Good morning and welcome to Taylor Morrison Home Corporation's Fourth Quarter 2025 Earnings Webcast. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to introduce Mackenzie Aron, Vice President of Investor Relations. Please go ahead.

Thank you, and good morning. Appreciate you joining us today. Before we begin, let me remind you that this call, including the question and answer session, includes forward-looking statements. These statements are subject to the Safe Harbor statement for forward-looking information that you can review in our earnings release on the Investor Relations portion of our website at taylormorrison.com. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to, those identified in the release, and in our filings with the SEC and we do not undertake any obligation to update our forward-looking statements. In addition, we will refer to certain non-GAAP financial measures on the call. They are reconciled to GAAP figures in the release where applicable. Now, I will turn the call over to our Chairman and Chief Executive Officer, Sheryl Palmer.

Thank you, Mackenzie, and good morning, everyone. Joining me is Kurt Van Hyfte, our Chief Financial Officer, and Erik Heuser, our Chief Corporate Operations Officer. I am pleased to share the results of our fourth-quarter performance and look forward to sharing an update on our strategic priorities for 2026. Our fourth-quarter results met or exceeded our expectations across nearly all key operational metrics despite challenging market conditions. These results concluded a solid year of performance in 2025, during which we delivered nearly 13,000 homes at an adjusted home closings gross margin of 23% and generated 40 basis points of SG&A expense leverage on essentially flat home closings revenue. Coupled with $381 million of share repurchases, these results drove a 13% return on equity and 14% growth in our book value per share. With the majority of homebuilders having already reported year-end results, it's clear that Taylor Morrison Home Corporation's 2025 performance stands apart. Among our peers, we delivered one of the highest home-closing gross margins in the industry. We were the only to achieve year-over-year SG&A leverage and modestly increased our closings volume, while the industry was generally flat to down, which together drove more resilient bottom-line earnings and returns. In a year characterized by softer consumer confidence and heightened pricing competition and inventory levels, we believe that these results reflect the effectiveness of our diverse operating model and broad consumer reach across our national footprint of well-located communities. Given the market's persistent affordability, which is felt most heavily among first-time homebuyers, our portfolio's unique concentration on move-up and resort lifestyle customers has helped us navigate the market's headwinds. We pride ourselves on developing thoughtfully designed communities, often with amenities in prime locations and offering a balanced mix of spec and to-be-built home offerings that meet the needs and aspirations…

Thanks, Sheryl, and good morning, everyone. At year-end, we owned or controlled 78,835 home-building lots, of which 54% were controlled off-balance sheet. This compares to 86,153 lots at the end of 2024, of which 57% were controlled. The decline in our controlled ratio, which we expect to be temporary, reflects the impact of normal course takedowns in a few of our larger assets that were being seller-financed, as well as recent walkaways from controlled lot deals as we have reevaluated our pipeline against current market conditions. Over the long term, we continue to target a controlled ratio of at least 65%, as we seek to optimize our capital efficiency and manage portfolio risk. Based on trailing twelve-month home closings, we owned 2.8 years of lots out of a total of 6.1 years of controlled supply at year-end. This was similar to 2.8 years owned and 6.6 years controlled at the end of 2024. The majority of our lots remain in prime locations within core submarkets, where we see the strongest long-term fundamentals. While we selectively invested in tertiary locations as work-from-home expanded, we have since shifted that limited portion of investment allocations back to core markets. Notably, 85% of our 2025 investment approvals were deemed to be in core locations based on consumer desirability. Core recent consumer research reinforces this focus. Most of our buyers view their chosen community as core, and they consistently tell us that the overall community design is as or more important than the home itself. Furthermore, 80% of our buyers say that wellness is important to their purchase decision, and even a higher percentage in our Esplanade communities, where hundreds of residents hold wellness club memberships. As a result, we believe our emphasis on prime locations, thoughtful community development, and amenity offerings positions us well,…

