Taylor Morrison Home Corporation (NYSE:TMHC) Q4 2018 Earnings Conference Call Transcript
Feb 13, 2019 • 08:30 am ET
Good morning, and welcome to Taylor Morrison's Fourth Quarter 2018 Earnings Conference Call. 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 Mr. Jason Lenderman, Vice President, Investor Relations and Treasury.
Thank you, and welcome everyone to Taylor Morrison's fourth quarter 2018 earnings conference call. With me today are Sheryl Palmer, Chairman and Chief Executive Officer; and Dave Cone, Executive Vice President and Chief Financial Officer. Sheryl will begin the call with an overview of our business performance and our strategic priorities. Dave will take you through a financial review of our results along with our guidance. Then Sheryl will conclude with the outlook for the business, after which we'll be happy to take your questions.
Before I turn the call over to Sheryl, let me remind you that today's call, including the question-and-answer session, includes forward-looking statements that are subject to the Safe Harbor statement for forward-looking information that you will find in today's news release. 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 factors identified in the release and in our filings with the Securities and Exchange Commission, and we do not undertake any obligation to update our forward-looking statements.
Now, let me turn the call over to Sheryl Palmer.
Thank you, Jason. Good morning, everyone, and thanks for joining us. I'll start today by discussing the current market environment and the beginning of 2019, because I know that's top of mind for most. Then I'll discuss 2018 and how we finished the year, followed by an update on our integration of AV Homes.
We continue to believe that the current new home sales environment has been best described as a break in momentum as the industry finds its new normal. The conditions the industry experienced during the back half of 2018 in regard to interest rates, affordability, and the resulting press coverage, led many potential buyers that had been in the market to take a wait-and-see approach. This coincides with what we felt, as well with reduced traffic, but the more significant impact appear to be a lack of urgency.
The ambivalence felt by customers was reflected in our conversions and further emphasized when considering the conversations on the sales floor versus the overall credit quality of our customers. Affordability issues have been less of an issue for us across most communities, but instead a more hesitant and curious consumer given the competitive discounts seen in the marketplace.
As we have shared for the last many quarters, our customers continue to have room with what they can afford based on mortgage underwriting. Our average conventional buyer is still able to absorb a rate increase of more than 500 basis points, and our average FHA buyer