D.R. Horton, Inc.

Third-quarter fiscal 2026 earnings were $3.20 per diluted share versus $3.36 a year ago. Net income was $905 million on consolidated revenues of $9.2 billion. Home sales revenues were $8.7 billion on 23,983 homes closed, versus $8.6 billion and 23,160 homes closed in the prior-year quarter. Average closing price was $362,000, down 2% year over year. Home sales gross margin was 20.7%, and consolidated pre-tax profit margin was 13.3%. Net sales order value was $8.4 billion on 23,084 homes sold, both flat year over year, and the cancellation rate rose to 20% from 17%. Looking ahead, Q4 consolidated revenues are expected to be $8.8 billion-$9.3 billion, with homebuilding closings of 22,500-23,000, home sales gross margin of 20.5%-21%, and consolidated pre-tax margin of 12.3%-12.8%. For fiscal 2026, management now expects consolidated revenues of approximately $32.5 billion-$33 billion and homebuilding closings of 83,800-84,300. The company still expects operating cash flow of at least $3 billion, repurchases of approximately $2.5 billion, and dividends of around $500 million.

Paul Romanowski said the quarter reflected disciplined execution in a still-challenging demand environment, with the company balancing pace, price, incentives, and inventory to protect returns. He emphasized D.R. Horton’s scale, affordability positioning, and broad geographic footprint, noting that 65% of mortgage-company closings were first-time homebuyers. His tone was confident but cautious, repeatedly pointing to affordability constraints, cautious consumer sentiment, and broader economic volatility.

Bill Wheat highlighted that the company is still generating strong cash and keeping leverage in check. Consolidated liquidity was $6.1 billion, including $2.1 billion of cash and $4 billion of available credit, with total debt of $7.1 billion and leverage at 23%; he said the long-term target is around 20%. He also noted $1.3 billion of homebuilding operating cash flow and $881 million of consolidated operating cash flow through the first nine months, plus $616 million of buybacks for 4.2 million shares in Q3 and a $0.45 quarterly dividend. On margins, he said current returns are below longer-term expectations, but the company believes margins and SG&A leverage can improve when top-line growth returns and pricing/absorption stabilize.

Analysts focused on whether demand is stabilizing, why full-year deliveries were cut, and how management is balancing margin versus volume. Management said sales softened later in the quarter and were below internal expectations, which drove the guide reduction, but they preferred to preserve margin rather than push volume. Questions also centered on incentives, with management saying incentives remain elevated but visibility points to relatively stable Q4 gross margin; they also said lower costs are still coming through in framing/stick-and-brick, though some lumber pressure could reappear in 2027.