Thanks, Eric, and good morning, everyone. I will review the details of our fourth quarter and full year 2025 financial performance. For the fourth quarter, reported net income was $174 million, or $1.76 per diluted share, while our adjusted net income was $188 million, or $1.91 per diluted share, after excluding the impact of pre-acquisition abandonment charges and the loss on the extinguishment of debt related primarily to the redemption of our 2027 senior notes. For the full year, reported net income was $783 million, or $7.77 per diluted share, while adjusted net income was $830 million, or $8.24 per diluted share. In addition to the fourth-quarter adjustments noted previously, full-year earnings were also adjusted for real estate impairments, additional pre-acquisition abandonments, and warranty charges incurred earlier in the year. Now to sales. Net orders in the fourth quarter totaled 2,499 homes, which was down 5% year-over-year. This decline was driven by moderation in our monthly absorption pace to 2.4 homes per community from 2.6 a year ago, partially offset by a 1% increase in our ending community count to 341 outlets. This was supported in part by improved cancellation trends. As a percentage of gross orders, cancellations were 12.5%, down from 15.4% in the prior quarter and 13.1% a year ago. As Sheryl noted, we have well over 100 communities expected to open this year, including over 20 new outlets in Esplanade communities. These openings are expected to drive high single-digit outlet growth to 365 to 370 outlets by year-end. For the first quarter, we expect to end with around 60 communities. Turning to closings. We delivered 3,285 homes in the fourth quarter, at an average price of $596,000, generating home closings revenue of approximately $2 billion. Compared to our guidance, closings volume was at the high end of…

To wrap up, I'd like to share a few closing thoughts on recent news headlines regarding the administration's focus on addressing the needs for greater housing affordability and accessibility. As I shared last quarter, we have been encouraged by constructive dialogue with the administration and progress being made in Congress to advance housing legislation, and we are prepared to participate in meaningful policy solutions. As you heard this morning, our focus on delivering the right product to our customers, whether that be home buyers or renters, is this organization's guiding mission. We believe we have the platform to greatly scale our business as market opportunities present themselves, and we will maintain our longstanding discipline around capital allocation and investment strategies to create long-term value for our customers, communities, and shareholders. Before I close, I want to express my sincere gratitude to our entire team for delivering a strong finish to 2025 and for the effort I know you will demonstrate as we move through 2026. Together, we will continue to push our company forward and achieve even greater success as we refocus and recommit to all that makes Taylor Morrison Home Corporation so unique. Thank you to everyone who joined us today. And let's now open the call to your questions. Operator, please provide our participants with instructions.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, to withdraw your question, press star 1 again. Pick up your handset when asking a question. If you are muted locally, please remember to unmute your device. Please stand by now while we compile the Q&A roster. Your first question comes from the line of Matthew Bouley with Barclays. Your line is open. Please go ahead.

Hey. Good morning, everyone. Thank you for taking the questions. Wanted to start around sort of the long-term view around the mix of the business, the buyer segments, and geographies. Interesting commentary there around, you know, where you'll be leaning in and out of land investments in the future, and sort of the favorable demographics for the move-up population going forward. So I guess the question is, number one, where do you see the entry-level mix going over time? And number two, just kinda, you know, anything around the know, specific geographies or submarkets to kinda help us understand, you know, where do you think you have the right scale, where you continue to lean into, versus sort of where do you wanna deemphasize? Thanks.

