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D.R. Horton's Q4 Earnings Miss on Weak Housing Demand, Sales Beat
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Key Takeaways
D.R. Horton's Q4 earnings fell 12.2% to $2.67 per share, while revenues beat estimates at $9.37 billion.
DHI's net sales orders fell 7%, as affordability concerns and rising mortgage rates weighed on buyer demand.
DHI projects fiscal 2027 revenues of $30-$32 billion, with elevated sales incentives expected to persist.
D.R. Horton, Inc. (DHI - Free Report) reported mixed fourth-quarter fiscal 2026 results, with earnings missing the Zacks Consensus Estimate but revenues surpassing the same. Results reflected persistent housing affordability challenges, elevated sales incentives, softer homebuyer demand and inventory impairment charges in the rental business.
Rising mortgage rates and cautious consumer sentiment pressured new home orders, while lower homebuilding profitability and rental-related charges weighed on overall earnings.
Shares of this homebuilder lost almost 3% following its earnings release.
D.R. Horton, Inc. Price, Consensus and EPS Surprise
D.R. Horton reported earnings of $2.67 per share for the fourth quarter of fiscal 2026, missing the Zacks Consensus Estimate of $3.03 by 11.9%. The bottom line declined 12.2% from $3.04 in the year-ago quarter.
Consolidated revenues (Homebuilding, Forestar, Rental and Financial Services) totaled $9.37 billion, exceeding the consensus estimate of $9.04 billion by 3.6%. However, revenues declined 3.2% from $9.68 billion reported a year ago.
Net income attributable to D.R. Horton decreased 18.1% year over year to $741.8 million from $905.3 million. Consolidated pre-tax income declined 15.8% to $1.01 billion from $1.20 billion, while the pre-tax profit margin contracted to 10.8% from approximately 12.4% a year ago.
Results included $91.4 million of inventory impairment charges related to nine multifamily rental projects.
D.R. Horton's Homebuilding Business Faces Demand Pressure
Homebuilding revenues declined 2% year over year to approximately $8.4 billion, while home closings decreased 2% to 22,915 units. Home sales revenues totaled $8.38 billion compared with $8.54 billion in the prior-year quarter.
Homebuilding pre-tax income fell 11% year over year to $891 million from approximately $1 billion, while the pre-tax profit margin contracted to 10.6% from approximately 11.7% a year ago. The home sales gross margin contracted 50 basis points (bps) year over year to 19.5% from 20%, reflecting continued pressure on profitability amid challenging housing market conditions.
Net sales orders decreased 7% year over year to 18,619 homes, while their dollar value declined 9% to $6.6 billion. The cancellation rate increased to 23% from 20% a year ago, highlighting persistent affordability constraints and cautious buyer sentiment.
Average active selling communities increased 10% year over year, suggesting that expanded community availability was insufficient to offset softer demand.
At fiscal year-end, D.R. Horton had 28,200 homes in inventory, including 17,700 unsold homes. Of these, 8,800 were completed, including 600 that had remained completed for more than six months.
DHI's Non-Homebuilding Segments Show Mixed Performance
The Rental segment generated revenues of $647.1 million but recorded a pre-tax loss of $25.3 million, including $91.4 million of inventory impairment charges. The business sold 509 single-family rental homes for $134.3 million and 2,182 multifamily rental units for $512.8 million.
Forestar generated revenues of $580.8 million from the sale of 5,004 residential lots. The segment reported pre-tax income of $78.6 million, translating into a pre-tax profit margin of 13.5%.
The Financial Services segment contributed $219.2 million in revenues and $78.2 million in pre-tax income, achieving a pre-tax profit margin of 35.7%. The segment continued to support D.R. Horton's integrated homebuilding business through mortgage financing and related services.
D.R. Horton reported earnings per share of $10.11 for fiscal 2026, down 12.6% from $11.57 in fiscal 2025. Total revenues declined 3.5% year over year to $33.04 billion from $34.25 billion. Homebuilding deliveries decreased 0.8% to 84,202 homes from 84,863 homes a year ago. Meanwhile, the home sales gross margin contracted 130 basis points to 20.2% from 21.5%, reflecting continued pricing pressure and elevated sales incentives amid challenging housing market conditions.
