stockrowWhat it does
D.R. Horton is a residential builder that constructs and sells homes in the United States. Founded in 1978 and headquartered in Arlington, it operates through local homebuilding divisions in 126 markets across 36 states. Paul Romanowski is President and Chief Executive Officer.
Homebuilding is its core activity. The company sells mainly completed homes, chiefly single-family detached houses, while attached homes include townhomes and duplexes. Its range covers entry-level, first-time move-up, move-up, active-adult and luxury buyers. Homes generally range from 1,000 to 4,000 square feet and from $250,000 to more than $1,000,000. Homebuilding operations closed 84,863 homes in fiscal 2025 at an average closing price of $370,400.
It also develops and sells rental properties. Its single-family rental business builds and leases homes within a community before marketing the community for a bulk sale; its multifamily operation develops, builds, leases and sells apartment communities. The company owns a majority interest in Forestar, which develops residential lots, and it provides mortgage financing and title services to many purchasers of its homes through DHI Mortgage and title-company subsidiaries.
Substantially all land development and home construction work is performed by subcontractors. Local divisions choose sites, buy or control lots, obtain approvals, select subcontractors, build homes, set community-level pricing and handle sales and customer service. Regional and corporate teams oversee capital allocation, land approvals, financing, risk controls and national purchasing.
How it makes money
D.R. Horton earns most of its revenue when it closes sales of completed homes. Home Building revenue was $31.4 billion in FY2025, representing 91.8% of revenue. Homes are priced by local divisions, which can alter product mix, pace, selling prices and buyer incentives by community. Customers place earnest-money deposits, but contracts commonly include mortgage-financing contingencies and may be cancelled.
Land and lot sales are a smaller source of homebuilding revenue. The company often controls rather than owns land through purchase contracts that give it the right, but generally not the obligation, to buy land or finished lots at stated prices on a schedule linked to anticipated closings. Forestar develops and sells lots, with D.R. Horton buying finished lots under a master supply agreement.
Rental revenue comes from selling single-family rental homes and multifamily rental units after development, construction and leasing activity; it is not described as a recurring rent stream. Rental revenue was $1.6 billion in FY2025. Management said on the call that the single-family rental model has shifted toward delivering completed units to institutional owners as construction is completed, rather than first stabilizing an entire neighborhood.
Financial Services revenue was $841.2 million in FY2025. DHI Mortgage primarily originates or brokers mortgages for D.R. Horton buyers, then sells substantially all originated mortgages and related servicing rights to third-party purchasers. Title subsidiaries earn from issuing title insurance and providing examination, underwriting and closing services.
FY2025 consolidated revenue was $34.3 billion; management said on the call that Q3 2026 revenue was $9.2 million.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Home Building | $31.4 billion | 91.8% | −7.29% |
| Rental | $1.6 billion | 4.79% | −2.65% |
| Financial Services | $841.2 million | 2.46% | −4.68% |
| Land | $336.8 million | 0.98% | 2.00% |
Customers and how it sells
The company primarily targets first-time and first-time move-up buyers, which account for the majority of home closings, while also serving entry-level, higher-end move-up, luxury and active-adult buyers. Management said on the call that 65.0% of mortgage-company closings in Q3 FY2026 were to first-time homebuyers. Buyers may use DHI Mortgage or other lenders; DHI Mortgage provided mortgage financing for 81% of homes closed in fiscal 2025.
Homes are sold through commissioned sales employees, typically from sales offices in furnished model homes. Independent real estate brokers are involved in the majority of closings. Marketing uses digital channels, including the company website, email, search marketing, social media and real-estate websites, supplemented by local media and broker relationships. The company builds speculative homes in essentially all communities for purchasers needing a home in a short time frame, including renters and people relocating.
The homebuilding business spans 126 markets in 36 states, organized into six reporting regions. This disperses land and inventory investments and revenue sources across local housing markets. Forestar operated in 64 markets across 23 states at September 30, 2025. Its rental operations focus on high-growth suburban markets, with multifamily activity primarily centered on garden-style apartment communities.
Management said on the call that Mid-Atlantic, Ohio Valley and Midwest markets showed relative strength, while the Northwest and Seattle faced softer demand associated with software-job shifts and layoffs.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Home Building | $31.5 billion | 92.0% | −7.20% |
| Forestar Group | $1.7 billion | 4.85% | 10.1% |
| Rental | $1.6 billion | 4.79% | −2.65% |
| Financial Services | $841.2 million | 2.46% | −4.68% |
| Eliminations and Other | −$1.4 billion | −4.11% | — |
Suppliers and costs
The company buys construction materials and services from national, regional and local suppliers and subcontractors. It selects subcontractors through competitive bidding for a subdivision or series of house plans, generally at an agreed price. Construction materials have generally been available from numerous sources, and certain building-material contracts exceed one year but are cancellable at the company’s option. No sole-source supplier is identified.
Land and lots are a central cost and capital commitment. The company seeks finished lots from Forestar and other developers, while purchase contracts limit exposure in many cases to escrowed earnest money and pre-acquisition due-diligence costs if it does not proceed. At June 30, management said on the call that its homebuilding lot position was approximately 570,000 lots, of which 22% were owned and 78% were controlled through purchase contracts.
