Arlington-based homebuilding giant D.R. Horton Inc. saw a surge in sales orders in its second fiscal quarter that ended in March as buyer demand returned to the U.S. housing market.
The boost brought the number of sales orders almost back to where it was a year ago, even with higher mortgage rates that hurt builders late last year.
Buyers are also canceling sales orders much less frequently as the company saw its cancellation rate drop from 27% at the end of 2022 to 18% last quarter.
The company closed on 19,664 homes last quarter, down 8% from a year ago.
Despite the slowdown in the market, the company closed on its millionth home to date, which chairman Donald Horton said marked a first for any homebuilder. D.R. Horton is the largest homebuilder in the nation by volume.
To meet the need for affordable homes amid higher mortgage rates, the company is offering incentives, reducing prices and building smaller, less expensive homes in some markets.
D.R. Horton President and CEO David Auld told investors in an earnings call Thursday that the company’s buyer demand, as expected, improved last quarter due to normal seasonal factors coupled with the company’s use of incentives and pricing adjustments to adapt to the changing market.
“Spring selling season is off to an encouraging start,” Auld said. “Although higher interest rates and economic uncertainty may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable.”
D.R. Horton earned $942.2 million in the second fiscal quarter that ended in March, down 49% from $1.4 billion in the same period of 2022. Its revenue from homebuilding was $7.5 billion, about the same as in the same quarter last year.
The company’s number of home sales orders decreased 5% to 23,142 homes over the past year, and the total value of those sales orders decreased 12% from $9.7 billion to $8.5 billion.
The company expects $31.5 billion to $33 billion in revenue for fiscal 2023, which covers October 2022 to September 2023. It anticipates it will close between 77,000 and 80,000 home sales during that period.
D.R. Horton recorded $33.5 billion in revenue and 82,744 sales in fiscal 2022.
The builder spent $303.2 million on stock buybacks during the quarter to reassure shareholders as the housing market changes.
