According to the Dallas Morning News, home builder D.R. Horton is reporting a 13% gain in house closings in the latest quarter, which extends a streak of double-digit gains that started in 2012. The Arlington, Texas builder is expected to close nearly 57,000 homes this fiscal year which would eclipse it's all time high notched in 2006, just before the housing crash. The firm's market value is now over $17 billion, up from $2.9 billion eight years ago.
One key to its run: Horton has ramped up construction of lower-priced homes, appealing to first-time buyers and empty-nesters looking for more affordable options. In the quarter ended in June, Horton closed almost 11,000 homes — over two-thirds of its total — for $300,000 or less. For the same period four years ago, Horton had about 6,700 closings below that price.
Business was so strong that Horton cut back on sales incentives, helping profit margins. In addition to an 11% gain in revenue, Horton had a 5% increase in profits and margins of over 20% on home sales. On a conference call, an analyst asked whether the company or the housing market deserved credit for the results.
“I would say it’s more Horton than the market,” said CEO David Auld. “But I’m probably slightly biased.”
In 2014, Horton launched a new brand, Express Homes, to focus on lower-priced buyers. Those homes also attracted seniors who wanted to downsize, so two years later, Horton created Freedom Homes to appeal to aging baby boomers.
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