Landsea Homes Corporation (NASDAQ:LSEA) Q3 2023 Earnings Call Transcript

Chris Porter : No, I think that that is primarily related to the mortgage incentives that I was mentioning earlier and just incentives in general to continue to push that demand through. If you look at kind of our base business year-over-year, ASPs were up 4%. If you exclude New York and Texas, which didn’t delivered in this quarter. And so I think that that shows some pricing within the portfolio, but I think margin-wise, a lot of it is just based around the incentives.

Jay McCanless: Okay. Got it. That’s it for me. I’ll get back in queue. Thank you.

Operator: The next question comes from Alex Rygiel with B. Riley. Please go ahead.

Alex Rygiel: Thank you. Good morning, gentlemen. Very nice quarter. Could you talk a bit about how you’re helping your buyers signed lower mortgages?

John Ho: Yeah, Chris, do you want to?

Chris Porter : Yeah, sure. Yeah. Alex, as you know, we’ve got a partnership with NFM mortgage to brand under Landsea Mortgage. So we have the tagline Landsea Mortgage Powered by NFM and they have access to all of our buyers. And we work with them on just creating the mortgage programs and also doing mortgage incentives through theirs. So, we’ll do either the buydowns and primarily it’s 30 year fixed is what we’re seeing out there. We still haven’t seen a lot of movement on the variable rate or the 15 year. And, but primarily it’s all around a 30 year that we’re able to – as everybody buy in bulk. And then use that as an incentive towards closing costs and towards the mortgage. And so, that’s primarily what we’re doing is using our mortgage companies.

Alex Rygiel: And then, can you talk a bit about, if you are seeing any opportunities to raise these prices, and then give us a quick update on sort of the trends in October relative to September?

Mike Forsum: Sure. Alex this is Mike. I’ll jump on that one. We are actually, in some cases raising prices not aggressively, but I think that we are doing it thoughtfully, prudently, where and when we can. So that one we are locking in our backlog, because they feel like they are at a community that’s doing well. We are seeing that in places in Florida, as well as Arizona and in Southern California. That seems to be our strongest markets right now and we’re able to do that. In further note, I think what we’re really at a point right now, Alex is that, it’s really a business of monthly payment as opposed to absolutely price. And so the toggling to keep absorptions up are really around what Chris was talking about the ability to buydown mortgage interest rates such that the monthly payments is more affordable against the backdrop with the credit or the homeowners’ ability qualify.

There does not seem to be a real hesitation resistance out there in terms of absolute pricing from our buyer profile that’s coming through. Just making sure that they know that they’re comfortable that they have a monthly payment that they can afford and beagain comfortable with.

Alex Rygiel: Thank you.

Operator: Next question, comes with Carl Reichardt with BTIG. Please go ahead.

Carl Reichardt: Okay. Thanks again, guys. So as your mix is changing here in over time, do you, Mike, have sort of a normalized sort of absorption rate per month that you think the company should be targeting overall? And I asked that just because I know the mix moves around quite a bit and at the entry level you’d be trying to target, say one week or a month higher end. It’s going to be more like three. So I’m just trying to get a sense of in your head, roughly what you think a normalized absorption pace it could be the company as it’s currently constituted?