Question-and-Answer Session
Operator
(Operator Instructions) The first question comes from the line of Analyst for Michael Rehaut – JPMorgan.
Analyst for Michael Rehaut - JPMorgan
A question on the gross margins. Given you have likely impaired your land down to appropriate levels and given where your backlog is today what should we be expecting for margins for the foreseeable future? Kind of stable around this 18% level or are you thinking about down sequentially?
Chris Anderson
I think as we have said when you back out some of these other adjustments you can see the volatility from last year’s Q2 to this year and even a bounce that we had in Q1. It is a little hard for us to predict exactly what is going to happen going forward. I think the one message that we would reiterate is what we have done with our inventory. As we have reduced the amount of finished, unsold inventory and as we shift to see a higher mix of unsold inventory that will hold at drywall or dirt sales then if that should have a positive effect for us on our mix.
Analyst for Michael Rehaut - JPMorgan
Nice job on the completed spec reduction. If you could give a break out of where that was geographically and then going forward, for your new strategy where are you targeting the new spec inventory? Is that kind of broad based or is that targeted in specific geographic locations?
Chris Anderson
I’m not sure we have provided a breakdown of that finished unit level inventory. We are down to 82 at June 30 which is a pretty minimal amount. When I think about going forward it is really across the board in all of our divisions. We are focused on unsold inventory that our buyers will be able to personalize and our dirt sales.
Analyst for Michael Rehaut - JPMorgan
Do you have a margin differential between those spec homes versus traditional build to order homes or is there pretty much no differential anymore?
Chris Anderson
No, we would say we are still seeing a difference I think I can’t remember if I said that or if Larry said that. We would expect to see a better margin performance in our unsold inventory that is held and allowed personalization versus our finished inventory.
Operator
The next question comes from the line of Joel [Locker] – No Company Listed.
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