D.R. Horton, continuing to benefit from constrained housing inventory at affordable price points, beat first-quarter Wall Street estimates while maintaining home closings year-over-year basis despite challenging operating conditions.
The largest home builder on the 2024 Builder 100 list generated profit of $844.9 million, or $2.61 per share, for the fiscal first quarter, ended Dec. 31, 2024, above market projections of $2.38 profits per share. D.R. Horton also delivered home building revenue of $7.2 billion on 19,059 closings in the period, down just slightly from revenues and closings of $7.3 billion and 19,340 in the same quarter of fiscal 2024.
“Although the level of new and existing home inventories has increased from historically low levels, the supply of homes at affordable price points is generally still limited, and demographic supporting housing demand remain favorable,” executive chairman David Auld said.
President and CEO Paul Romanowski said incentives such as mortgage rate buydowns have helped the home builder address affordability and spur demand despite challenging market conditions. D.R. Horton anticipates incentive costs will remain elevated in the fiscal second quarter through the spring selling season.
The builder said it has continued to start and sell more homes with smaller floor plans to aid with affordability and meet home buyer demand. D.R. Horton’s average closing price in the fiscal first quarter was $374,900, down 1% on a sequential basis from the fourth quarter of 2024 and roughly flat on a year-over-year basis.
Net sales orders for the first quarter decreased 1% year-over-year to 17,837 homes while D.R. Horton’s cancellation rate improved to 18% from 19% in the same period a year ago.
Given current market conditions, D.R. Horton is projecting home closings in the fiscal second quarter—which spans the traditional spring selling season—of between 20,000 and 20,500 homes and full fiscal 2025 closings between a range of 90,000 and 92,000 homes.
At the end of the fiscal first quarter, D.R. Horton had 11,003 homes in backlog, down from 13,965 homes at the end of the fiscal first quarter in 2024. The builder had 36,200 homes in inventory at quarter’s end after starting 17,900 homes in the three month period ending Dec. 31. Romanowski said cycle times improved by three weeks on a year-over-year basis in the first quarter.
The builder’s land and lot portfolio totaled 639,800 lots at the end of the quarter, of which 24% were owned and 76% were controlled through land and lot purchase contracts. Of homes closed during the first quarter, 65% were on lots developed by either a third party or Forestar, D.R. Horton’s residential lot development subsidiary.
“Our strong liquidity, low leverage, substantial cash flows, tenured operators, and national scale provide us with significant financial and operational flexibility,” Auld said. “We are well-positioned with our affordable product offerings and flexible lot supply, and we are focused on maximizing returns in each of our communities.”
