The nation’s largest builder, D.R. Horton, reported today and its sales results didn’t disappoint. Horton said its homes closed increased 33% and its orders jumped 30%. With this growth, the builder posted $230.1 million in pretax income and revenue growth of 38%.
Much of that growth of was driven by its luxury Emerald brand, which doubled its homes sold, and its entry-level Express Communities, which saw three times the amount of homes sold.
“There seems to be a lot of talk about the lack of first-time home buyer coming into the market,” CEO David Auld said on the company’s earnings call. “That’s certainly not something we’re seeing, where we have been able to get product on the ground we have found buyers.”
Horton’s East, Southeast, Midwest, South Central, West and Southwest rose 40%, 36%, 35%, 33%, 13% and 1%, respectively, according to J.P Morgan. On the call, the company mentioned Houston saw 33% growth, which shows energy prices aren’t having a full effect yet.
Even with its entry-level brand driving more sales, Horton’s average price rose 4% to $281,300. The company said a 3% increase in average home size accounted for the price growth.
“Overall, we were impressed with F2Q results and believe they reflect DR Horton's ability to execute on its broadened product range across price points, leaving it well positioned as we go through the selling season,” said Susan Maklari, director and lead analyst for building and building products at UBS Securities, in a research note.
Analysts have been focused on gross margins this earnings season and Horton’s came in roughly in line with expectations at 19.7%.
Maklari likes the outlook for Horton, which saw its unit backlog rise 21% year over year. “We believe Horton's ability to substantially outgrow the market is a function of its focus on entry-level buyers with its Express series, as there's less competition among builders there, and spec construction, which allows it to better compete with existing homes,” she said in the note.
On the its earnings call today, CEO David Auld is optimistic for the remainder of the year, as well. “We had a great first half of 2015 and expect the second half to be even better, with a sales backlog of 12,177 homes at March 31, and a well-stocked supply of land, lots, and homes,” he said.