D.R. Horton, Inc. (DHI) Earnings & Analysis

Latest quarter

D.R. Horton reported Q3 FY2026 revenue of $9.2 billion, up 0.02% from Q3 FY2025. Revenue exceeded the consensus by 0.46%, according to the company’s reported comparison with the consensus. Adjusted EPS, as the consensus counts it, was $3.20, compared with the consensus of $2.99; the company reported a 7.02% difference against the consensus.

The filing shows diluted EPS of $3.20, down from $3.36 a year earlier, while gross margin was 23.3%, compared with 23.9%, and operating margin was 12.5%, compared with 13.7%. The company reported free cash flow of $397.3 million, compared with $711.0 million in Q3 FY2025.

D.R. Horton said homebuilding revenue increased 1% to $8.7 billion as homes closed increased 4% to 23,983, while the average closing price decreased 2% to $362,000. The filing said rental revenue decreased to $266.1 million from $380.7 million and financial-services revenue decreased to $220.7 million from $227.8 million; Forestar revenue increased to $407.0 million from $390.5 million. D.R. Horton reported Q3 revenue within its prior guidance range of $8.8 billion to $9.3 billion.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Paul Romanowski, president and chief executive officer, said affordability constraints and cautious consumer sentiment continued to affect new-home demand. He said sales followed normal seasonality but were softer after the April call, and buyers needed more confidence in the economy and their ability to purchase a home. Romanowski said demand softened as the quarter progressed, contributing to the reduction in the company’s annual outlook.

Bill Wheat, chief financial officer, said third-quarter net sales orders totaled $8.4 billion on 23,084 homes and were flat from the prior-year quarter. Wheat said the cancellation rate was 20%, compared with 17% a year earlier and 16% sequentially, and that mortgage qualification remained the largest reason for cancellations. He also said the average number of active selling communities rose 9% year over year, while the average price of net sales orders was $365,600 and was essentially unchanged from both the prior quarter and prior year.

On pricing and margins, Wheat said incentives improved slightly before sales softened later in the quarter, and D.R. Horton expects incentives to remain elevated. Romanowski said the company chose to hold more margin rather than push unit volume, and said the margin difference reflected cost-reduction efforts, modestly lower incentives and the decision not to lean into absorption. Wheat said the company’s visibility pointed to a relatively stable margin outlook for Q4, while noting uncertainty because many sales and closings occur within the quarter.

Responding to questions about operating costs, Wheat said active communities increased 9% year over year and homebuilding SG&A spending increased 8%, linking the expense increase chiefly to the larger community count. Romanowski said the company had opened about 30 markets over five years and that its expanded footprint had reduced SG&A leverage while revenue and absorption remained relatively flat. He said the company sees relative demand strength in the Mid-Atlantic, Ohio Valley and Midwest, while the Northwest, particularly Seattle, faced demand headwinds.

Romanowski said fourth-quarter starts are expected to be below third-quarter starts and that the company will manage starts and inventory based on market conditions. He also said D.R. Horton expects similar lot-cost appreciation in Q4, while development-cost savings now being observed would not affect results for several quarters. Wheat said multifamily revenue is expected to increase in Q4 as completed and stabilized projects under contract close, while total rental inventory is expected to remain within the $3 billion range.

Guidance

D.R. Horton reduced its FY2026 consolidated-revenue outlook to $32.5 billion to $33.0 billion and its FY2026 homebuilding-closings outlook to 83,800 to 84,300 homes. The company continues to expect FY2026 operating cash flow of at least $3.0 billion, share repurchases of approximately $2.5 billion, dividend payments of approximately $500.0 million and an income tax rate of approximately 25.0%.