that's like I mentioned before , that's just kind of the environment we're we're in as far as backlog .
Speaker #6: Again , I'd have to go go back and and I'd have to go and look at . Exactly what it is . But again , given given the size of the backlog , I mean , there's there's there's probably heavier pre-sale just sitting in backlog .
Speaker #6: But but maybe not by a , by a wide margin . I think , you know , because because most of the specs if , if it's sitting in backlog and it was a spec , it's probably only 60 days old at most .
Speaker #6: So , right . You know , we and we try to sell just just as a . Matter of process . You know when when we're focused on specs .
Speaker #6: Clearly if it's a finished spec we've got a high focus on anything that gets finished without a contract . But even if we start something in our process , we're we're very focused on getting a contract on that before what we call line in the sand .
Speaker #6: It's basically drywall . So , you know , historically , you know , even , you know , while , you know , we're pre-sale focused and historically we're like 70% pre-sale and 30% spec when you take in account , you know , getting a contract before we hit that line in the sand , you know , we were , you know , 90% plus of our homes had a contract on it before that line in the sand .
Speaker #6: So it's really heavy , heavy with , you know , kind of pre-sale prior to line in the sand . It's just the environment , you know , shifted that a bit .
Speaker #6: But you know , ultimately the market will , you know , the market will change . You know , you're starting to see spec levels come down from other builders , which also is a factor in , you know , you know , impacting , you know , us as well .
Speaker #6: But I think that that will continue to shift back in our favor over time .
Speaker #11: Okay . That's helpful . And then with just the community count growth that you're talking about for for next year , how do we just think about the SG&A run rate going going forward ?
Speaker #11: Should we think about sort of like on a dollar basis , estimate will grow in line with community count ? Just trying to understand and like , I know there's a there's a new market that you're expanding to just trying to understand like maybe the puts and takes that .
Speaker #6: Yeah . We we're in the process of budgeting right now . So I can't give you an exact answer . All I would say is clearly the fixed overhead .
Speaker #6: We're going to continue to leverage fixed overhead because we have , you know , everything here is in place . You know , the corporate support team , you know , HR legal finance you know all those you know , that's that's in place .
Speaker #6: And we can do you know , a good amount of volume above where we're at . So that will continue to leverage . And then obviously the variable piece of of of our SG&A .
Speaker #6: So commissions and you know , community level marketing , things like that , that'll , that'll move in line more or less with with community count .
Speaker #6: And you know , sales starts closing . But I would expect some leverage going into next year .
Speaker #11: Okay . That's helpful . Thank you .
Speaker #9: Sure .
Speaker #3: For any additional questions please press star followed by the number one on your telephone keypad . Our next question comes from Paul . Our next question comes from Paul from Wolfe Research .
Speaker #3: Please go ahead. Your line is open.
Speaker #7: Yeah . Good morning .
Speaker #12: Thanks for the monthly order cadence . I was wondering if you could add some further color . How did incentives flow monthly through the quarter ?
Speaker #12: And then regarding your forward commitment , how is the spread ? Have you maintained that spread to market or widened it or tried to contract it and and then again with Absorptions at two in September and October ?
Speaker #12: Do you have a minimum absorption pace you were targeting ?
Speaker #6: Yeah , we're so I'll take the last one because that's easy . More is is that that's , you know , more absorptions , you know , we're in you know , this is , you know , spring selling season obviously is is the is is where we'll get , you know , higher absorption pace .
Speaker #6: But you know , if we could hit a two and a half to three in , in , in the quarter , you know , that's generally , you know , you know , two and a half to three and a half would be , you know , more reasonable for a , for a Q4 .
Speaker #6: So , you know , we we , we are trying to push as , as we've mentioned , pace . So we are looking at at trying to push that absorption pace .
Speaker #6: And but it's going to come at the , at the expense of margin . And we leaned into we leaned into the forwards in in Q3 .
Speaker #6: So it's the cost did come down for sure . You know , as , as rates started to move down , you know , we we were benefiting benefactor of of cheaper forward commitments .
Speaker #6: But we also at the same time while the the the you know , the pro rata costs came down , we also pushed higher incentives to , to try and spur some of that absorption pace .
Speaker #6: So you know anything that we gain , we kind of , you know , we gave back a little bit because we were really just pushing a stronger incentive specifically on some of our , you know , older specs .
Speaker #6: We really we really have a focus on turning , you know , and not keeping any specs there . You know , we did have a good week last week in terms , you know , I think absorption pace was was up last last week which we didn't I don't think I mentioned that in my my prepared remarks .
Speaker #6: So we saw a little bit of a nice bump . But yeah incentives . Incentives trended up through the quarter for for sure .
Speaker #6: And you know we'll see . We'll see what the balance of the year holds . But like we said , pace over price that that's that's our , our our philosophy .
Speaker #6: And and we'll continue to use incentives to continue to to push that pace .
Speaker #12: Okay . And then I guess as you look at your , your consumer mix , you got entry level some downsizers , you know , active adult , however you want to define it .
Speaker #12: Are you seeing any shifts there ? I mean , what I'm really asking , I guess . Are you seeing any type of hesitation or cancellations with , with the Downsizers or active adults because they just can't sell their home for what they're looking to get out of it .
Speaker #5: You know ? Yeah , we we are for sure seeing a lot of of buyers that and you know , we , we have a resulting number of , of specs that happen from contingencies that , that they just don't get over the line .
Speaker #5: So there's , there's yeah for sure . I heard the other day for the first time long time , new homes were cheaper than resales .
Speaker #5: And you know , that's that's making that , that , that difficult . So yeah , the move up buyer , the , you know for us which is not a big cohort , but that move down buyer is a is a pretty significant .
Speaker #5: They're still struggling with that challenge.
Speaker #12: Thank you I appreciate it .
Speaker #9: Yep . Thanks Paul .
Speaker #3: We have no further questions. I would like to turn the call back over to Greg Bennett for closing remarks.
Speaker #5: Yeah . Thank you everyone for joining us today and your interest in Smith Douglas . Hope you have a great day and look forward to visiting after Q4 .
