Despite grappling with inflation and elevated mortgage rates, Arlington-based D.R. Horton, the nation’s largest homebuilder, showcased remarkable resilience with a notable 14% year-over-year surge in sales orders. This growth is particularly noteworthy given the prevailing economic headwinds.
For the second fiscal quarter ending March 31, D.R. Horton reported a significant uptick in net sales orders, reaching 26,456 homes compared to 23,142 homes during the same period last year. This marks a substantial 46% increase from the 18,069 net sales reported in the previous quarter, signaling robust demand for new homes despite market challenges.
Brian Yarbrough, an analyst at Edward Jones, attributed D.R. Horton’s success to its effective execution and the prevailing lack of existing housing supply in the market. In regions like the Dallas-Fort Worth area, where there is only a three-month housing inventory according to March 2024 data, the demand for new homes far exceeds the available supply. However, Yarbrough cautioned about the sustainability of this trend, especially considering the historically low affordability levels, which could potentially dampen demand in the future.
Despite these challenges, D.R. Horton reported a robust profit of $1.2 billion for the quarter, representing a notable 24% increase from the previous year. Consolidated revenue for the quarter stood at $9.1 billion, reflecting the company’s strong financial performance amidst market volatility.
The first half of the fiscal year also saw impressive results for D.R. Horton, with a total of 44,525 net home sales orders, up from 36,524 reported sales during the same period last year. Profit for the first half amounted to $2.1 billion, an 11% increase from the previous year, underscoring the company’s sustained growth trajectory.
Buoyed by its strong performance, D.R. Horton raised its forecast for the fiscal year ending in September, anticipating consolidated revenues of $37.7 billion, up $1 billion from previous estimates. The company also expects to close on an additional 2,000 homes this fiscal year, further solidifying its market leadership position.
In response to rising mortgage rates, D.R. Horton, along with other builders, has implemented incentive programs such as rate buy-downs to assist buyers with affordability issues. Additionally, the company has adjusted the price and size of homes to mitigate the impact of higher mortgage rates, ensuring continued accessibility to homebuyers amid changing market conditions.
Looking ahead, D.R. Horton remains committed to offering buyer incentives at current levels, especially in light of continued rate instability. Despite the uncertain economic outlook, the company’s strong performance and strategic initiatives position it well to navigate challenges and capitalize on opportunities in the housing market, reaffirming its status as a key player in the industry.
