Sharply declining oil prices in the past few months are taking a toll on home building in West Texas, the chairman of the nation’s largest home builder said Thursday.
Speaking after the company’s annual shareholders meeting in Fort Worth, Donald R. Horton, who founded D.R. Horton in 1991, said banks in Midland-Odessa have “backed off” the small home-building companies there. But in other Texas cities where the economy also relies heavily on the oil industry, he said, the impact hasn’t been as great.
Horton said his company and one other firm are now the only ones building homes in Midland-Odessa.
“Has the number of buyers slowed down there? Yes. But the builders have slowed way down,” he said. “I can tell you, so far in Houston, we haven’t seen any issues.”
In Dallas-Fort Worth, Horton said, the company closed the sale of a $3.5 million Emerald brand home in Highland Park last week and is building another luxury-brand home in Fort Worth’s Rivercrest neighborhood priced at just under $5 million.
In Texas, analysts have forecast a 20 percent decline in home construction this year, followed by a 4 percent dip in 2016, partly because of low oil prices, according to published reports. Before the sudden drop in the price of crude, expectations were for 12 to 14 percent growth in home building.
Nationwide, strong job growth and continued low mortgage rates are helping the housing markets.
For the fiscal year that ended Sept. 30, Horton’s revenue climbed to $8 billion and the company closed on 28,670 homes. The number of closings put Horton 46 percent ahead of Lennar Homes, another large nationwide builder, Horton said.
Horton told executives and other shareholders that the company owns enough land to support double-digit revenue growth in fiscal 2015. It forecasts closing on 34,500 to 37,500 homes and seeing revenue reach $9.5 billion to $10.5 billion, he said.
The company will release its first-quarter revenue, for the three months that ended Dec. 31, on Monday.
Horton builds in 79 markets in 27 states. Its Emerald luxury brand, launched in 2013, is growing faster than expected and is now in 34 markets in 14 states. In fiscal 2014, it accounted for 17 percent of home sales revenue.
Express Homes, the entry-level brand it brought to the market less than a year ago, is now in 24 markets in eight states and represents 4 percent of home sales revenue.
Horton said he expects those two brands to reach 25 percent of revenue each and the Horton brand, for entry-level and move-up buyers, to be 50 percent.
In DFW, Horton started 3,803 homes and closed on 3,138 homes in 2014, representing nearly 15 percent of market share, according to a report this week by Dallas-based Residential Strategies.
Sandra Baker, 817-390-7727