D.R. Horton's Liquidity and Shareholder Returns
D.R. Horton ended fiscal 2026 with total liquidity of $7.2 billion and a debt-to-total capital ratio of 20.8%, highlighting its financial flexibility amid uncertain housing market conditions.
Cash and cash equivalents totaled $2.06 billion as of Sept. 30, 2026, compared with $2.99 billion a year ago. Total inventories were $25.07 billion compared with $25.29 billion at the end of fiscal 2025.
Cash provided by operating activities totaled $3.5 billion in fiscal 2026.
During the fiscal fourth quarter, the company repurchased 9.4 million shares for $1.4 billion and paid $125 million in cash dividends. For fiscal 2026, total repurchases amounted to $3.6 billion, while dividend payments totaled $513.3 million.
Shares outstanding declined 8% year over year to 271.4 million. The company had $4.7 billion remaining under its share repurchase authorization as of Sept. 30, 2026.
D.R. Horton also increased its quarterly dividend by 11% to 50 cents per share, payable on Nov. 19, 2026, to shareholders of record as of Nov. 12.
DHI Provides Fiscal 2027 Guidance
D.R. Horton expects consolidated revenues of $30-$32 billion for fiscal 2027, implying a decline of approximately 3.2%-9.2% from fiscal 2026 revenues of $33.04 billion.
Homebuilding closings are projected to be between 79,000 and 84,000 homes compared with 84,202 homes closed during fiscal 2026.
Management anticipates an income tax rate of approximately 25.5% and operating cash flow of around $3.5 billion.
The company also expects to repurchase approximately $3 billion worth of shares and distribute about $500 million in dividends during fiscal 2027.
Management cautioned that housing market conditions became more challenging during the fourth quarter, with rising mortgage rates, affordability constraints and subdued consumer confidence pressuring demand. Consequently, sales incentives are expected to remain elevated throughout fiscal 2027, depending on market conditions.
Despite these challenges, D.R. Horton remains focused on adjusting pricing, incentives and construction starts across individual communities to balance inventory levels with demand, while leveraging its national scale, liquidity and disciplined capital allocation strategy to protect long-term profitability.
DHI’s Zacks Rank & Recent Homebuilding Releases
D.R. Horton currently carries a Zacks Rank #4 (Sell).
PulteGroup, Inc. (PHM - Free Report) reported weaker-than-expected third-quarter 2026 results, with quarterly earnings of $2.53 per share missing the Zacks Consensus Estimate of $2.63 by 3.8%. Earnings fell from $2.96 per share in the prior-year quarter. Total revenues (Homebuilding & Financial Services) of $3.97 billion lagged the consensus mark of $4.13 billion by 3.9% and decreased 9.8% from $4.40 billion in the year-ago period.
PulteGroup ended the quarter with a backlog of 10,298 homes, up 4.1% year over year. Management emphasized its strategy of balancing home pricing and sales pace while aligning production with demand conditions. Move-up and active-adult buyers accounted for more than 60% of the company's business, supporting its focus on maintaining profitability amid housing-market challenges.
KB Home (KBH - Free Report) reported third-quarter fiscal 2026 earnings of $1.05 per share, beating the Zacks Consensus Estimate of 88 cents by 19.3%. Earnings declined 34.8% from $1.61 per share in the year-ago quarter.
KBH’s total revenues of $1.30 billion surpassed the consensus mark of $1.29 billion by 0.4% but dropped 20% year over year. Results reflected lower deliveries and continued pricing pressure, partly offset by progress in the company’s Built to Order model. BTO homes represented 74% of deliveries, supporting sequential improvement in housing gross margin.
Lennar Corporation (LEN - Free Report) reported weaker-than-expected third-quarter fiscal 2026 (ended Aug. 31) results. Adjusted earnings of $1.23 per share missed the Zacks Consensus Estimate of $1.29 by 4.7% and fell 38.5% from $2.00 per share a year ago.
Lennar’s total revenues of $8.05 billion missed the consensus estimate of $8.33 billion by 3.4% and declined 8.6% year over year. Lower deliveries and home prices weighed on results amid affordability pressure. Inventory turn stood at 2.4 times.
