Fort Worth-based D.R. Horton reported a 14 percent jump in orders for its fiscal second quarter on Thursday, benefiting from buyer demand at the start of the key spring selling season.
But shares of the country’s leading homebuilder fell after the company’s sales forecast implied a slowdown in the second half of the year.
Orders for the three months ended March 31 increased to 13,991 homes from 12,292 a year earlier, the company said Thursday. The value of those deals rose 17 percent to $4.2 billion.
Net income for the second quarter was $229.2 million, or 60 cents a share, compared with $195.1 million, or 52 cents, a year earlier, D.R. Horton said in its statement. The average estimate of 14 analysts was 59 cents a share, according to data compiled by Bloomberg.
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Homebuilding revenue rose to $3.2 billion from $2.7 billion a year earlier, D.R. Horton said. The number of sales completed in the quarter climbed 15 percent to 10,685.
Homebuilder sales have been climbing as resilient job growth and tight housing inventory fuel demand for newly constructed residences. D.R. Horton has seen increasing volume through its Express brand, which targets entry-level buyers who may be looking for other options amid bidding wars and rising prices for existing properties.
However Jade Rahmani of Keefe, Bruyette & Woods, said an analysis of Horton’s projections for its fiscal fourth quarter show sales are likely to range from a decline of 1 percent to an increase of 15 percent. During a conference call on Thursday, executives said the perceived slowdown was a matter of difficult sales comparisons.
Still, Horton shares (ticker: DHI) lost 85 cents, or 2.5 percent, to $33.10. The shares had gained 24 percent this year before Thursday.
“We believe the shares are trading modestly lower on decelerating growth in the back half,” Rahmani said in his report.
D.R. Horton is preparing to move into a new four-story headquarters building in Arlington, located on the north side of I-30 across from Globe Life Park. The company has said it expects to relocate from downtown Fort Worth by late May.
Labor shortages and the rising cost of land have made it more difficult for builders to meet demand. U.S. homebuilders say the labor crunch is their biggest challenge, and that it has pushed costs up as much as 5.2 percent on average over 12 months, according to National Association of Home Builders/Wells Fargo surveys last year.
“Builders will have to compete against each other to attract labor,” Rahmani said. “Builders with the greatest market share in each market will have the best ability to attract subcontractors.”
This article includes material from Star-Telegram archives.