LEN
#Sure.
Let me have <UNK> give an answer there.
Let me start and then have <UNK> and <UNK> weigh in, but as I said in my opening remarks, some of what you saw in our gross margin reflects some of the sluggishness that we saw towards the end of last year.
Remember that what we're selling two quarters ago, we're closing now, and as we went through the election season, as we went through some reconciliations in November, the market was a little bit slower than reported and we saw that bleed into December.
We went from kind of sluggish, to better, to strong ---+ in terms of sales.
So as you see things firm up, there's a little bit less incentives and a little bit more price.
Construction costs have been moving up at the same pace.
We feel pretty comfortable as we look at our numbers, as we look at our backlog right now, that our margin is coming back up.
<UNK>.
Yes, I guess the thing I'd say to add to that, <UNK>, is we're spot on with where we thought we would be for the quarter with regard to gross margins.
I think that the analyst community put too much margin in the first half of the year than in the back half of the year.
We are on the trajectory to get to where we guided to.
With regard to WCI, as <UNK> said, it'll have about a 20 to 30 basis point impact in Q2.
But given the fact that WCI had a low cost land position with high gross margins, it will not negatively impact margins for this year on an annualized basis.
Thank you.
I think some of that is driven by the impact of still, a little bit of sluggishness in Houston, but with regard to Houston, we have seen a pick up.
We are starting to see a little of an increase in rig count and we still have a divergence in sales pace between the higher priced and the lower priced ones.
So, Houston was a little soft, but it looks like it's, the picture is getting a little brighter there as we move through the year.
Good morning, Mike.
Okay, so, I'm not really sure where you get your 7%, but let's put that aside and let's understand where my commentary comes from.
Remember that when we are looking at our monthly year-over-year, we're looking at comparison to last year.
So, let's take seasonality out of the equation because we're looking at December to December, January to January, February to February, so the seasonality is injected at both sides.
And what we were seeing in terms of the numbers is a slower and lower comparison in December, a comparable comparison in January, and a substantially higher comparison in February.
So that's the numerical side of the commentary.
But the empirical side is what I look to dovetail with the number side, as I think about these things and I try to think about them in realtime and balance what we're hearing at the front line in the field from our customers and measure that up against what we're seeing in the numbers.
And so the commentary really derives from the kind of traffic patterns, the questions that people are talking about, and the kinds of people that are showing up.
What we are starting to see ---+ I think in my commentary I noted that the millennials are doubled up at about a 60% rate living at home with parents, relatives or roommates.
It's at 115 year high as reported in USA Today.
I don't know if that's exactly the right number, but it is directionally interesting and we're starting to see some of that cohort start to come out to our sale centers and talk about the fact that rental rates are high, rental rates have been moving, rental rates create some instability.
It's time to start thinking about buying a home, 30-year mortgage, fixing the monthly payment and looking at the possibilities and benefits of actual ownership, dovetailing that with the banks talking about coming back to market.
These are the components that kind of make up my sense that there's something afoot in the market that's broader than just one month in a row positive comparison.
So that's kind of where it comes from, Mike.
Well, what I would say, Mike, is that, as we go through the purchases accounting exercise, we look at all the various assets and the assets will be, let's just to use an estimate, be somewhere close to the margins that we get within that marketplace where the assets are.
So as we're performing at a certain level, we would expect the assets in that same market to be somewhere close.
So, the real purchase accounting impact is really in the second quarter as we write up backlog and then as you get beyond the second quarter, for the most part, the integration costs, the write up of backlog is all behind us, we expect.
And then for the second half of the year and beyond, you get back to more normal type of margins that we would expect in that market place and that's probably the best way to think about it.
They are just a little bit ahead of the Company average.
Let's take our last question now.
Yes, this is <UNK>.
We haven't really given any 2018 guidance, but you could expect from my comments earlier that we will get SG&A leverage, you will see a benefit to some gross margin because of lower costs and operating efficiencies, and as we move into the tail end of this year, we'll give guidance for 2018.
I could take that.
We have a little static in the background, but, <UNK>, titles, first quarter is typically the lowest quarter of the year, so that increase is on a very low base and, essentially, we just had some additional pricing in terms of the average sales price of the transactions we had during the quarter were higher on the same overhead base, so we got additional leverage.
So, percentage wise, it looked really good, but nominally, it was really just a small increase.
Okay, so with that, let me say thank you to everybody for joining us.
We feel really good about how our Company is positioned and how the year is starting to shape up.
We think that the overall environment is strong and we look forward to reporting back to you as we go through the rest of the year.
Thank you.
