D.R. Horton year-end results show some resiliency in housing market

Yet numbers also point to signs of a slowdown in the months ahead

ARLINGTON, Texas — By most accounts, D.R. Horton, which bills itself as America’s largest homebuilder since 2002, had a stellar fourth quarter and a stellar fiscal year ended Sept. 30.

The company reported that consolidated revenues for the fourth quarter increased 19% to $9.6 billion and net income increased 26% to $1.6 billion.

For the full year, consolidated revenues rose 21% to $33.5 billion while net income rose 40% to $5.9 billion.

Revenue on homes closed during the quarter rose 23.3% to $9.4 billion on 23,212 homes and for the full year, it rose 20% to $31.9 billion on 82,744 homes.

All this matters because it is a sign that the home construction market remains strong at least for one of the major players in the business. And that in turn could also end up being good for furniture sales in the regions where its building activity is the strongest, including the Southeast and South Central regions of the United States.

Yet despite the strong financial performance, there were some other signs pointing to a slowdown in the business.

Net sales orders — or the number and dollar value of new sales contracts executed with customers, net of sales contract cancellations — fell 15% to 13,583 homes and 10% in value to $5.4 billion, from 15,949 homes and $6 billion in the same quarter last year.

The cancellation rate for the quarter (which the company describes as cancelled sales orders divided by gross sales orders) was 32% compared to 19% in the same period last year.

For the full fiscal year, net sales orders fell 6% to 76,137 homes and rose 9% in value to $30.4 billion, compared to 81,378 homes and $27.7 billion in fiscal 2021. Its cancellation rate for the fiscal year was 21% compared to 17% in fiscal 2021.

Meanwhile its sales order backlog of homes under contract as of Sept. 30 fell 25% to 19,614 homes and 16% in value to $8 billion, compared to 26,221 homes and $9.5 billion as of Sept. 30, 2021.

Its total number of homes in inventory remains at 46,400, just under the 47,800 reported at the end of last fiscal year.

Meanwhile, the company’s Forestar residential lot development division reported it sold 3,914 lots that generated $381.4 million in revenue during the quarter compared to 4,902 lots and $418.7 million in revenues in the prior year quarter. For the full fiscal year, it sold 17,691 lots and generated $1.5 billion in revenue compared to 15,915 lots and $1.3 billion in revenue in fiscal 2021.

Noting that the company completed its 21st consecutive year as the largest homebuilder in the U.S., Chairman Donald R. Horton was pleased with the results.

Yet he also pointed to some broader issues affecting the business moving forward.

“During most of the year, demand for our homes was strong,” he said in the company’s earnings release, adding, “Beginning in June and continuing through today, we have seen a moderation in housing demand caused by significant increases in mortgage interest rates and general economic uncertainty. While these pressures may persist for some time, the supply of homes at affordable price points remains limited and demographics supporting housing demand remain favorable.”

Of course these same pressures — namely people hesitating to commit to a new home purchase — in turn could affect demand for home furnishings in the coming year.

Thus it makes homebuilding and homebuying an area to watch in the coming months. At Home News Now, we also will be watching these trends and reporting any significant changes as they occur across the nation and in individual regions as the information is available.

Like others in the industry, we hope the environment becomes more favorable for home buying and selling as this area of the economy continues to be so closely tied to furniture sales.

Thomas Russell

Home News Now Editor-in-Chief Thomas Russell has covered the furniture industry for 25 years at various daily and weekly consumer and trade publications. He can be reached at tom@homenewsnow.com and at 336-508-4616.

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