In the face of competitive market conditions and affordability challenges, D.R. Horton reported “solid” fourth quarter and fiscal 2024 results, highlighted by gains in profits per share and home sales revenue.
“Our net sales orders in the fourth quarter increased slightly from the prior year to 19,035 homes,” executive chairman David Auld said. “Our sales pace was in line with normal seasonality from the third to fourth quarter but was below our expectations. While mortgage rates have decreased from their highs earlier this year, many potential home buyers expect rates to be lower in 2025.”
The home builder said rate volatility and uncertainty surrounding the presidential election will likely cause some buyers to remain on the sidelines in the near term. To spur demand in the coming months, D.R. Horton remains committed to using incentives such as mortgage rate buydowns. Additionally, the company said it has continued to start and sell more homes with smaller floor plans to combat affordability concerns.
“The supply of both new and existing homes at affordable price points is still generally limited, and the demographics supporting demand are favorable,” Auld said. “With a focus on affordable product offerings, 37,400 homes in inventory, and continued improvement in our construction cycle times, we are well-positioned for fiscal 2025.”
D.R. Horton, the largest company on the 2024 BUILDER 100 list, reported profit of $1.3 billion in the fiscal fourth quarter, representing profit per share of $3.92. Profit per share for the home builder fell short of Wall Street expectations for the quarter, with the Zacks Consensus Estimate projecting profit per share of $4.20 for D.R. Horton in the fourth quarter. For the full fiscal year, profit per share increased 4% to $14.34 on profit of $4.8 billion.
D.R. Horton generated home building revenue of $9.0 billion in the fiscal fourth quarter—ended Sept. 30—an increase of 2% on a year-over-year basis. The builder closed 23,647 homes in the quarter, a 3% year-over-year increase. For the full fiscal year, home building revenue jumped 7% to $31.7 billion compared to 2023 while homes closed increased 8% to 86,690.
Net sales orders for the fourth quarter increased marginally to 19,035 homes compared to 18,939 homes in the fourth quarter of 2023. The builder’s cancellation rate was 21%, unchanged from the prior-year period.
For the full fiscal year, net sales orders increased 10% to 86,561 homes while the full-year cancellation rate improved to 18% from 20% in 2023.
At the end of the fiscal fourth quarter, D.R. Horton had a sales order backlog of 12,180 homes, a 20% decrease compared to the end of the fourth quarter in 2023. In the fourth quarter, D.R. Horton started approximately 18,400 homes. For homes closed in the fourth quarter, cycle times decreased a week on a sequential basis and by a month compared to a year ago. The company ended the fiscal year with 37,400 homes in inventory, of which 25,700 were unsold.
The builder’s home building land and lot portfolio totaled 632,900 lots at the end of the fiscal year, of which 24% were owned and 76% were controlled through land and lot purchase contracts. Of homes closed during fiscal 2024, 64% were on lots developed by third parties or Forestar, D.R. Horton’s residential lot development subsidiary.
Based on current market conditions, D.R. Horton is projecting home closings between 90,000 and 92,000 for 2025.
Rental and Forestar Results
D.R. Horton’s rental operations generated $99.9 million of pre-tax income on revenues of $704.8 million in the fourth quarter. For the full fiscal year, the division generated pre-tax income of $228.7 million on revenues of $1.7 billion, down from pre-tax income of $524.2 million and revenue of $2.6 billion in the 2023 fiscal year.
During the fourth quarter, D.R. Horton sold 1,692 single-family rental homes and 868 multifamily rental units, compared to 3,006 single-family rental homes and 1,582 multifamily units in the fourth quarter of 2023. For the full fiscal year, the company sold 3,970 single-family rental homes and 2,202 multifamily rental units compared to 6,175 single-family rental homes and 2,112 multifamily units in the full fiscal 2023.
D.R. Horton subsidiary Forestar Group sold 5,374 lots and generated $551.4 million of revenue in the fourth quarter, compared to 4,986 lots and $549.7 million in revenue in the prior-year period. For the full fiscal year 2024, Forestar sold 15,068 lots and generated $1.5 billion of revenue, up from 14,040 lots and $1.4 billion in revenue in 2023.
