D.R. Horton Surpasses Expectations in Q1 Driven by New Home Demand
D.R. Horton (NYSE: DHI) exceeded Wall Street projections for both revenue and earnings in its fiscal first quarter, driven by heightened demand for new homes amid a shortage of existing inventory.
Despite rising mortgage rates, the construction giant reported a 5% increase in its share price during premarket trading. Homebuilders have capitalized on the scarcity of existing homes on the market, as homeowners who acquired properties during low-interest rate periods are hesitant to sell and purchase new homes in the current climate.
The limited supply of resale homes, which represent a substantial portion of U.S. housing sales, has fueled demand for newly constructed homes, despite the elevated borrowing costs and rising prices.
"Incentives such as mortgage rate buydowns have helped address affordability and stimulate demand," said David Auld, D.R. Horton's executive chairman. The company has also shifted its focus to selling smaller floor plans to meet customer demand.
As the largest U.S. homebuilder by sales, D.R. Horton closed sales on 19,059 homes in the first quarter, a slight decrease from the 19,340 homes sold in the same period last year. However, the company's pre-tax profit margin in its homebuilding segment remained strong at 14.1% for the quarter.
D.R. Horton's first-quarter revenue reached $7.61 billion, exceeding analysts' estimates of $7.08 billion. Earnings per share came in at $2.61, higher than the projected $2.36 per share.