Thanks so much, Matt. Appreciate the question. As far as the ultimate mix of entry-level to the business, you know, we've generally been running something like a third, a third, and a third. And I would expect that you'll see the first-time buyer come down a bit. But once again, it's not it's not necessarily about departing from the first-time buyer business. It's refocusing the business geographically where we don't, you know, buy land in what I would call those more fringe or tertiary locations that attract a very different entry-level buyer. And as we see movements in the markets, I think we've been we've proven, we've seen over the years, and we thought maybe it could be a little bit different during COVID that those more tertiary locations might provide, you know, a different experience coming out of COVID. But the honest truth is it's just not the case. That the further out you get when markets slow down a bit, we see those come to a very different stock, and the level of incentives required to get those first-time buyers into a house. It's tough. So it's not necessarily about, once again, leaving. You've heard us over the years talk about the professional first-time buyer, Matt, where that's generally a dual-income. I mean, more than 50% of our business today is millennials. And we're seeing more than half, if I'm not mistaken, Erik, of those millennials already buying their second house. So it's really a subset of the first time. As far as geographic penetrations, I think we've talked over the last few quarters that we've pulled back some investment in California. A bit, recognizing some of the underwriting constraints that we've seen there. So I think you'll see that, you know, geographic shift mix. Beyond that, I would think you'll continue to see us invest across our markets. When I look at the business, Florida continues to be, you know, we continue to be very bullish on it. And it continues to be the home of our Esplanade brand. So I think you'll see continued penetrations Florida, Texas, you know, different slight different in California, Phoenix, very steady for us. Colorado, I don't think you'll see huge shifts in the geography.

Okay. No. That's perfect. Thank you for that color, Cheryl. Really detailed. Second one, spec versus to be built mix. Think I heard you say 72% spec sales in Q4, and that you've sort of mixed somewhat back towards to be built year to date if I heard you correctly. So is the intention to get back to 50%? And can that happen in 2026, or sort of what's the timeline and intention around that mix? Thank you.

It's a great question. Hard for me to be 100% certain where that mix lands. What I'm excited about is we are seeing the consumer show up differently, Matt. I mean, last year, it's not like we ever changed our strategy and we wanted to sell less to be built. But what we definitely saw is the consumer you know, our industry trained them, and the honest truth is that the incentives were stronger with an inventory home. And the closer that home got to completion, the stronger the incentives. And the buyer really began to appreciate the impact of that. What we've seen since the first of the year is they're showing up with more of a desire to buy what they want, where they want it, how they want it. They want to appoint the house in a way, lot premiums, have become quite important again. So, yeah, we've seen 700 basis points in January over the average of to be built in the fourth quarter. We have seen that continue in February. So I'm very encouraged about that. I'm not sure we were ever 50/50. We were probably 60-ish, Curt. And, you know, it's kinda moved on the margin five percentage points. Fifty fifty would be ideal. And maybe over time, Matt, as we continue to evolve the portfolio further away from the more attainable buyer, we might see that. I would be pleased but surprised if we saw a 50/50 mix in 2026.

Agree? No. I agree. And I think, Matt, over the course of the year, we're gonna work our way through that. That's something that's not gonna happen overnight. Just kind of where we've made great progress with our spec inventory. I think as Cheryl had some, but we still have a little bit higher number of finished inventory than maybe we would like. So we'll continue to work our way through that and balance that with bringing in some of these to be built sales, especially on some of the new outlets that we'll be opening over the course of the year.

New Esplanade. So yep. I hope that helps, Matt.

Your next question comes from the line of Alan Ratner. With Zelman. Your line is open. Please go ahead.

Hey, guys. Good morning. Thanks for all the details so far. I it. Of course. First question, you know, similarly on the mix of the business. I just wanna make sure I'm thinking about kinda esplanade the right way in terms of, it it sounds like you know, a lot of the community growth or at least the the the share coming from Esplanade is going to continue to rise. I know you showed that off at your Analyst Day last year. '25 and where you see that in in '26 and beyond, should we think of any We look at absorptions, kinda where they were running at in mix shift there, either higher or lower as more of the business comes from Esplanade? I think generally those are higher absorption communities, but I just wanted to confirm that.

I'd say, actually, Alan, I think they're actually quite consistent. With the rest of the business. You know, we might have a couple positions with I mean, as you know, we probably have four or five communities per Esplanade. So we might have some that, you know, run-in a low three, some that run in a high. But I think on average, they're pretty consistent. Just for clarity as we talk about those 20 new outlets, that's probably four or five new communities. But I wouldn't see any significant change in the pace. We'll continue to aspire as we see some market bend. To get back to that annualized pace of the low grade. As I said in the prepared remarks, it's just not our intention to just throw inventory in the ground and sell it all costs given, I think, the value creation that we have with our land holdings.