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D.R. Horton's Q4 Earnings Miss on Weak Housing Demand, Sales Beat
Key Takeaways
D.R. Horton, Inc. (DHI - Free Report) reported mixed fourth-quarter fiscal 2026 results, with earnings missing the Zacks Consensus Estimate but revenues surpassing the same. Results reflected persistent housing affordability challenges, elevated sales incentives, softer homebuyer demand and inventory impairment charges in the rental business.
Rising mortgage rates and cautious consumer sentiment pressured new home orders, while lower homebuilding profitability and rental-related charges weighed on overall earnings.
Shares of this homebuilder lost almost 3% following its earnings release.
D.R. Horton, Inc. Price, Consensus and EPS Surprise
D.R. Horton, Inc. price-consensus-eps-surprise-chart | D.R. Horton, Inc. Quote
DHI's Q4 Earnings & Revenue Discussion
D.R. Horton reported earnings of $2.67 per share for the fourth quarter of fiscal 2026, missing the Zacks Consensus Estimate of $3.03 by 11.9%. The bottom line declined 12.2% from $3.04 in the year-ago quarter.
Consolidated revenues (Homebuilding, Forestar, Rental and Financial Services) totaled $9.37 billion, exceeding the consensus estimate of $9.04 billion by 3.6%. However, revenues declined 3.2% from $9.68 billion reported a year ago.
Net income attributable to D.R. Horton decreased 18.1% year over year to $741.8 million from $905.3 million. Consolidated pre-tax income declined 15.8% to $1.01 billion from $1.20 billion, while the pre-tax profit margin contracted to 10.8% from approximately 12.4% a year ago.
Results included $91.4 million of inventory impairment charges related to nine multifamily rental projects.
D.R. Horton's Homebuilding Business Faces Demand Pressure
Homebuilding revenues declined 2% year over year to approximately $8.4 billion, while home closings decreased 2% to 22,915 units. Home sales revenues totaled $8.38 billion compared with $8.54 billion in the prior-year quarter.
Homebuilding pre-tax income fell 11% year over year to $891 million from approximately $1 billion, while the pre-tax profit margin contracted to 10.6% from approximately 11.7% a year ago. The home sales gross margin contracted 50 basis points (bps) year over year to 19.5% from 20%, reflecting continued pressure on profitability amid challenging housing market conditions.
Net sales orders decreased 7% year over year to 18,619 homes, while their dollar value declined 9% to $6.6 billion. The cancellation rate increased to 23% from 20% a year ago, highlighting persistent affordability constraints and cautious buyer sentiment.
Average active selling communities increased 10% year over year, suggesting that expanded community availability was insufficient to offset softer demand.
At fiscal year-end, D.R. Horton had 28,200 homes in inventory, including 17,700 unsold homes. Of these, 8,800 were completed, including 600 that had remained completed for more than six months.
DHI's Non-Homebuilding Segments Show Mixed Performance
The Rental segment generated revenues of $647.1 million but recorded a pre-tax loss of $25.3 million, including $91.4 million of inventory impairment charges. The business sold 509 single-family rental homes for $134.3 million and 2,182 multifamily rental units for $512.8 million.
Forestar generated revenues of $580.8 million from the sale of 5,004 residential lots. The segment reported pre-tax income of $78.6 million, translating into a pre-tax profit margin of 13.5%.
The Financial Services segment contributed $219.2 million in revenues and $78.2 million in pre-tax income, achieving a pre-tax profit margin of 35.7%. The segment continued to support D.R. Horton's integrated homebuilding business through mortgage financing and related services.
DHI's Fiscal 2026 Performance Reflects Housing Market Weakness
D.R. Horton reported earnings per share of $10.11 for fiscal 2026, down 12.6% from $11.57 in fiscal 2025. Total revenues declined 3.5% year over year to $33.04 billion from $34.25 billion. Homebuilding deliveries decreased 0.8% to 84,202 homes from 84,863 homes a year ago. Meanwhile, the home sales gross margin contracted 130 basis points to 20.2% from 21.5%, reflecting continued pricing pressure and elevated sales incentives amid challenging housing market conditions.
