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    DHI
    Earnings call· Jun 2026(Q3 FY26)

    HORTON D R INC /DE/ DHI

    Jul 21, 2026 Source

    Executive summary

    D.R. Horton Q3 FY26 — Solid Earnings and Capital Returns Amidst Softening Demand

    D.R. Horton delivered solid Q3 FY26 results, achieving strong margins and returning substantial capital to shareholders, despite a softening demand environment and elevated incentives. The company remains focused on capital efficiency and affordability, adjusting its start pace and pricing strategies to market conditions while expanding its geographic footprint for future growth. Management anticipates continued agility in navigating economic uncertainties.

    Highlights

    5

    • Earnings per diluted share of $3.20.

    • Home sales gross margin of 20.7%, above the high end of guidance.

    • Generated $3.4 billion of cash from operations over the past 12 months, all returned to shareholders.

    • 65% of mortgage company's closings were to first-time homebuyers, reflecting focus on affordability.

    • Homebuilding pretax return on inventory was 17% for the trailing 12 months.

    Concerns

    5

    • Net sales orders were flat with the prior year quarter at 23,084 homes sold.

    • Cancellation rate increased to 20% from 17% in the prior year and 16% sequentially.

    • Full-year FY26 homes closed guidance was reduced to 83,800-84,300 homes.

    • SG&A as a percentage of revenues increased to 8.3% from 7.8% in the prior year quarter.

    • Affordability constraints and cautious consumer sentiment continued to impact new home demand.

    Guidance & targets

    12
    CategoryTargetConfidence
    Consolidated revenues
    $8.8 billion to $9.3 billion
    high materiality
    High
    Homes closed (homebuilding operations)
    22,500 to 23,000 homes
    high materiality
    High
    Home sales gross margin
    20.5% to 21%
    high materiality
    High
    Consolidated pretax profit margin
    12.3% to 12.8%
    high materiality
    High
    Consolidated revenues
    approximately $32.5 billion to $33 billion
    high materiality
    High
    Homes closed (homebuilding operations)
    83,800 to 84,300 homes
    high materiality
    High
    Income tax rate
    approximately 25%
    medium materiality
    High
    Operating cash flow
    at least $3 billion
    high materiality
    High
    Common stock repurchases
    approximately $2.5 billion
    high materiality
    High
    Dividend payments
    around $500 million
    high materiality
    High
    Consolidated leverage
    around 20%
    high materiality
    High
    Inventory turn
    3x
    medium materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Homebuilding
    Home sales revenues totaled $8.7 billion on 23,983 homes closed, compared to $8.6 billion on 23,160 homes closed in the prior year quarter.
    Homes closed: 23,983Average closing price: $362,000
    		$8.7 billion———
    Rental Operations
    Generated $31 million of pretax income on $266 million of revenues from the sale of single-family rental homes and multifamily rental units. Focus remains on improving capital efficiency and returns, with inventory expected to remain around $3 billion.
    Single-family rental homes sold: 601Multifamily rental units sold: 339Rental property inventory: $3 billionMultifamily rental properties: $2.7 billionSingle-family rental properties: $321 million
    		$266 million——$31 million pretax income
    Financial Services
    Pretax income for the third quarter was $70 million on $221 million of revenues, resulting in a pretax profit margin of 31.9%.
    Pretax profit margin: 31.9%
    		$221 million——$70 million pretax income
    Forestar
    Reported third quarter revenues of $407 million on 3,659 lots sold with pretax income of $49 million. D.R. Horton purchased $360 million of finished lots from Forestar during the quarter.
    Lots sold: 3,659Owned and controlled lot position: 92,000 lotsOwned lots under contract with D.R. Horton: 66%
    		$407 million——$49 million pretax income

    Operational metrics

    41
    Diluted EPS
    $3.20vs $3.36 in prior year quarter
    Q3 FY26

    Reported earnings per diluted share.

    Consolidated pretax income
    $1.2 billion
    Q3 FY26

    Total consolidated pretax income.

    Consolidated revenues
    $9.2 billion
    Q3 FY26

    Total consolidated revenues.

    Consolidated pretax profit margin
    13.3%
    Q3 FY26

    Consolidated pretax profit margin.

    Home sales gross margin
    20.7%
    Q3 FY26

    Gross margin on home sales revenue, above guidance.

    Homebuilding pretax return on inventory
    17%
    TTM

    Homebuilding pretax return on inventory for the trailing 12 months.

    Consolidated return on equity
    12.8%
    TTM

    Consolidated return on equity for the trailing 12 months.

