D.R. Horton reports higher profit, plans for entry-level Express Homes

04/24/2014 11:03 AM

04/24/2014 11:04 AM

Leading home builder D.R. Horton reported an 18 percent rise in profit for its fiscal second quarter Thursday as it pushed prices higher during a nationwide shortage of new and existing homes for sale.

At the same time, the Fort Worth-based company announced plans to roll out a new brand called Express Homes, a more affordable line focused on first-time buyers who don’t qualify for its higher-priced houses.

Express Homes will range from $120,000 to $150,000 and will be turnkey, with buyers having no option to select finishes or upgrades. The brand will offer competitive well-built homes that take less time and money to build, the company said.

The lower price point compares with an average selling price of $278,900 for Horton homes in the quarter that ended March 31, up 10 percent from the previous year, the company said.

Donald Tomnitz, Horton’s chief executive officer, said Express Homes will be introduced in 13 markets in four states where D.R. Horton homes are already sold. He was not more specific.

“The next leg of the recovery will be led by the true entry-level buyer,” Tomnitz said. “This price point creates a whole new pool of buyers.”

Shares of Horton (ticker: DHI) closed up $1.78 at $23.13.

Horton said its profit for the quarter was $131 million, or 38 cents a share, compared with $111 million, or 32 cents a share, a year ago. Home-building revenue for the period rose 22 percent to $1.7 billion.

The company also closed more homes in the quarter — 6,194, 10 percent more than the 5,643 homes closed a year ago. Sales orders also increased 9 percent to 8,569 homes. The value of the orders rose 20 percent to $2.4 billion, the company said.

“Our homebuilding and financial services operations delivered a great quarter,” Chairman Donald Horton said in a statement. “The dollar value of our homes sold, closed and in backlog all increased by double-digit percentages.”

A year ago, Horton introduced its Emerald line of luxury homes, priced above $500,000. Tomnitz said the line represented 6 percent of its sales in the quarter.

Toward the end of the second quarter, the company increased incentives in some markets to spur sales, but not significantly, Tomnitz said.

“We are experiencing solid demand,” he said.

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