D.R. Horton, Inc.
DHI · NYSE
Next quarter
Reports Oct 29, 2026, before the open.
Consensus is $3.06 EPS for Sep 2026 across 17 estimates, ranging $2.80 to $3.32.
DHI Jun 2026
- 7.02%
- -0.70%
- $2.99
- $3.20
- —
- $9.23B
Reported results
- $9.23B
- 23.26%
- $904.90M
- $3.20
Highlights
- Earnings beat: Fiscal third-quarter diluted EPS was $3.20, 7.0% above the $2.99 consensus, while net income attributable to D.R. Horton was $904.9 million, down 12% year over year.
- Stable revenue, lower profitability: Consolidated revenue was $9.23 billion, essentially flat year over year and up from $7.56 billion in the second quarter; pre-tax income fell 10% to $1.23 billion and the pre-tax margin declined to 13.3% from 14.7%.
- Home closings grew: Homebuilding closed 23,983 homes, up 4% year over year and at the high end of guidance, while home sales revenue increased 1% to $8.68 billion.
- Affordability pressured margins: Home sales gross margin fell to 20.7% from 21.8%, as average closing price declined 2% to $362,000 and incentives, including mortgage-rate buydowns, remained elevated.
- Orders were flat but backlog improved: Net orders were 23,084 homes worth $8.44 billion, essentially unchanged from a year earlier; ending backlog rose 14% to 15,983 homes worth $6.18 billion, while the cancellation rate increased to 20% from 17%.
- Inventory expanded: Homes in inventory rose to 38,000 from 29,600 at September 30, 2025, including 23,300 unsold homes and 7,600 completed homes; total homebuilding inventory increased to $21.3 billion from $20.3 billion.
- Guidance reset for fiscal 2026: D.R. Horton now expects consolidated revenue of $32.5 billion-$33.0 billion and 83,800-84,300 homebuilding closings, while reiterating at least $3.0 billion of operating cash flow and approximately $2.5 billion of share repurchases.
- Capital returns remained substantial: The company repurchased 4.2 million shares for $615.7 million and paid $127.1 million of dividends in the quarter; nine-month repurchases totaled $2.2 billion and shares outstanding were down 6% year over year.
Analysis
D.R. Horton’s fiscal third quarter was a modest earnings beat against a softer operating backdrop. Diluted EPS of $3.20 exceeded the $2.99 consensus by 7.0%, but declined 5% from $3.36 a year ago as net income fell 12% to $904.9 million. Revenue of $9.23 billion was essentially unchanged year over year and increased 22% sequentially from $7.56 billion in the second quarter, while EPS rose 43% from $2.24. The sequential improvement reflects the company’s seasonal closing pattern rather than a clear change in demand conditions.
The central feature of the print was volume holding up while affordability costs increased. Home closings rose 4% to 23,983 and orders were broadly flat at 23,084, but the cancellation rate rose to 20% from 17%, the average closing price fell 2% to $362,000 and home sales gross margin contracted 110 basis points to 20.7%. D.R. Horton is carrying more inventory and expects incentives to remain elevated through the rest of fiscal 2026 and into fiscal 2027. The company updated full-year revenue and closing guidance, while maintaining its cash-flow and capital-return targets. Forestar was a relative bright spot, with pre-tax income up 12% to $48.7 million, whereas rental and financial services pre-tax income declined 43% and 14%, respectively.
Core homebuilding demand
Homebuilding delivered more closings but not stronger pricing. Revenue increased 1% to $8.7 billion as closings rose 4% to 23,983, offset by a 2% decline in average closing price to $362,000. Net orders were 23,084 homes valued at $8.44 billion, essentially unchanged from the prior-year quarter. The 20% cancellation rate, versus 17% a year earlier, underscores the effect of affordability constraints and cautious consumers.
- Backlog: Ending backlog increased 14% to 15,983 homes and 16% to $6.18 billion, with the North and Southwest showing the strongest year-over-year gains in backlog value.