    Consolidated return on assets
    8.5%
    TTM

    Consolidated return on assets for the trailing 12 months.

    Average closing price
    $362,000down 2% YoY, flat sequentially
    Q3 FY26

    Average closing price of homes, reflecting focus on affordability.

    Average closing price vs US average
    $155,00030% below US average
    Q3 FY26

    Average closing price is significantly below the average price of new homes in the United States.

    First-time homebuyers (mortgage closings)
    65%
    Q3 FY26

    Percentage of mortgage company's closings to first-time homebuyers.

    Net sales orders
    23,084 homesflat YoY
    Q3 FY26

    Number of homes sold in net sales orders.

    Cancellation rate
    20%up from 17% YoY and 16% sequentially
    Q3 FY26

    Cancellation rate for the quarter, within normal historical range.

    Average price of net sales orders
    $365,600flat YoY and sequentially
    Q3 FY26

    Average price of net sales orders.

    SG&A as % of revenues
    8.3%up from 7.8% YoY
    Q3 FY26

    SG&A expenses as a percentage of revenues.

    Homes started
    23,900
    Q3 FY26

    Number of homes started in the third quarter.

    Homes in inventory
    38,000down 1% sequentially and YoY
    Q3 FY26

    Total homes in inventory at quarter end.

    Unsold homes
    23,300
    Q3 FY26

    Number of unsold homes at June 30.

    Completed unsold homes
    7,600
    Q3 FY26

    Number of completed homes that were unsold.

    Completed unsold homes > 6 months
    600down from 800 sequentially
    Q3 FY26

    Number of completed unsold homes that have been completed for more than 6 months.

    Homebuilding lot position
    570,000
    Q3 FY26

    Total homebuilding lot position at June 30.

    Owned lots percentage
    22%down 13% YoY
    Q3 FY26

    Percentage of total lots that are owned.

    Controlled lots percentage
    78%
    Q3 FY26

    Percentage of total lots that are controlled through purchase contracts.

    Closings on 3rd party/Forestar lots
    67%up from 66% YoY
    Q3 FY26

    Percentage of homes closed on lots developed by Forestar or third parties.

    Homebuilding investments (lots, land, development)
    $2.1 billion
    Q3 FY26

    Total homebuilding investments in lots, land, and development.

    Forestar owned and controlled lot position
    92,000
    Q3 FY26

    Forestar's total owned and controlled lot position.

    Finished lots purchased from Forestar by DHI
    $360 million
    Q3 FY26

    Value of finished lots purchased by D.R. Horton from Forestar.

    Consolidated liquidity
    $6.1 billion
    Q3 FY26

    Total consolidated liquidity at June 30.

    Total debt
    $7.1 billion
    Q3 FY26

    Total debt at quarter end.

    Homebuilding senior notes maturing
    $600 million
    next 12 months

    Amount of homebuilding senior notes maturing over the next 12 months.

    Consolidated leverage
    23%
    Q3 FY26

    Consolidated leverage at June 30.

    Homebuilding cash provided by operations
    $1.3 billion
    9 months YTD

    Homebuilding cash provided by operations for the first 9 months of the year.

    Consolidated cash provided by operations
    $881 million
    9 months YTD

    Consolidated cash provided by operations for the first 9 months of the year.

    Cash dividends paid
    $0.45
    Q3 FY26

    Cash dividends paid per share and total for the quarter.

    Shares repurchased
    4.2 million
    Q3 FY26

    Number of shares repurchased and total value during the quarter.

    Share count reduction
    6%YoY
    Q3 FY26

    Reduction in outstanding share count compared to a year ago.

    Stockholders' equity
    $23.8 billiondown 1% YoY
    Q3 FY26

    Stockholders' equity at quarter end.

    Book value per share
    $84.85up 5% YoY
    Q3 FY26

    Book value per share at quarter end.

    Mortgage rate for buyers in backlog
    4.9%vs market rate ~6.5%
    Q3 FY26

    Mortgage rate for buyers in backlog utilizing D.R. Horton's mortgage company, with average buydown.

    Owned land supply
    1.5down from 1.6 years sequentially and 1.7 years YoY
    Q3 FY26

    Owned land supply in years.

    Controlled land supply
    6.7
    Q3 FY26

    Controlled land supply in years.

    Risks & headwinds

    5
    Affordability constraints and cautious consumer sentimentOngoing

    Cancellation rate increased to 20% from 17% YoY and 16% sequentially; net sales orders flat YoY.

    Mitigation: Adjusting pace, price, and incentives; focusing on affordable price points; expanding geographic footprint.

