D.R. Horton Inc.
04/23/2026 | Press release | Distributed by Public on 04/23/2026 12:31
Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this quarterly report and with our annual report on Form 10-K for the fiscal year ended September 30, 2025. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those described in the "Forward-Looking Statements" section following this discussion.
BUSINESS
D.R. Horton, Inc. is the largest homebuilding company in the United States as measured by number of homes closed. We construct and sell homes through our operating divisions in 126 markets across 36 states. Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange and NYSE Texas under the ticker symbol "DHI." Unless the context otherwise requires, the terms "D.R. Horton," the "Company," "we" and "our" used herein refer to D.R. Horton, Inc., a Delaware corporation, and its predecessors and subsidiaries.
Our business operations consist of homebuilding, rental, a majority-owned residential lot development company, financial services and other activities. Homebuilding is our core business and primarily includes the construction and sale of single-family homes with sales prices generally ranging from $200,000 to more than $1,000,000, with an average closing price of $363,500 during the six months ended March 31, 2026. Approximately 85% of our home sales revenue in the six months ended March 31, 2026 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes and duplexes.
We have closed more than 1.2 million homes during our 47-year history, and we have been the largest volume homebuilder in the United States every year since 2002. Our product offerings include a broad range of homes for entry-level, move-up, active adult and luxury buyers.
Our rental segment consists of single-family and multi-family rental operations. Single-family rental operations construct homes within single-family rental (build-to-rent) communities and then either sell homes to an investor as they are completed or lease the homes and market the entire community for a bulk sale. Multi-family rental operations develop, construct, lease and sell residential rental properties, the substantial majority of which are apartment communities.
At March 31, 2026, we owned 62% of the outstanding shares of Forestar Group Inc. (Forestar), a publicly traded residential lot development company listed on the New York Stock Exchange and NYSE Texas under the ticker symbol "FOR." Forestar operates across many of our homebuilding operating markets and is a key part of our homebuilding strategy to maintain relationships with land developers and control a large portion of our land and lot position through land purchase contracts.
Our financial services operations provide mortgage financing and title agency services to homebuyers in many of our homebuilding markets. DHI Mortgage, our wholly owned subsidiary, provides mortgage financing services primarily to our homebuyers and sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers after origination. Our wholly owned subsidiary title companies issue title insurance policies and provide examination, underwriting and closing services primarily to our homebuilding customers.
In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented as other.
OVERVIEW
During the six months ended March 31, 2026, our number of homes closed and home sales revenues decreased 3% and 5%, respectively, compared to the prior year period, and consolidated revenues decreased 6% to $14.4 billion compared to $15.3 billion. Our pre-tax income was $1.7 billion in the six months ended March 31, 2026 compared to $2.2 billion in the prior year period, and pre-tax operating margin was 11.5% compared to 14.2%. Net income was $1.3 billion in the six months ended March 31, 2026 compared to $1.7 billion in the prior year period, and diluted earnings per share were $4.27 compared to $5.19.
In the trailing twelve months ended March 31, 2026, our return on equity (ROE) was 13.2% compared to 17.4% in the prior year period, and return on assets (ROA) was 8.9% compared to 12.2%. ROE is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average stockholders' equity, where average stockholders' equity is the sum of ending stockholders' equity balances for the trailing five quarters divided by five. ROA is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average consolidated assets, where average consolidated assets is the sum of total asset balances for the trailing five quarters divided by five.
During the second quarter, new home demand continued to be impacted by affordability constraints and cautious consumer sentiment. Despite these conditions, our net sales orders increased 11% compared to the prior year quarter, and the value of net sales orders increased 10%, reflecting the focus of our operations on disciplined execution across our markets. Home sales revenues decreased 2% compared to the prior year quarter. Home sales gross margin was 20.1% for the second quarter, compared to 21.8% in the prior year quarter, reflecting the decline in our average sales price and higher sales incentives, including mortgage interest rate buydowns offered to support affordability for our homebuyers. We remain well positioned with our affordable product offerings and controlled lot supply, and we continue to manage home pricing, sales incentives and inventory levels based on demand within our local markets. We currently expect sales incentives to remain elevated and may adjust incentive levels further depending on changes in market conditions and mortgage interest rates.
