Biggest US homebuilder misses estimates, sees fewer closings
D.R. Horton Inc., the biggest US homebuilder, reported earnings that missed analyst estimates and said it expects to keep offering more discounts than usual to entice sluggish buyers.
Processing Content
The company reported earnings per share of $2.67 in the fourth quarter, below the average analyst estimate of $3.02 compiled by Bloomberg.
D.R. Horton now expects to close fewer home sales in the coming fiscal year, forecasting as few as 79,000 closings in 2027 compared to about 84,000 this year. Rising rates, affordability constraints and cautious consumer sentiment pressured demand in the quarter, Executive Chairman David Auld said in a statement.
READ MORE:
“There’s just a lot of noise today out there,” Chief Executive Officer Paul Romanowski said in a call with analysts Thursday. “It would be nice to go through a spring without an additional shock or something coming out there so that people can settle down” and buy homes, he said.
D.R. Horton focuses on entry-level buyers sensitive to borrowing cost changes. Romanowski said expecting rates to fall is “imprudent,” but added that greater geopolitical stability, lower gas prices and stronger consumer confidence could help the housing market.
In the meantime, homebuilders are using a variety of discounts or sweeteners to help sell houses when demand weakens. The so-called incentives — things like providing below-market mortgage rates and reducing closing costs — cut into profit margins. More than half of builders reported using sales incentives in October, according to the National Association of Home Builders.
READ MORE:
D.R. Horton said it expects its use of incentives to remain higher into the new fiscal year.
The company’s shares rose as much as 2.2% in New York trading Thursday.
