D.R. Horton tightens home sales forecast, unveils $4 billion share buyback
7:37 am Thursday, July 18th, 2024
(Reuters) -D.R. Horton tightened its annual forecast for home sales and beat Wall Street estimates for quarterly profit on Thursday, as historically low U.S. supplies lift new home sales despite elevated mortgage rates.
The largest U.S. homebuilder by sales volume now expects to deliver between 90,000 and 90,500 homes in fiscal 2024, the mid-point of which is higher than its prior forecast of 89,000 to 91,000.
The company delivered 24,155 homes in the third quarter, 5% more than a year earlier and above its own forecast range of 23,500 to 24,000.
The popular 30-year, fixed-mortgage rate has hovered around 7% for months, discouraging U.S. homeowners with fixed rates below 5% to resell their homes.
This “rate lock-in” has constrained supply of existing homes, which account for a large portion of U.S. housing sales, forcing buyers to turn to new construction.
D.R. Horton also approved a new share buyback authorization totaling $4 billion.
However, the homebuilder’s pre-tax profit margin declined marginally to 18.1% from 18.3% a year earlier, dragged by discounts to whip up demand due to affordability concerns.
Among the most popular incentives are mortgage rate buydowns, which function as a temporary or permanent reduction on the home loan market rate.
With discounts still elevated, the company also tightened its full-year revenue forecast.
It now expects revenue to be in the range of $36.8 billion to $37.2 billion for fiscal 2024, compared to its previous expectations of $36.7 billion to $37.7 billion
The Arlington, Texas-based homebuilder beat Wall Street estimates for quarterly revenue and profit. Its earnings of $4.10 per share, came in above analysts’ average estimate of $3.75, according to LSEG data.
Revenue rose 2% to about $10 billion, above estimates of $9.73 billion
(Reporting by Ananta Agarwal in Bengaluru; Editing by Sriraj Kalluvila)