Cost control includes standardized house plans, competitive materials and labor bids, volume-based supplier and subcontractor pricing, local budget monitoring and centralized purchasing contracts. Costs can move with land prices, materials, labor, development requirements, financing and sales incentives. Management said on the call that it expects similar lot-cost appreciation in the fourth quarter, while savings in development costs then being observed would not affect results until well into fiscal 2027 and 2028.
- Revenue$33.0B
- Cost of revenue−$25.7B
- Selling, general and administrative−$3.7B
- Operating income$3.6B
Competitive position
D.R. Horton competes in for-sale housing and rental housing with local, regional and national builders and rental companies, existing-home sellers and rental-property owners. It also competes for desirable land, raw materials, skilled labor and financing. The bases of competition include price, location, home quality and design, and mortgage-financing terms.
Its financial-services businesses compete with mortgage lenders, title companies, mortgage banks and other financial institutions. Some financial-services competitors may face fewer regulations, have greater access to capital, use different lending criteria or offer a broader range of products and services.
Lennar is named in connection with homebuilding gross margins and sales incentives. It therefore competes with D.R. Horton in residential homebuilding, including the use of incentives to support demand.
Our reading: Geographic reach across 126 markets and a decentralized local operating structure are a meaningful operating advantage because land acquisition, pricing and construction decisions are inherently market-specific. The advantage is not exclusive: the company competes with local, regional and national firms in every relevant market.
Our reading: Scale is a meaningful cost and capital advantage because it supports supplier discounts, subcontractor pricing, centralized overhead and lending relationships. Its durability depends on preserving volume and local execution, while inputs, land and labor remain contested.
Our reading: Forestar and purchase-contract-controlled lots provide a meaningful source of lot access and reduce direct land-ownership exposure, but they do not remove dependence on developers, land availability or local approvals.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Lennar | U.S. residential homebuilding and sales incentives | Medium |
Growth opportunities
The company’s growth approach is to expand its operating footprint, increase local market share, add communities and allocate inventory investment across markets. It has opened about 30 markets over the last five years, management said on the call. Management also said on the call that the company expects long-term community-count growth to trend toward roughly the mid-single digits. It was number one in only half of the markets in which it operated, management said on the call, leaving local share-growth opportunities.
Homebuilding growth depends on consumer demand at targeted price points, land and lot availability, labor and subcontractor capacity, mortgage affordability, local approvals and the pace at which divisions can sell and close homes. The company can adjust product offerings, sales pace, prices, incentives, speculative-home inventory and starts by local market. Management said on the call that it expects fourth-quarter starts to be lower than third-quarter starts and will manage inventory and starts based on market conditions.
Forestar can expand lot development across a geographically diversified platform, supporting D.R. Horton’s finished-lot supply. The company also invests in rental operations in high-growth suburban markets. Management said on the call that rental inventory is expected to remain around $3 billion, with the single-family rental business focused on forward sales and a lower inventory balance than under its historical model.
Management said on the call that affordability constraints and cautious consumer sentiment continued to affect new-home demand. It also said that it did not expect recently passed housing legislation to produce a significant near-term change in housing demand or supply.
- $33.5BFY2022
- $35.5BFY2023
- $36.8BFY2024
- $34.3BFY2025
- $33.0BFY2026
- $30.0BFY2027 guidance
Structural risks
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Homebuilding, rental and land development are cyclical and can be adversely affected by general and local economic and real-estate conditions, including employment, consumer confidence, housing demand, financing availability, interest rates, inflation and home and rental-property values.
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Housing affordability and buyer confidence affect sales. Management said on the call that affordability constraints and cautious consumer sentiment continued to affect new-home demand, while mortgage qualification remained the largest reason for cancellations.
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Land, lot, construction and approval risks can increase costs or delay projects. These include expensive or unavailable suitable land, municipal or government approval delays, shortages of qualified subcontractors or materials, and increases in lumber, drywall and cement costs.
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Sales incentives, mortgage-rate buydowns and pricing actions can support demand but pressure home-sales margins and average selling prices. The company expects incentives to remain elevated, depending on demand, mortgage rates and broader market conditions.
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The company and its subsidiaries have debt and may incur more. Debt and related covenants could constrain future financing, require cash flow to service obligations or limit flexibility to respond to changing business and economic conditions.
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Mortgage and title operations are subject to extensive state and federal rules and regular examinations. Their liquidity depends on renewing or extending mortgage repurchase facilities, using uncommitted facilities or obtaining other financing in sufficient capacity.
Bottom line
Our reading
Our reading: D.R. Horton is a predominantly homebuilding business whose revenue and operating results are linked to local housing demand, mortgage affordability, sales incentives and the timing of home closings. Its broad market footprint, local operating divisions, supplier scale and controlled-lot model support execution across markets, while Forestar and financial services extend its role beyond the home sale. The principal exposures remain cyclical demand, land and construction costs, regulation, buyer financing and leverage.