America's Biggest Homebuilder Says Buyers Are Still on the Fence

Get D.R. Horton Alerts

Weekly insights + SMS alerts

D.R. Horton (D.R. Horton (DHI)), America's largest homebuilder by volume, reported fiscal third-quarter 2026 results on Tuesday that beat Wall Street's earnings expectations. But the company also lowered its full-year sales and home-closing guidance, signaling that affordability pressures and cautious buyers are still weighing on the housing market.

Net income attributable to the company fell 12% year over year to $904.9 million. Earnings came in at $3.20 per share, topping the analyst consensus estimate of $3.06. Revenue rose to $9.23 billion from a year earlier, also exceeding expectations of $9.18 billion. Consolidated pretax income totaled $1.2 billion, with a pretax profit margin of 13.3%.

Executive Chairman David Auld said affordability challenges and cautious consumer sentiment continue to pressure demand for new homes. He added that elevated sales incentives are expected to continue through the fourth quarter, with the level of incentives depending on demand trends, mortgage rates, and broader market conditions.

Homebuilding Margins Narrow

Homebuilding revenue edged up 1% from a year earlier to $8.7 billion as home closings increased 4% to 23,983 units. But pretax income from the homebuilding segment fell 10% to $1.1 billion, and the pretax margin narrowed to 12.3%.

Net sales orders were flat year over year at 23,084 homes valued at $8.4 billion. The cancellation rate rose to 20% from 17% in the prior-year quarter. At the end of the quarter, D.R. Horton had 38,000 homes in inventory, including 23,300 unsold homes. Of those, 7,600 were completed, including 600 that had been sitting completed for more than six months.

Rental, Forestar, and Financial Services Add Profit

The rental segment generated $266.1 million in revenue from the sale of 601 single-family rental homes and 339 multifamily units. Pretax income totaled $31.0 million, resulting in an 11.6% margin.

Forestar sold 3,659 lots during the quarter and generated $407.0 million in revenue and $48.7 million in pretax income, representing a 12.0% margin.

Financial services reported revenue of $220.7 million and pretax income of $70.3 million, producing a 31.9% margin.

Operating cash flow totaled $880.8 million for the first nine months of fiscal 2026. Total liquidity stood at $6.1 billion, including $2.08 billion in cash and cash equivalents.

During the quarter, the company repurchased 4.2 million shares for $615.7 million, bringing year-to-date buybacks to 14.6 million shares. It had $1.1 billion remaining under its share repurchase authorization and declared a quarterly dividend of 45 cents per share, payable Aug. 13 to shareholders of record as of Aug. 6.

Outlook Cut

D.R. Horton lowered its fiscal 2026 revenue outlook to $32.5 billion to $33.0 billion from its prior forecast of $33.5 billion to $34.5 billion. The new range is below the analyst consensus estimate of $33.66 billion.

The company also reduced its homebuilding closing forecast to 83,800 to 84,300 homes from its previous guidance of 86,000 to 87,500 homes.

D.R. Horton reaffirmed expectations for operating cash flow of at least $3.0 billion, approximately $2.5 billion in share repurchases, and about $500 million in dividend payments for fiscal 2026.