We remain focused on our relationships with land developers across the country to maximize returns and capital efficiency. Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 77% of the lots owned and controlled at March 31, 2026 compared to 75% at both September 30, 2025 and March 31, 2025. We continue to prioritize the purchase of finished lots from Forestar and other land developers when possible. During the six months ended March 31, 2026, 67% of the homes we closed were on lots developed by either Forestar or a third party compared to 65% in the prior year period.
We believe our strong balance sheet and liquidity provide us with flexibility to operate effectively through changing economic conditions. We plan to continue to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.
STRATEGY
Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive positions to maximize the returns on our inventory investments and generate strong profits and cash flows from operations, while managing risk and maintaining financial flexibility to navigate changing economic conditions. Our strategy includes the following initiatives:
•Developing and retaining highly experienced and productive teams of personnel throughout our company that are aligned and focused on continuous improvement in our operational execution and financial performance.
•Maintaining a significant cash balance and strong overall liquidity position while controlling our level of debt.
•Allocating and actively managing our inventory investments across our operating markets to diversify our geographic risk.
•Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market.
•Executing sales and marketing strategies to drive traffic, generate demand and optimize sales pace across our communities.
•Modifying product offerings, sales pace, home prices and incentives as necessary in each of our markets to meet consumer demand and maintain affordability.
•Delivering high quality homes and a positive experience to our customers both during and after the sale.
•Managing our inventory of homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold completed homes in inventory.
•Investing in lots, land and land development in desirable markets, while controlling the level of land and lots we own in each market relative to the local new home demand.
•Controlling a significant portion of our land and finished lot position through purchase contracts and prioritizing the purchase of finished lots from Forestar and other land developers when possible.
•Controlling the cost of labor and goods provided by subcontractors and vendors.
•Improving the efficiency of our land development, construction and other key operational activities.
•Controlling our selling, general and administrative (SG&A) expense infrastructure to match production levels.
•Ensuring that our financial services business provides high quality mortgage and title services to homebuyers efficiently and effectively.
•Investing in our rental operations to meet rental demand in high growth suburban markets and selling these properties profitably.
•Opportunistically evaluating potential acquisitions to enhance our operating platform.
We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position. However, we cannot provide any assurance that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.
KEY RESULTS
Key financial results as of and for the three months ended March 31, 2026, as compared to the same period of 2025 unless otherwise indicated, were as follows:
Consolidated Results:
•Consolidated revenues decreased 2% to $7.6 billion compared to $7.7 billion.
•Consolidated pre-tax income decreased 19% to $867.4 million compared to $1.1 billion.
•Consolidated pre-tax income was 11.5% of consolidated revenues compared to 13.8%.
•Income tax expense was $209.4 million compared to $248.0 million, and our effective tax rate was 24.1% compared to 23.2%.
•Net income attributable to D.R. Horton decreased 20% to $647.9 million compared to $810.4 million.
•Net income per diluted share attributable to D.R. Horton decreased 13% to $2.24 compared to $2.58.
•Stockholders' equity was $23.6 billion compared to $24.2 billion and $24.3 billion at September 30, 2025 and March 31, 2025, respectively.
•Book value per share increased to $82.91 compared to $82.15 and $78.82 at September 30, 2025 and March 31, 2025, respectively.
•Debt to total capital was 21.7% compared to 19.8% and 21.1% at September 30, 2025 and March 31, 2025, respectively. Net debt to total capital was 16.4% compared to 11.0% and 14.3% at September 30, 2025 and March 31, 2025, respectively.
Homebuilding:
•Homebuilding revenues decreased 2% to $7.1 billion compared to $7.2 billion.
•Homes closed increased 1% to 19,486 homes, while the average closing price of those homes decreased 3% to $361,600.
•Net sales orders increased 11% to 24,992 homes, and the value of net sales orders increased 10% to $9.2 billion.
•Sales order backlog increased 19% to 16,882 homes, and the value of sales order backlog increased 17% to $6.4 billion.
•Home sales gross margin was 20.1% compared to 21.8%.
•Homebuilding SG&A expense was 9.2% of homebuilding revenues compared to 8.9%.
•Homebuilding pre-tax income decreased 19% to $757.9 million compared to $935.0 million.
•Homebuilding pre-tax income was 10.7% of homebuilding revenues compared to 13.0%.
