DR Horton tightens home sales forecast, unveils US$4 billion share buyback
The company is also approving a new share buyback authorisation which totals US$4 billion
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HOMEBUILDER DR Horton tightened its annual forecast for home sales and beat Wall Street estimates for quarterly profit on Thursday (Jul 18), as historically low US supplies lift new home sales despite elevated mortgage rates.
The largest US homebuilder by sales volume now expects to deliver between 90,000 and 90,500 homes in fiscal year 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 per cent 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 per cent for months, discouraging US homeowners with fixed rates below 5 per cent to resell their homes.
This “rate lock-in” has constrained supply of existing homes, which account for a large portion of US housing sales, forcing buyers to turn to new construction.
DR Horton also approved a new share buyback authorisation totalling US$4 billion.
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However, the homebuilder’s pre-tax profit margin declined marginally to 18.1 per cent from 18.3 per cent a year earlier, dragged by discounts to whip up demand due to affordability concerns.
Among the most popular incentives are mortgage rate buy-downs, 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 US$36.8 billion to US$37.2 billion for FY2024. This is 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 London Stock Exchange Group data.
Revenue rose 2 per cent to about US$10 billion, above estimates of about US$9.7 billion. REUTERS
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