    Elevated incentivesQ4 FY26

    Average buydown decreased slightly to 1.6% from 1.7% sequentially; expected to remain elevated.

    Mitigation: Balancing pace, price, incentives, and inventory levels to meet demand and maximize returns; holding gross margin.

    SG&A deleverageOngoing until revenue growth resumes

    SG&A as a percentage of revenues was 8.3%, up from 7.8% YoY, primarily due to 9% YoY increase in active selling communities.

    Mitigation: Managing platform with discipline to gain market share efficiently; expecting to return to positive SG&A operating leverage when revenue growth resumes and absorption rates stabilize.

    Potential lumber cost headwindsInto FY27

    Slight lumber headwind again with where lumber prices have gone.

    Mitigation: Ongoing cost containment efforts; expecting current cost improvements to hold through Q4 FY26.

    Uncertainty in broader economy and geopolitical volatilityOngoing

    Not quantified, but cited as impacting consumer confidence.

    Mitigation: Remaining agile and disciplined in operations; focusing on enhancing long-term value.

    What to watch in Q4 FY26

    5

    SG&A operating leverage

    When revenue growth resumes and absorption rates stabilize
    CurrentSG&A as % of revenues 8.3%, up from 7.8% YoY
    TargetReturn to positive operating leverage

    Why it matters

    Indicates efficiency of operations and ability to scale profitably as the company expands its footprint.

    We remain focused on managing our platform with discipline to gain market share efficiently and we expect to return to positive SG&A operating leverage when revenue growth resumes, and our average sales price and community absorption rates stabilize.

    Q&A highlights

    7

    Is the market stabilizing and forming a bottom despite volatility, given what DHI is seeing in channel checks?

    Sales were in line with normal seasonality but softened after April. Buyers are present, but need more confidence in the economy to proceed with purchases.

    “I would say that when looking at our sales, our sales were relatively in line with normal seasonality for a little softer post our call in April and still see plenty of buyers out there in our sales offices as we travel and in front of people, it's just needing to see them be a little more confident in the overall economy and their ability to move forward with a sale -- with a purchase today.”

    asked by John Lovallo · answered by Paul Romanowski

    2 min read6 chapters

    Detailed Narrative

    01

    Market Conditions and Affordability Focus

    Management noted continued affordability constraints and cautious consumer sentiment impacting new home demand. Despite this, 65% of mortgage closings were to first-time homebuyers, reflecting D.R. Horton's focus on affordable price points. The company adjusts pace, price, and incentives based on market evolution, with sales in Q3 FY26 being relatively in line with normal seasonality but softer post-April.

    02

    Operational Efficiency and Inventory Management

    Improved cycle times, down roughly 3 weeks year-over-year from home start to home close, enable holding less housing inventory and turning it more efficiently. Inventory was down 1% sequentially and year-over-year, with only 600 completed unsold homes aged over 6 months. Starts are expected to be lower in Q4 FY26 than Q3 FY26, managed according to market conditions, with an internal goal to achieve a 3x inventory turn.

    03

    Gross Margin Strength and Cost Control

    Home sales gross margin of 20.7% exceeded guidance, driven by lower 'stick and brick' costs (down 2% sequentially, 5% year-over-year), primarily in framing, and slightly lower incentives. While some cost headwinds exist (fuel), the company expects Q4 FY26 gross margin to be relatively flat, reflecting a strategic decision to hold margin rather than push for higher absorption.

    04

    SG&A and Scale

    SG&A as a percentage of revenues increased to 8.3% due to community count growth (up 9% YoY) and expansion into 30 new markets over the last five years. Management expects to return to positive SG&A operating leverage when revenue growth resumes and absorption rates stabilize, leveraging its broad geographic footprint and aiming for mid-single-digit community count growth over the longer term.

    05

    Land Strategy and Capital Efficiency

    The company actively manages its 570,000-lot position (22% owned, 78% controlled), with owned lots down 13% YoY. 67% of Q3 FY26 closings were on lots developed by Forestar or third parties, enhancing capital efficiency. The focus is on relationships with land developers to build more homes on developed lots, with owned land supply at 1.5 years and controlled land supply at 6.7 years.

    06

    Rental Operations and Housing Legislation Impact

    Rental operations generated $31 million pretax income on $266 million revenues from 601 single-family rental homes and 339 multifamily units. Rental property inventory totaled $3 billion, with a focus on improving capital efficiency and maintaining inventory around this level, shifting towards forward sales for single-family rentals. The recently passed housing legislation is expected to primarily impact the single-family rental market by settling uncertainty for institutional investors.

    AI-generated summary of the company’s earnings call. Not investment advice.