•Homebuilding cash and cash equivalents totaled $1.1 billion compared to $2.2 billion and $1.9 billion at September 30, 2025 and March 31, 2025, respectively.
•Homebuilding inventories totaled $21.0 billion compared to $20.3 billion and $20.9 billion at September 30, 2025 and March 31, 2025, respectively.
•Homes in inventory totaled 38,200 compared to 29,600 and 36,900 at September 30, 2025 and March 31, 2025, respectively.
•Owned lots totaled 134,100 compared to 147,000 and 150,600 at September 30, 2025 and March 31, 2025, respectively. Lots controlled through purchase contracts totaled 441,200 compared to 444,900 and 462,500 at September 30, 2025 and March 31, 2025, respectively.
•Homebuilding debt was $3.4 billion compared to $3.2 billion and $3.1 billion at September 30, 2025 and March 31, 2025, respectively.
Rental:
•Rental revenues were $211.8 million compared to $236.6 million.
•Single-family rental homes closed totaled 566 compared to 519.
•Multi-family rental units closed totaled 216 compared to 300.
•Rental pre-tax income was $12.3 million compared to $22.8 million.
•Rental inventory totaled $3.0 billion compared to $2.7 billion and $3.1 billion at September 30, 2025 and March 31, 2025, respectively.
Forestar:
•Forestar's revenues increased 7% to $374.3 million compared to $351.0 million. Revenues in the current and prior year quarters included $295.9 million and $267.8 million, respectively, of revenue from land and lot sales to our homebuilding segment.
•Forestar's lots sold decreased 14% to 2,938 compared to 3,411. Lots sold to D.R. Horton totaled 2,450 compared to 2,501.
•Forestar's revenue from tract acres sold was $35.6 million compared to no tract acres sold in the prior year quarter.
•Forestar's pre-tax income increased 8% to $43.9 million compared to $40.7 million.
•Forestar's pre-tax income was 11.7% of revenues compared to 11.6%.
•Forestar's cash and cash equivalents totaled $362.2 million compared to $379.2 million and $174.3 million at September 30, 2025 and March 31, 2025, respectively.
•Forestar's inventories totaled $2.7 billion compared to $2.6 billion and $2.8 billion at September 30, 2025 and March 31, 2025, respectively.
•Forestar's owned and controlled lots totaled 94,400 compared to 99,800 and 105,900 at September 30, 2025 and March 31, 2025, respectively. Of these lots, 41,000 were under contract to sell to or subject to a right of first offer with D.R. Horton compared to 40,400 and 43,900 at September 30, 2025 and March 31, 2025, respectively.
•Forestar's debt was $793.5 million compared to $802.8 million and $872.5 million at September 30, 2025 and March 31, 2025, respectively.
•Forestar's debt to total capital was 30.4% compared to 31.2% and 34.7% at September 30, 2025 and March 31, 2025, respectively. Forestar's net debt to total capital was 19.2% compared to 19.3% and 29.8% at September 30, 2025 and March 31, 2025, respectively.
Financial Services:
•Financial services revenues decreased 9% to $192.8 million compared to $212.9 million.
•Financial services pre-tax income decreased 29% to $51.7 million compared to $73.0 million.
•Financial services pre-tax income was 26.8% of financial services revenues compared to 34.3%.
Key financial results for the six months ended March 31, 2026, as compared to the same period of 2025, were as follows:
Consolidated Results:
•Consolidated revenues decreased 6% to $14.4 billion compared to $15.3 billion.
•Consolidated pre-tax income decreased 24% to $1.7 billion compared to $2.2 billion.
•Consolidated pre-tax income was 11.5% of consolidated revenues compared to 14.2%.
•Income tax expense was $406.0 million compared to $506.0 million, and our effective tax rate was 24.4% compared to 23.2%.
•Net income attributable to D.R. Horton decreased 25% to $1.2 billion compared to $1.7 billion.
•Net income per diluted share attributable to D.R. Horton decreased 18% to $4.27 compared to $5.19.
•Net cash provided by operations was $441.5 million compared to $210.5 million.
Homebuilding:
•Homebuilding revenues decreased 5% to $13.6 billion compared to $14.4 billion.
•Homes closed decreased 3% to 37,304 homes, and the average closing price of those homes decreased 3% to $363,500.
