D.R. Horton (NYSE:DHI) reported fiscal first-quarter net sales orders below market expectations, highlighting continued pressure on homebuying activity as consumers remain cautious.
Rising housing costs and elevated mortgage rates have weighed heavily on affordability for U.S. buyers, an issue that has also moved into sharper focus ahead of the November midterm elections. Against this backdrop, net sales orders — representing newly signed home purchase contracts — increased 3% to 18,300 homes in the quarter ended December. That figure came in below Bloomberg consensus estimates of 18,653.
“Affordability constraints and cautious consumer sentiment continue to impact new home demand,” said David Auld, executive chairman of D.R. Horton, in a statement on Tuesday.
Auld said the group expects sales incentives to stay “elevated” through fiscal 2026, adding that the scale of these incentives will “depend on the strength of demand during the spring, changes in mortgage interest rates and market conditions throughout the year.”
Homebuilders across the sector have stepped up promotional activity to attract price-sensitive buyers, putting pressure on profitability. Even so, D.R. Horton reported a pre-tax profit margin of 11.6%, slightly ahead of expectations of 11.5%. Earnings per share came in at $2.03, beating forecasts despite a 22% decline from the same period a year earlier.
The company said margins benefited from a 40-basis-point uplift linked to the recovery of warranty costs from prior periods.
Shares in the Texas-based builder were little changed in pre-market trading in the U.S.