Makes sense. Second question on on the cost side. I know you mentioned that your outlook is for pretty flattish construction cost this year. And certainly, I think cost has been a nice tailwind in general for builders over the last year or so. You know, we're starting to see lumber prices, tick back up again. There's a little bit of increased chatter about maybe some cost increase announcements around the New Year, which I think are fairly normal for this time of year. But, you know, you have the the the headlines around ice raids still out there. So just curious, is there any risk to that outlook based on what you're seeing here in the first six weeks or so of the year? And know, generally speaking, where do you see know, cost trending beyond?

Hi, Alan. Great question. Just kinda a little backdrop on the cost side. You know, we saw tremendous you know, teams did a lot of work in 2025. On our house cost initiatives. Very proud of what we were able to accomplish. And to your point, lumber here more recently is starting to run up a little bit. But our teams continue to focus on house cost reduction strategies, working with our trade partners, working with our suppliers, and so we think we have the ability to hope you know, to offset some of those potential headwinds that are out there. Through just our continued work on optimizing the business, whether it's through our discussion with our trade partners or suppliers or just our continued work on optimizing our floor plans, you know, value engineering our new communities, know, all those different type of tactical things. So it's something that we're we're looking at and watching and something the teams are very focused on.

Thanks a lot. Appreciate it.

Your next question comes from the line of Trevor Allinson with Wolfe Research. Your line is open. Please go ahead.

Good morning. Actually, you've got Paul Przybylski on. I apologize if I missed this. But morning. Could you bridge the sequential gross margin to decline for 1Q among leverage incentives, land inflation mix? Etcetera. And I think you said the incentive environment was stable in 4Q, if that remains the case. In 1Q, should we expect a gross margin in 2Q similar to 1Q?

Great question, Paul. Yeah. We're not gonna probably talk further beyond Q1 today. I think in our prepared comments, we did talk about a gradual increase in margins over the course of the year just because of the change in mix to a higher concentration of to-be-built homes. And, of course, as we work our way through our existing inventory. You know, from Q4 to Q1 sequentially, the margins are down, I think, 180 basis points, and that is in large part from a mix standpoint. A, we pulled in some higher ASP and higher margin homes in 2025 into Q4, and as a result, now we have a few more of those entry-level kinda tertiary kind of community closings coming through Q1. And so as we work our way through that, you know, we'll see our margins in line with that guide that we put out there. And relative to incentives, as Cheryl alluded to in her talking points, they were modestly in line from an order perspective. But they were kind of they at the end of the day, they stay they're they're remaining elevated, so to speak, from Q4 into Q1 from a closing perspective.

And maybe, Curt, the only other thing I might add is, obviously, Paul, we're gonna take price as the market allows. You know, I was interested that in the fourth quarter, we did see base prices increase in more than half of the communities that had been opened the prior year. And more than a quarter of our total communities. And so if the opportunity exists, we're gonna continue to take base price increases, reduce incentives, which is where we're getting the confidence to say we expect Q1 to be the low point of the margin.

Okay. Thank you. And then I guess, you know, you talked a lot about, you know, the 100 new community openings this year. How have absorptions been performing in your new communities relative to legacy? Are they still seeing the historical spread?

Historical spread. I mean, I'm excited about the new communities we're opening. I can give you a couple examples I might have mentioned in prior quarters that we were opening a new community in Phoenix. It's over 1,200 lots. I think we have five positions. We opened it in the fourth. Some of it the September, one or two one position in October. We've got well over 100. Units sold in there already. So I would say PACE is there really, really strong. One that's been a beautiful master plan called Verdin. When I look at some of our Esplanade preopening activities and what we call our signature VIP events, I mean, some of these communities have waiting lists or interest lists, not waiting. We haven't started sales. Interest list of hundreds to thousands of names. So there is this activity that we're seeing. We're also seeing traffic generally has picked up in the first of the year. When I look at web traffic, year over year up in most all of our divisions. So both new and old, I think we are starting to see a little traction and know, it's early days. Like I said, generally, we see spring kick off after Super Bowl, so here we are. So if we can continue that, then I think that gives us some upside to the year.

