Homebuyers Cautious Due To 'Continued Affordability Constraints And Declining Consumer Confidence:' D.R. Horton Cuts Annual Outlook

D.R. Horton, Inc. DHI reported second-quarter FY25 results on Thursday.

Sales fell 15% year-over-year (Y/Y) to $7.73 billion, missing the consensus of $8.03 billion. EPS was $2.58, missing the consensus of $2.67. Net sales orders fell 15% Y/Y to 22,437 homes and decreased 17% Y/Y in value to $8.4 billion.

Homebuilding revenue declined 15% Y/Y to $7.2 billion. Homes closed in the quarter fell 15% Y/Y to 19,276 homes.

Also Read: Homebuilders Brace For Tough 2025, Analyst Downgrades D.R. Horton And Smith Douglas Amid Market Pressures

The sales order backlog of homes under contract as of March 31, 2025, decreased 21% year over year to 14,164 homes and 22% year over year in value to $5.5 billion.

D.R. Horton had 36,900 homes in inventory, of which 23,500 were unsold as of March 31, 2025.

Return on equity was 17.4%, and return on assets stood at 12.2% for the trailing twelve months ended March 31, 2025.

Operating cash flow stood at $210.5 million in the six months ended March 31, 2025.

As of March 31, 2025, the cash balance was $2.5 billion, and the available capacity on its credit facilities was $3.3 billion, for a total liquidity of $5.8 billion.

Buyback: D.R. Horton repurchased 9.7 million shares for $1.3 billion during the quarter. The company's remaining stock repurchase authorization as of March-end was $1.2 billion.

In April 2025, the Board of Directors approved a new $5.0 billion share repurchase authorization, replacing the prior program, which had $1.1 billion remaining following post-quarter-end buybacks.

Dividend: Subsequent to year-end, the company declared the quarterly dividend of $0.40 per share, payable on May 9, to shareholders of record as of May 2, 2025.

FY25 Outlook: D.R. Horton revised its revenue guidance to $33.3 billion-$34.8 billion (from $36.0 billion – $37.5 billion) versus the consensus of $36.4 billion.

It now expects homes closed to be 85,000-87,000 homes (vs. 90,000-92,000 homes prior) for the year.

DHI projects FY25 operating cash flow to be greater than $3.0 billion.

The company revised its share repurchase outlook for FY25 to approximately $4.0 billion (from $2.6 billion—$2.8 billion earlier).

The company continues to expect dividend payments of around $500 million.

David Auld, Executive Chairman, said, "The 2025 spring selling season started slower than expected as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence."

"Our tenured operators are responding appropriately to market conditions by increasing sales incentives where necessary to drive traffic and incremental sales, while carefully balancing pace versus price to maximize returns."

Investors can gain exposure to the stock via IShares U.S. Home Construction ETF ITB and Exchange Listed Funds Trust Long Pond Real Estate Select ETF LPRE.

Price Action: DHI shares are down 3.86% at $113.00 premarket at the last check Thursday.

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