D.R. Horton's Liquidity and Shareholder Returns
D.R. Horton ended fiscal 2026 with total liquidity of $7.2 billion and a debt-to-total capital ratio of 20.8%, highlighting its financial flexibility amid uncertain housing market conditions.
Cash and cash equivalents totaled $2.06 billion as of Sept. 30, 2026, compared with $2.99 billion a year ago. Total inventories were $25.07 billion compared with $25.29 billion at the end of fiscal 2025.
Cash provided by operating activities totaled $3.5 billion in fiscal 2026.
During the fiscal fourth quarter, the company repurchased 9.4 million shares for $1.4 billion and paid $125 million in cash dividends. For fiscal 2026, total repurchases amounted to $3.6 billion, while dividend payments totaled $513.3 million.
Shares outstanding declined 8% year over year to 271.4 million. The company had $4.7 billion remaining under its share repurchase authorization as of Sept. 30, 2026.
D.R. Horton also increased its quarterly dividend by 11% to 50 cents per share, payable on Nov. 19, 2026, to shareholders of record as of Nov. 12.
DHI Provides Fiscal 2027 Guidance
D.R. Horton expects consolidated revenues of $30-$32 billion for fiscal 2027, implying a decline of approximately 3.2%-9.2% from fiscal 2026 revenues of $33.04 billion.
Homebuilding closings are projected to be between 79,000 and 84,000 homes compared with 84,202 homes closed during fiscal 2026.
Management anticipates an income tax rate of approximately 25.5% and operating cash flow of around $3.5 billion.
The company also expects to repurchase approximately $3 billion worth of shares and distribute about $500 million in dividends during fiscal 2027.
Management cautioned that housing market conditions became more challenging during the fourth quarter, with rising mortgage rates, affordability constraints and subdued consumer confidence pressuring demand. Consequently, sales incentives are expected to remain elevated throughout fiscal 2027, depending on market conditions.
Despite these challenges, D.R. Horton remains focused on adjusting pricing, incentives and construction starts across individual communities to balance inventory levels with demand, while leveraging its national scale, liquidity and disciplined capital allocation strategy to protect long-term profitability.
DHI’s Zacks Rank & Recent Homebuilding Releases
D.R. Horton currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PulteGroup, Inc. (PHM - Free Report) reported weaker-than-expected third-quarter 2026 results, with quarterly earnings of $2.53 per share missing the Zacks Consensus Estimate of $2.63 by 3.8%. Earnings fell from $2.96 per share in the prior-year quarter. Total revenues (Homebuilding & Financial Services) of $3.97 billion lagged the consensus mark of $4.13 billion by 3.9% and decreased 9.8% from $4.40 billion in the year-ago period.
PulteGroup ended the quarter with a backlog of 10,298 homes, up 4.1% year over year. Management emphasized its strategy of balancing home pricing and sales pace while aligning production with demand conditions. Move-up and active-adult buyers accounted for more than 60% of the company's business, supporting its focus on maintaining profitability amid housing-market challenges.
KB Home (KBH - Free Report) reported third-quarter fiscal 2026 earnings of $1.05 per share, beating the Zacks Consensus Estimate of 88 cents by 19.3%. Earnings declined 34.8% from $1.61 per share in the year-ago quarter.
KBH’s total revenues of $1.30 billion surpassed the consensus mark of $1.29 billion by 0.4% but dropped 20% year over year. Results reflected lower deliveries and continued pricing pressure, partly offset by progress in the company’s Built to Order model. BTO homes represented 74% of deliveries, supporting sequential improvement in housing gross margin.
Lennar Corporation (LEN - Free Report) reported weaker-than-expected third-quarter fiscal 2026 (ended Aug. 31) results. Adjusted earnings of $1.23 per share missed the Zacks Consensus Estimate of $1.29 by 4.7% and fell 38.5% from $2.00 per share a year ago.
Lennar’s total revenues of $8.05 billion missed the consensus estimate of $8.33 billion by 3.4% and declined 8.6% year over year. Lower deliveries and home prices weighed on results amid affordability pressure. Inventory turn stood at 2.4 times.