•Net sales orders increased 7% to 43,292 homes, and the value of net sales orders increased 5% to $15.8 billion.
•Home sales gross margin was 20.3% compared to 22.3%.
•Homebuilding SG&A expense was 9.4% of homebuilding revenues compared to 8.9%.
•Homebuilding pre-tax income decreased 25% to $1.5 billion compared to $1.9 billion.
•Homebuilding pre-tax income was 10.8% of homebuilding revenues compared to 13.6%.
•Net cash provided by homebuilding operations was $618.8 million compared to $876.0 million.
Rental:
•Rental revenues were $321.3 million compared to $454.3 million.
•Single-family rental homes closed totaled 963 compared to 830.
•Multi-family rental units closed totaled 216 compared to 804.
•Rental pre-tax income was $12.5 million compared to $34.7 million.
Forestar:
•Forestar's revenues increased 8% to $647.3 million compared to $601.3 million. Revenues in the current and prior year periods included $479.7 million and $486.4 million, respectively, of revenue from land and lot sales to our homebuilding segment.
•Forestar's lots sold decreased 15% to 4,882 compared to 5,744. Lots sold to D.R. Horton totaled 4,077 compared to 4,613.
•Forestar's revenue from tract acres sold was $64.9 million compared to no tract acres sold in the prior year period.
•Forestar's pre-tax income increased 4% to $64.8 million compared to $62.6 million.
•Forestar's pre-tax income was 10.0% of revenues compared to 10.4%.
Financial Services:
•Financial services revenues decreased 5% to $377.4 million compared to $395.2 million.
•Financial services pre-tax income decreased 10% to $109.7 million compared to $121.6 million.
•Financial services pre-tax income was 29.1% of financial services revenues compared to 30.8%.
RESULTS OF OPERATIONS - HOMEBUILDING
We conduct our homebuilding operations in the geographic regions, states and markets listed below. Our homebuilding operating divisions are aggregated into six reporting segments, also referred to as reporting regions, which comprise the markets below. Our financial statements and the notes thereto contain additional information regarding segment performance.
| State | Reporting Region/Market | State | Reporting Region/Market | State | Reporting Region/Market | |||||||||||||||||||||||||||
| Northwest Region | Southeast Region | North Region | ||||||||||||||||||||||||||||||
| Colorado | Colorado Springs | Alabama | Baldwin County | Delaware | Northern Delaware | |||||||||||||||||||||||||||
| Denver | Birmingham | Southern Delaware | ||||||||||||||||||||||||||||||
| Fort Collins | Huntsville | Illinois | Chicago | |||||||||||||||||||||||||||||
| Oregon | Bend | Mobile | Indiana | Fort Wayne | ||||||||||||||||||||||||||||
| Eugene/Springfield | Montgomery | Indianapolis | ||||||||||||||||||||||||||||||
| Medford | Tuscaloosa | Northwest Indiana | ||||||||||||||||||||||||||||||
| Portland/Salem | Florida | Cape Coral/Fort Myers | Iowa | Des Moines | ||||||||||||||||||||||||||||
| Utah | Salt Lake City/Provo/Ogden | Deltona/Daytona Beach | Iowa City/Cedar Rapids | |||||||||||||||||||||||||||||
| St. George | Gainesville | Kansas/Missouri | Kansas City | |||||||||||||||||||||||||||||
| Washington | Bremerton | Jacksonville | Kentucky | Louisville/Lexington | ||||||||||||||||||||||||||||
| Central Washington | Lakeland | Maryland | Baltimore | |||||||||||||||||||||||||||||
| Kennewick/Pasco/Richland | Miami/Fort Lauderdale | Eastern Maryland | ||||||||||||||||||||||||||||||
