Weekly Real Estate News
Summary
D.R. Horton's fiscal fourth-quarter net home orders declined 7% to 18,619, while cancellations rose to 23%. Closings fell 2% to 22,915 and net income dropped 18% to $741.8 million. The builder expects fiscal 2027 consolidated revenue of $30 billion to $32 billion and 79,000 to 84,000 closings, with elevated incentives likely to continue.
D.R. Horton ended its fiscal year with a sharper slowdown in new orders and more canceled contracts, a combination that shows how quickly higher borrowing costs can interrupt the market for newly built homes even when the country’s largest builder is still closing tens of thousands of sales.
The Arlington, Texas-based company reported Thursday that buyers signed contracts for 18,619 homes in the three months ended September 30, down 7% from a year earlier. The cancellation rate rose to 23% from 20%, according to D.R. Horton’s fiscal fourth-quarter earnings release. Net orders declined 9% in dollar value to $6.6 billion, a steeper fall than the decline in contracts.
Home closings fell 2% to 22,915. Revenue from home sales was $8.4 billion, also down 2%. Net income attributable to the company dropped 18% to $741.8 million, or $2.67 per diluted share, while consolidated revenue came to approximately $9.4 billion.
The builder’s initial outlook for fiscal 2027 calls for 79,000 to 84,000 home closings and $30 billion to $32 billion in consolidated revenue. That compares with 84,202 homes closed and $33.0 billion in consolidated revenue during fiscal 2026. The forecast is a management projection, not an order book or completed transaction.
Executive Chairman David Auld attributed the tougher quarter to rising mortgage rates, affordability constraints and cautious consumer sentiment. He said the company adjusted prices, incentives and construction starts market by market, and expects incentives to remain elevated in fiscal 2027. The company did not provide a single national incentive amount in its headline release; offers vary by community and buyer.
Inventory underscores the balancing act. Horton finished September with 28,200 homes in inventory, including 17,700 unsold units. Of those unsold homes, 8,800 were already complete, including 600 that had been finished for more than six months. Finished inventory gives builders something to sell quickly, but also increases the carrying costs and pressure to negotiate when demand slows.
There is a wider housing-market context. Government data reported by WRE News earlier this week showed an 8.4-month supply of new homes at September’s sales pace. The figures measure different things: the Census report covers the national new-home market, while Horton’s results reflect its own operations and fiscal calendar.
Horton’s rental segment also recorded $91.4 million of inventory impairment charges tied to nine multifamily rental projects. The rental operation posted a $25.3 million pretax loss for the quarter despite selling 509 single-family rentals and 2,182 multifamily units. The write-downs are an accounting recognition of reduced carrying values, not evidence that the projects were sold at those losses.
For the full year, the company generated $3.5 billion of operating cash flow and repurchased $3.6 billion of stock. It increased its quarterly dividend to 50 cents a share. Those capital returns coexist with the weaker order trend; they do not change the outlook for the next selling season.
Attention now turns to whether spring demand recovers enough to absorb completed homes without still larger incentives. Management’s 2027 guidance leaves room for a decline in closings, and the cancellation rate offers an early warning of how prospective buyers are responding to monthly payments.