Great. Thank you very much. Good luck.

Thank you.

Your next question comes from the line of Michael Dahl with RBC Capital Markets. Your line is open. Please go ahead.

Thanks for taking my questions. Cheryl, just to pick up on the last comment around kind of the seasonal improvement and similarly, your opening comments about the improvement. Obviously, like, it hasn't been a very normal period of time the past number of months. So can you just help us dial that in a little bit more? Like, obviously, seasonally, you should see traffic pick up 4Q better than normal seasonal sequential change in orders, but off worse than normal. So what are we actually talking about in terms of quantifying kind of pace dynamics that you've seen over the past couple of months or or January into February, more specifically?

Yeah. No. It it's a fair question. And, you know, you don't I don't wanna get too over my ski tips, Mike. But what I would tell you is, you know, the improvement we saw through the fourth quarter, December being better than November, that would be something relatively unusual in my tenure. January, better than December. Okay. We should expect that, and the good news is we got it. And like you said, given the volatility that we've seen over the last year, I take each of these as, you know, positive green shoots. I'd say it's a little and honestly, and I think we said it in our prepared remarks, what made January even more I wanna probably a better word than sensational, but strong was the fact that we had a real significant weather event and, you know, a large part of the country. We have we were closed in many of our communities for days in Texas and the Southeast, and we still saw a nice January finish. And I give a lot of credit to our virtual tools on the ability to be able to continue to work with these consumers even when they couldn't come into the sales office. February, we're ten days in, a little early. I would say, you know, generally similar. You know, I'm not I it's it's hard to make a trend in ten days. We've got some communities that are doing really well and ahead of pace and some that aren't quite there yet. We had a strong finish. We've also had weather into early February. So all in all, I'd say generally supportive of kind of normal seasonal trends to your point we haven't seen in some time. So it's nice to see that momentum building.

Okay. Thanks. And maybe just one quick one on that just to put a finer point on that. Are we talking absorptions now flat year on year, up year on year? So down a little year on year, but then my second question is really then on the, I wanna make sure I understand your incentive comments appreciating you're not guiding beyond 1Q when you consider conceptually 1Q the low and incentives improving. Are are you really just saying incentives should improve as a function of your build-to-order mix, or do you also expect just from a market level incentives to improve through the year?

Well, obviously, if we get continued traction, and continued pickup in market. Like I said, we'll continue to take price when we can use incentives. We've also seen some relief from interest rates. I mean, still somewhat volatile. I think we're probably in the 6.1 range over the last few days. Know, sometime last year, that was closer to mid to high sixes. I think you've got a number of things working, and I think, you know, once again, we have the programs, Mike, to help the customer and not spread those incentives like peanut butter. The to be built mix will certainly be a piece of it as well, but I wouldn't just point to that. I think there's a number of factors that would, help us. Now having said that, competitive pressure and seeing what others offer is gonna continue to also have an impact on the incentives the consumer continues to expect. But all in all, I'm hoping there's some discipline across the market and we see a pullback in incentives and have the ability to take price. Pace, I don't know that I've seen I've looked at Kurt year over year. I mean, I think you know, we had a strong first quarter last year. So my instinct, it's probably a little down year over year, Mike, but I I need to verify that. But just you know, going into the investor day last year, we had a really nice strong first quarter. But offsetting that, you're gonna see some good community count growth as you saw us going from a low 340 to something closer to 360 in the first quarter.

Okay. Great. Appreciate it. Thanks, y'all.

Thank you.

Your next question comes from the line of Michael Rehaut with JPMorgan. Your line is open. Please go ahead.

