D.R. Horton, Inc. (NYSE:DHI) delivered a mixed fourth-quarter fiscal 2026 report on Thursday, and the headline numbers tell a familiar story: the homebuilder is selling houses, just not at the prices or margins it used to command. Earnings per share came in at $2.67, missing the $3.03 analyst estimate. Revenue of $9.371 billion, however, topped expectations of $8.988 billion.

The company faced weaker demand and declining sales prices amid high mortgage rates and affordability pressures, and management warned of continued margin pressure in fiscal 2027.

Home Sales and Demand Trends

Homebuilding revenue fell 2% year-over-year to $8.4 billion, while homes closed declined 2% to 22,915. The average closing price was $365,600, which is 27% below the U.S. new-home average in the fourth quarter. That discount is the company's way of keeping buyers engaged in a market where affordability is stretched.

Net sales orders decreased 7% year-over-year to 18,619 homes, while order value fell 9% to $6.6 billion. The average order price declined 2% to $356,600.

The cancellation rate rose to 23%, up from 20% a year earlier and also higher than the previous quarter. Active selling communities increased 10% year-over-year, meaning the company has more places to sell homes but is seeing fewer buyers commit.

Management cited high mortgage rates, affordability constraints and cautious consumer sentiment as factors weighing on demand.

Profitability and Cash Flow

Home sales gross margin fell 120 basis points sequentially to 19.5%, pressured by weaker pricing power and litigation costs. Management expects continued margin pressure and elevated incentives in fiscal 2027, which is a polite way of saying the company will keep sweetening deals to move inventory.

D.R. Horton started 13,100 homes in the fourth quarter, down 10% year-over-year. Land and development investments totaled $2 billion during the quarter, bringing the fiscal-year total to $8.2 billion.

The company generated $3.5 billion in operating cash flow in fiscal 2026 and ended Sept. 30 with $7.2 billion in liquidity, including $2.1 billion in cash and $5.1 billion in available credit facilities.

Shareholder Returns

D.R. Horton returned $4.1 billion to shareholders in fiscal 2026 through share repurchases and dividends. Over the past five years, the company has returned $14 billion to shareholders.

The board increased the quarterly dividend by 11% to $0.50 per share, marking 13 consecutive years of dividend-per-share growth.

Fiscal 2027 Outlook

D.R. Horton expects first-quarter revenue of $5.9 billion-$6.4 billion, below the $6.963 billion analyst estimate. For fiscal 2027, the company forecasts revenue of $30 billion-$32 billion, compared with the $33.653 billion estimate.

The company expects fiscal 2027 home closings of 79,000-84,000, operating cash flow of approximately $3.5 billion, $3 billion in share repurchases and $500 million in dividends.

For the first quarter, D.R. Horton projects home closings of 15,500-16,500.

Management expects high mortgage rates, affordability challenges and cautious consumer sentiment to continue weighing on housing demand.

DHI Stock Price Activity: D.R. Horton shares were up 0.32% at $142.54 at the time of publication Thursday.