D.R. Horton Beats Estimates in First Quarter

(Reuters) – D.R. Horton outperformed Wall Street expectations for first-quarter revenue and profit on Tuesday, driven by a persistent shortage of existing homes in the U.S. housing market. This situation has boosted new home sales even amid rising mortgage rates.

Shares of the construction company increased by more than 5% in premarket trading.

Homebuilders are benefitting from a limited supply of existing homes for sale. Many current homeowners, who purchased properties when interest rates were low, are hesitant to sell and buy new homes in today’s environment of higher mortgage rates.

This limited supply of resale homes, which constitutes a significant portion of U.S. housing sales, has heightened demand for newly built homes despite elevated borrowing costs and increasing prices.

“Despite continued affordability challenges and competitive market conditions, incentives such as mortgage rate buydowns have helped to address affordability and spur demand,” remarked D.R. Horton executive chairman David Auld. He noted that the company has begun selling more homes with smaller floor plans to cater to homebuyer demand.

D.R. Horton, the largest U.S. homebuilder by sales, recorded closed sales on 19,059 homes for the first quarter ending December 31, a slight decrease of 1% from 19,340 homes a year earlier.

The pre-tax profit margin in its homebuilding segment stood at 14.1% for the quarter, compared to 15% in the previous year.

Headquartered in Arlington, Texas, the company reported first-quarter revenue of $7.61 billion, surpassing analysts’ average estimate of $7.08 billion, according to LSEG data.

Earnings per share of $2.61 for the quarter also exceeded analysts’ estimates of $2.36 per share.