Thanks. Good morning, everyone. Thanks for taking my questions. First, I just wanted to make sure I heard it correctly, and and sorry if this is being a little repetitive. But just wanted to appreciate the trend of incentives that you guys have offered in from the beginning of the fourth quarter to the end of the fourth quarter. I think you said it was relatively consistent, but I just want to make sure I heard that right. And, also, when you think about the first quarter gross margin guidance, how much of that is reflective of just higher incentives flowing through more broadly versus mix and maybe flushing out some of the impact of selling some of the excess spec that you have in?

I'll let Kurt get into the particulars, but, Mike, I I really as Kurt said in his prepared remarks, I mean, we have a lot of inventory that we want to even though we're gonna continue to get those to be built to hopefully a different customer, need to work through that inventory in the first quarter, so we are expecting some pressure there. And if you look at just the ASP that we articulated for the first quarter, and how far you know, it's slightly lower than what we saw in the fourth quarter. I think it speaks to the mix. And you know, as we've said, the more affordable positions we require greater incentives, so we're anxious to work through those. And then see the to be built be a healthier piece of the mix.

Yeah. And then, Mike, on the incentives in our prepared comments you did hear it correctly. They were relatively flat Sequentially from Q3 to Q4. As we kinda I think we alluded to that last quarter that gonna con you know, that we would have elevated incentives to move through based on that spec penetration for Q4 closings as we work through the inventory.

Your next question comes from Rafe Jadrosich with Bank of America. Your line is open. Please go ahead.

Hi. Good morning. Thanks for taking my questions. Just for following up on the comment on incremental land investment in the non-core submarkets sort of shifting away from that. Obviously, it makes sense given the context of what's going in the market at the entry level today. When you think about are you finding better land deals at the move-up and resort lifestyle sort of price points? Is there just less competition in those markets? Or are you just more bullish on the long-term fundamentals on move-up with your lifestyle versus entry-level? Can you just talk a little bit more about the shift there and why the returns will be higher at move up and then compare it to entry level?

Hi, Rafe. Eric. Yeah. Good question. It's really kind of a light pivot to where we've come from, right? If we were to look historically we've really been at that 15% kind of exposure to kinda to kind of that tertiary entry level. And, you know, coming out of COVID, as Sheryl suggested, we saw such strong demand there, and really we're discerning how much of that work-from-home was gonna be kinda sustainable. And so it moved up to 20 to 25%, call it. And so it's really a repivot back to 15%. Direct to your question, I would say, yes. When you think about the competitive landscape and some of the peer group that's very focused on that entry level I would suggest that the land market has yielded some opportunity for us, especially as the market has evolved. So I would say, yes, it's in it's what we're good at. It's what we've been historically focused on. From an opportunity standpoint, that's where we're seeing some of the opportunity, and I would expect some good performance looking forward.

And the only thing I'd throw on top of that, Rafe, is you know, when we're talking about the first time buyer environment today, with every sale, it's really working through with them. Can they make this work? When you look at the move up and the Esplanade buyer, it's really should I? Given just the confidence things we've talked about. They have the capabilities. They have the balance sheet. They just wanna make sure that the time, it makes sense for them and they have the time. You know, it's the right time to do it. It's a very different formula when you're dealing with this first-time buyer and how many consumers we have to, you know, pre-approve to try to get the folks that actually can make the final purchase. And we don't see that that is gonna significantly change, in the foreseeable future.

Okay. That's helpful, and that makes sense. And then just following up on the land side, mid-single-digit lot inflation for '26. For the land that you're contracting today, what's the inflation that you're seeing and is there a point here where we'd expect some relief like this rollover in 2027? How do we think about that through the year?

Yeah. As far as the land conditions out there, yeah, and as you know, when we expressed in fourth quarter, you know, we really focused on pairing to really the core opportunities, the cream of the crop for us, and I think others have done that too. And so you are seeing kind of a stabilization in the land market, that's resulting in something that approximate zero. So kind of low single digits in terms of land appreciation expectations in the market today. So we are seeing and as we expressed in third quarter too, we've experienced a lot of success in working with sellers and renegotiating pretty much everything that comes through the investment committee.