| Seattle/Tacoma/Everett/Olympia | Ocala | Suburban Washington, D.C. | ||||||||||||||||||||||||||||||
| Spokane | Orlando | Western Maryland | ||||||||||||||||||||||||||||||
| Vancouver | Palm Bay/Melbourne | Minnesota | Minneapolis/St. Paul | |||||||||||||||||||||||||||||
| Panama City | Nebraska | Omaha | ||||||||||||||||||||||||||||||
| Southwest Region | Pensacola | New Jersey | Northern New Jersey | |||||||||||||||||||||||||||||
| Arizona | Phoenix | Port St. Lucie | Southern New Jersey | |||||||||||||||||||||||||||||
| Tucson | Tallahassee | Ohio | Cincinnati/Dayton | |||||||||||||||||||||||||||||
| California | Bakersfield | Tampa/Sarasota/Punta Gorda | Columbus | |||||||||||||||||||||||||||||
| Bay Area | West Palm Beach | Pennsylvania | Central Pennsylvania | |||||||||||||||||||||||||||||
| Fresno/Tulare | Louisiana | Baton Rouge | Philadelphia | |||||||||||||||||||||||||||||
| Los Angeles County | Lake Charles/Lafayette | Pittsburgh | ||||||||||||||||||||||||||||||
| Modesto/Merced/Stockton | Mississippi | Gulf Coast | Virginia | Northern Virginia | ||||||||||||||||||||||||||||
| Redding/Chico/Yuba City | Hattiesburg | Richmond | ||||||||||||||||||||||||||||||
| Riverside County | Jackson | Virginia Beach/Williamsburg | ||||||||||||||||||||||||||||||
| Sacramento | Western Virginia | |||||||||||||||||||||||||||||||
| San Bernardino County | East Region | West Virginia | Eastern West Virginia | |||||||||||||||||||||||||||||
| Hawaii | Oahu | Georgia | Atlanta | Northern West Virginia | ||||||||||||||||||||||||||||
| Nevada | Las Vegas | Augusta | Wisconsin | Southeast Wisconsin | ||||||||||||||||||||||||||||
| Reno | Central Georgia | |||||||||||||||||||||||||||||||
| New Mexico | Albuquerque | Savannah/Brunswick | ||||||||||||||||||||||||||||||
| Santa Fe | Valdosta | |||||||||||||||||||||||||||||||
| North Carolina | Asheville | |||||||||||||||||||||||||||||||
| South Central Region | Charlotte | |||||||||||||||||||||||||||||||
| Arkansas | Little Rock | Greensboro/Winston-Salem | ||||||||||||||||||||||||||||||
| Northwest Arkansas | New Bern/Greenville | |||||||||||||||||||||||||||||||
| Oklahoma | Oklahoma City | Raleigh/Durham/Fayetteville | ||||||||||||||||||||||||||||||
| Tulsa | Wilmington | |||||||||||||||||||||||||||||||
| Texas | Abilene | South Carolina | Charleston | |||||||||||||||||||||||||||||
| Austin | Columbia | |||||||||||||||||||||||||||||||
| Beaumont | Greenville/Spartanburg | |||||||||||||||||||||||||||||||
| Bryan/College Station | Hilton Head | |||||||||||||||||||||||||||||||
| Corpus Christi | Myrtle Beach | |||||||||||||||||||||||||||||||
| Dallas | Tennessee | Chattanooga | ||||||||||||||||||||||||||||||
| East Texas | Knoxville | |||||||||||||||||||||||||||||||
| Fort Worth | Memphis | |||||||||||||||||||||||||||||||
| Houston | Nashville | |||||||||||||||||||||||||||||||
| Killeen/Temple/Waco | Northeast Tennessee | |||||||||||||||||||||||||||||||
| Lubbock | ||||||||||||||||||||||||||||||||
| Midland/Odessa | ||||||||||||||||||||||||||||||||
| New Braunfels/San Marcos | ||||||||||||||||||||||||||||||||
| San Antonio | ||||||||||||||||||||||||||||||||
The following tables and related discussion set forth key operating and financial data for our homebuilding operations by reporting segment as of and for the three and six months ended March 31, 2026 and 2025.