- Regional mix: North closings increased 7% and East closings increased 5%, while Northwest closings declined 2%; North orders rose 11% and Northwest orders fell 9%.
- Demand response: Management expects sales incentives to remain elevated during the fourth quarter and into fiscal 2027, with pricing and incentives adjusted by community according to mortgage rates and local demand.
Margin and inventory pressure
The quarter’s earnings decline was primarily a margin story. Homebuilding pre-tax income fell 10% to $1.07 billion and the segment margin declined to 12.3% from 13.8%. Home sales gross margin narrowed to 20.7% from 21.8% as home costs increased while average selling prices declined; homebuilding SG&A also rose to 8.3% of revenue from 7.8%.
- Inventory: Homebuilding inventory reached $21.3 billion, up from $20.3 billion at September 30, 2025, while homes in inventory rose to 38,000 from 29,600.
- Unsold homes: Of 23,300 unsold homes, 7,600 were completed, including 600 completed for more than six months. This compares with 9,300 completed unsold homes at fiscal year-end.
- Land discipline: D.R. Horton owned 126,600 lots and controlled another 441,900 through purchase contracts; 78% of owned and controlled lots were under contract, up from 75% at September 30, 2025.
- Charges: Third-quarter inventory impairment charges were $3.7 million and land-contract write-offs were $18.2 million, versus $15.9 million and $38.3 million, respectively, a year earlier.
Fiscal 2026 outlook
After nine-month revenue of $23.7 billion, down 4% year over year, D.R. Horton updated its full-year fiscal 2026 outlook to reflect current market conditions. The company is preserving its cash-generation and shareholder-return objectives despite the lower-margin environment.
- Updated guidance: Consolidated revenue is expected at $32.5 billion-$33.0 billion, with 83,800-84,300 homebuilding closings and an approximately 25.0% tax rate.
- Maintained targets: Operating cash flow is expected to be at least $3.0 billion, share repurchases approximately $2.5 billion and dividend payments approximately $500 million.
- Year-to-date performance: Nine-month diluted EPS was $7.45, down 13% year over year; net income was $2.15 billion, down 20%, and operating cash flow was $880.8 million versus $949.1 million.
Forestar and other segments
Forestar provided a partial offset to weaker homebuilding profitability, while rental and financial services results declined. Forestar’s revenue rose 4% to $407.0 million and pre-tax income increased 12% to $48.7 million, supported by 3,659 lots sold, including 3,370 to D.R. Horton. Forestar’s 12.0% margin improved from 11.2%.
- Rental: Revenue fell 30% to $266.1 million and pre-tax income fell 43% to $31.0 million, primarily because single-family rental closings declined 44% to 601 homes.
- Financial services: Revenue declined 3% to $220.7 million and pre-tax income fell 14% to $70.3 million. DHI Mortgage’s share of D.R. Horton homebuyers increased to 82% from 81%, but mortgage gain-on-sale revenue fell 7% to $142.1 million.
- Nine-month mix: Forestar pre-tax income rose 7% to $113.4 million, while rental pre-tax income fell 51% to $43.5 million and financial services pre-tax income fell 11% to $180.0 million.
Liquidity and capital returns
D.R. Horton continued to return substantial capital while carrying more debt and inventory. Total liquidity was $6.1 billion at quarter end, debt to total capital was 23.0% versus 19.8% at September 30, 2025, and cash provided by operations for the first nine months was $880.8 million.
- Repurchases: The company bought back 4.2 million shares for $615.7 million in the quarter and 14.6 million shares for $2.2 billion year to date; $1.1 billion remained under the authorization.
- Dividends: Quarterly dividends were $127.1 million, and the company declared another $0.45-per-share dividend payable in August.
- Debt: Notes payable totaled $7.1 billion, including $600 million of homebuilding senior notes due in October 2026; the company reported compliance with its debt covenants.
- Balance-sheet value: Book value per share increased 5% year over year to $84.85 despite the decline in reported earnings.