Thank you. That's helpful.

Your next question comes from the line of Kenneth Zener. With Seaport. Your line is open. Please go ahead.

Hi, everybody. Hey, Ken. Could you comment on the I know and you mentioned Austin, but could you talk about what the dynamics were that Saudi order rates for that whole segment come down? First. And then second, are you guys going to try to it sounds like you're probably gonna run start in line. With orders, or is there gonna be more of a front end load this year? That's it. Thank you.

Maybe I'll take the first one, and then, Kurt can grab the second. You know, when I think about Texas, it has been a little bit more of a mixed bag, Ken. You know, Austin has probably seen the greatest pullback of volume. But, honestly, our locations are, I believe, best in market. And so we continue to see a strong margin. So we've been okay holding the line a bit there and not giving away quality irreplaceable communities. The good news in Austin is we have seen spec inventory drop more than half over the last year. Land activity continues to be tough, and but the teams are being very diligent in making sure we don't get ahead of ourselves. Houston and Dallas, you know, slowed down year over year, but not what we saw in Austin. We did see Paces hold serve in Dallas. And Houston Paces are ahead of the company average. So like I said, a little bit of a couple of different stories. Similar to Austin, though, margins have held up well in all of Texas. So I think Texas provides the perfect example of the important trade-offs we'll make between price and pace, but we'll take a lower volume to protect the margin. As I look forward, Texas is an important part of the portfolio. I expect the state of Texas to be the highest population growth over the next, you know, three to four years.

And then on the starts front, Ken, the last couple of quarters, we've, I guess, understarted to sales as we've kinda worked our way through our inventory. But on a go forward basis, I envision us being more sticky to the sales standpoint. From a start standpoint on a go forward basis. So that's what kind of we're looking at as we're sitting here today.

Thank you.

Your next question comes from the line of Alex Barron with Housing Research Center LLC. Your line is open. Please go ahead.

Yes. Thank you. I think you just answered one of my questions. The other one was I think there was you know, more price discounting activity from yourselves and other builders in the fourth quarter, but you feel like that's mainly a 2025 thing and that the type of incentives that are now in 2026 has gone back to primarily, you know, rate buy downs and that type of thing, closing costs.

Yeah. I think that will continue to be part of the mix, Alex, as we've said. We continue to personalize our incentives by consumer. You know, when you're dealing with the resort lifestyle, honestly, for them, it's not as much about mortgage buy downs as it is maybe a credit in the design center as they customize their home. I think the competitive market will help guide us there, but once again, I think we're gonna try to hold the line. Certainly, we have some quality assets and large master plans where we're gonna be very careful about the inventory we leak in to make sure that we can protect the values.

How are you guys thinking in terms of specs per community or spec starts? You know, I know there's different price points that you guys are working with, but maybe, like, especially at the entry level, how are you guys thinking about what's the ideal number of specs for your strategy?

Yeah, Alex. We have what I would call a spec management kind of program that we kind of follow. It's a subdivision-by-subdivision or community-by-community kind of basis analysis. In entry-level communities or multifamily communities, we'll tend to have maybe a little bit higher spec counts in those communities. And then as we work our way up the consumer segmentation kind of profile, to the move up and resort lifestyle, we'll have fewer specs that we'll have in the program. But at the end of the day, it all comes down to it's a community by community analysis and what, you know, what the demand is. And so we're looking at those all on an individual basis.

Got it. Okay. Best of luck, guys. Thank you.

There are no further questions at this time. I will now turn the call back to Sheryl Palmer, CEO and Chairman, for closing remarks. Please go ahead.

Well, thank you very much for joining us today where we had the opportunity to share our 2025 results, and we look forward to talking to you at the end of the first quarter. Take care.

This concludes today's call. Thank you.