| Net Sales Orders (1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Homes Sold | Value (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Northwest | 1,234 | 1,390 | (11) | % | $ | 672.0 | $ | 762.7 | (12) | % | $ | 544,600 | $ | 548,700 | (1) | % | ||||||||||||||||||||||||||||||||||||||||
| Southwest | 2,646 | 2,371 | 12 | % | 1,276.6 | 1,143.7 | 12 | % | 482,500 | 482,400 | - | % | ||||||||||||||||||||||||||||||||||||||||||||
| South Central | 6,821 | 5,958 | 14 | % | 2,040.2 | 1,853.5 | 10 | % | 299,100 | 311,100 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 5,734 | 5,180 | 11 | % | 1,944.7 | 1,762.1 | 10 | % | 339,200 | 340,200 | - | % | ||||||||||||||||||||||||||||||||||||||||||||
| East | 5,152 | 4,754 | 8 | % | 1,789.9 | 1,644.0 | 9 | % | 347,400 | 345,800 | - | % | ||||||||||||||||||||||||||||||||||||||||||||
| North | 3,405 | 2,784 | 22 | % | 1,430.3 | 1,192.6 | 20 | % | 420,100 | 428,400 | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||
| 24,992 | 22,437 | 11 | % | $ | 9,153.7 | $ | 8,358.6 | 10 | % | $ | 366,300 | $ | 372,500 | (2) | % | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Homes Sold | Value (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Northwest | 2,157 | 2,409 | (10) | % | $ | 1,159.6 | $ | 1,296.4 | (11) | % | $ | 537,600 | $ | 538,100 | - | % | ||||||||||||||||||||||||||||||||||||||||
| Southwest | 4,668 | 4,545 | 3 | % | 2,242.7 | 2,193.1 | 2 | % | 480,400 | 482,500 | - | % | ||||||||||||||||||||||||||||||||||||||||||||
| South Central | 11,752 | 10,517 | 12 | % | 3,517.6 | 3,284.2 | 7 | % | 299,300 | 312,300 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 9,971 | 9,602 | 4 | % | 3,361.9 | 3,264.1 | 3 | % | 337,200 | 339,900 | (1) | % | ||||||||||||||||||||||||||||||||||||||||||||
| East | 9,020 | 8,341 | 8 | % | 3,125.0 | 2,883.3 | 8 | % | 346,500 | 345,700 | - | % | ||||||||||||||||||||||||||||||||||||||||||||
| North | 5,724 | 4,860 | 18 | % | 2,408.7 | 2,091.0 | 15 | % | 420,800 | 430,200 | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||
| 43,292 | 40,274 | 7 | % | $ | 15,815.5 | $ | 15,012.1 | 5 | % | $ | 365,300 | $ | 372,700 | (2) | % | |||||||||||||||||||||||||||||||||||||||||
| Sales Order Cancellations | ||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| Cancelled Sales Orders | Value (In millions) | Cancellation Rate (2) | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Northwest | 159 | 198 | $ | 90.8 | $ | 115.7 | 11 | % | 12 | % | ||||||||||||||||||||||||||||
| Southwest | 544 | 407 | 270.5 | 212.7 | 17 | % | 15 | % | ||||||||||||||||||||||||||||||
| South Central | 1,253 | 1,030 | 395.1 | 336.5 | 16 | % | 15 | % | ||||||||||||||||||||||||||||||
| Southeast | 1,167 | 1,111 | 407.0 | 382.5 | 17 | % | 18 | % | ||||||||||||||||||||||||||||||
| East | 1,039 | 919 | 368.5 | 326.5 | 17 | % | 16 | % | ||||||||||||||||||||||||||||||
| North | 700 | 590 | 288.0 | 248.2 | 17 | % | 17 | % | ||||||||||||||||||||||||||||||
| 4,862 | 4,255 | $ | 1,819.9 | $ | 1,622.1 | 16 | % | 16 | % | |||||||||||||||||||||||||||||
| Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| Cancelled Sales Orders | Value (In millions) | Cancellation Rate (2) | ||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||||||
| Northwest | 320 | 362 | $ | 185.9 | $ | 209.3 | 13 | % | 13 | % | ||||||||||||||||||||||||||||
| Southwest | 974 | 777 | 482.4 | 395.4 | 17 | % | 15 | % | ||||||||||||||||||||||||||||||
| South Central | 2,251 | 2,021 | 714.0 | 658.4 | 16 | % | 16 | % | ||||||||||||||||||||||||||||||
| Southeast | 2,137 | 2,175 | 736.0 | 751.1 | 18 | % | 18 | % | ||||||||||||||||||||||||||||||
| East | 1,889 | 1,708 | 672.3 | 607.0 | 17 | % | 17 | % | ||||||||||||||||||||||||||||||
| North | 1,293 | 1,141 | 530.2 | 480.6 | 18 | % | 19 | % | ||||||||||||||||||||||||||||||
| 8,864 | 8,184 | $ | 3,320.8 | $ | 3,101.8 | 17 | % | 17 | % | |||||||||||||||||||||||||||||
________________________
(1)Net sales orders represent the number and dollar value of new sales contracts executed with customers (gross sales orders), net of cancelled sales orders.
(2)Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.
Net Sales Orders
The value of net sales orders was $9.2 billion (24,992 homes) and $15.8 billion (43,292 homes) for the three and six months ended March 31, 2026, respectively, compared to $8.4 billion (22,437 homes) and $15.0 billion (40,274 homes) in the prior year periods. The increase in value in the three and six month periods was attributable to increases in sales order volume of 11% and 7%, respectively, while the average selling price decreased 2% in both periods.
In regions where sales order volume increased, the markets contributing most to the increase were the Northern California and Phoenix markets in the Southwest, the Fort Worth, Houston and San Antonio markets in the South Central, the Tampa and Alabama markets in the Southeast, the Myrtle Beach and Atlanta markets in the East and the Pittsburgh and Ohio markets in the North. In the Northwest, the Seattle and Salt Lake City markets contributed most to the decrease in sales order volume.
During the second quarter, new home demand continued to be impacted by affordability constraints and cautious consumer sentiment. We remain well positioned with our affordable product offerings and controlled lot supply, and we continue to manage home pricing, sales incentives and inventory levels based on demand within our local markets.
| Sales Order Backlog | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As of March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes in Backlog | Value (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Northwest | 645 | 665 | (3) | % | $ | 351.4 | $ | 387.2 | (9) | % | $ | 544,800 | $ | 582,300 | (6) | % | ||||||||||||||||||||||||||||||||||||||||
| Southwest | 1,643 | 1,218 | 35 | % | 814.1 | 613.1 | 33 | % | 495,500 | 503,400 | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||
| South Central | 4,448 | 3,567 | 25 | % | 1,369.9 | 1,161.4 | 18 | % | 308,000 | 325,600 | (5) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 3,331 | 3,040 | 10 | % | 1,179.2 | 1,067.3 | 10 | % | 354,000 | 351,100 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| East | 3,799 | 3,413 | 11 | % | 1,376.7 | 1,227.4 | 12 | % | 362,400 | 359,600 | 1 | % | ||||||||||||||||||||||||||||||||||||||||||||
| North | 3,016 | 2,261 | 33 | % | 1,330.4 | 1,020.3 | 30 | % | 441,100 | 451,300 | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||
| 16,882 | 14,164 | 19 | % | $ | 6,421.7 | $ | 5,476.7 | 17 | % | $ | 380,400 | $ | 386,700 | (2) | % | |||||||||||||||||||||||||||||||||||||||||
Sales Order Backlog
Sales order backlog represents homes under contract but not yet closed at the end of the period. Many of the contracts in our sales order backlog are subject to contingencies, including mortgage loan approval and buyers selling their existing homes, which can result in cancellations. A portion of the contracts in backlog will not result in closings due to cancellations.
| Homes Closed and Home Sales Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes Closed | Value (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Northwest | 993 | 1,223 | (19) | % | $ | 539.6 | $ | 660.4 | (18) | % | $ | 543,400 | $ | 540,000 | 1 | % | ||||||||||||||||||||||||||||||||||||||||
| Southwest | 2,169 | 2,206 | (2) | % | 1,025.1 | 1,063.6 | (4) | % | 472,600 | 482,100 | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||
| South Central | 5,111 | 4,968 | 3 | % | 1,511.4 | 1,530.0 | (1) | % | 295,700 | 308,000 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 4,662 | 4,626 | 1 | % | 1,552.3 | 1,593.0 | (3) | % | 333,000 | 344,400 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||||
| East | 4,039 | 3,953 | 2 | % | 1,381.9 | 1,359.8 | 2 | % | 342,100 | 344,000 | (1) | % | ||||||||||||||||||||||||||||||||||||||||||||
| North | 2,512 | 2,300 | 9 | % | 1,035.2 | 974.1 | 6 | % | 412,100 | 423,500 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||||
| 19,486 | 19,276 | 1 | % | $ | 7,045.5 | $ | 7,180.9 | (2) | % | $ | 361,600 | $ | 372,500 | (3) | % | |||||||||||||||||||||||||||||||||||||||||
| Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes Closed | Value (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Northwest | 1,988 | 2,279 | (13) | % | $ | 1,086.0 | $ | 1,193.5 | (9) | % | $ | 546,300 | $ | 523,700 | 4 | % | ||||||||||||||||||||||||||||||||||||||||
| Southwest | 4,060 | 4,541 | (11) | % | 1,915.0 | 2,203.6 | (13) | % | 471,700 | 485,300 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||||
| South Central | 9,739 | 9,704 | - | % | 2,900.7 | 3,016.5 | (4) | % | 297,800 | 310,900 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||
| Southeast | 9,045 | 9,657 | (6) | % | 3,004.6 | 3,332.2 | (10) | % | 332,200 | 345,100 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||
| East | 7,653 | 7,672 | - | % | 2,632.2 | 2,668.3 | (1) | % | 343,900 | 347,800 | (1) | % | ||||||||||||||||||||||||||||||||||||||||||||
| North | 4,819 | 4,482 | 8 | % | 2,019.7 | 1,912.9 | 6 | % | 419,100 | 426,800 | (2) | % | ||||||||||||||||||||||||||||||||||||||||||||
| 37,304 | 38,335 | (3) | % | $ | 13,558.2 | $ | 14,327.0 | (5) | % | $ | 363,500 | $ | 373,700 | (3) | % | |||||||||||||||||||||||||||||||||||||||||
Home Sales Revenue
Revenues from home sales were $7.0 billion (19,486 homes closed) and $13.6 billion (37,304 homes closed) for the three and six months ended March 31, 2026, respectively, compared to $7.2 billion (19,276 homes closed) and $14.3 billion (38,335 homes closed) in the prior year periods. The decrease in revenues in both periods was attributable to a 3% decrease in the average selling price, along with a 3% decrease in closings volume in the six month period.
The number of homes closed increased 1% and decreased 3% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods. In regions and periods where homes closed decreased, the markets contributing most to the decrease were the Seattle and Salt Lake City markets in the Northwest, the Las Vegas and Southern California markets in the Southwest and the Jacksonville and Tampa markets in the Southeast. The Pittsburgh and Southern Virginia markets contributed most to the increase in the North.
| Homebuilding Operating Margin Analysis | ||||||||||||||||||||||||||
| Percentages of Related Revenues | ||||||||||||||||||||||||||
|
Three Months Ended March 31, |
Six Months Ended March 31, |
|||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Gross profit - home sales | 20.1 | % | 21.8 | % | 20.3 | % | 22.3 | % | ||||||||||||||||||
| Gross profit - land/lot sales and other | 24.9 | % | 86.4 | % | 21.2 | % | 61.3 | % | ||||||||||||||||||
| Inventory and land option charges | (0.4) | % | (0.4) | % | (0.3) | % | (0.3) | % | ||||||||||||||||||
| Gross profit - total homebuilding | 19.8 | % | 21.6 | % | 20.0 | % | 22.1 | % | ||||||||||||||||||
| Selling, general and administrative expense | 9.2 | % | 8.9 | % | 9.4 | % | 8.9 | % | ||||||||||||||||||
| Other (income) expense | (0.2) | % | (0.2) | % | (0.2) | % | (0.3) | % | ||||||||||||||||||
| Homebuilding pre-tax income | 10.7 | % | 13.0 | % | 10.8 | % | 13.6 | % | ||||||||||||||||||
Home Sales Gross Profit
Gross profit from home sales decreased to $1.4 billion in the three months ended March 31, 2026 from $1.6 billion in the prior year period and decreased 170 basis points to 20.1% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 200 basis points due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes and 10 basis points due to an increase in the amortization of capitalized interest. These decreases were partially offset by an increase of 40 basis points due to a favorable litigation outcome and lower warranty costs.
Gross profit from home sales decreased to $2.7 billion in the six months ended March 31, 2026 from $3.2 billion in the prior year period and decreased 200 basis points to 20.3% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 240 basis points due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes and 10 basis points due to an increase in the amortization of capitalized interest. These decreases were partially offset by an increase of 50 basis points due to a favorable litigation outcome and lower warranty costs.
We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. To adjust to changes in market conditions during recent years, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers. We expect our incentive levels to stay elevated during fiscal 2026, the extent to which will depend on market conditions and changes in mortgage interest rates.
Land/Lot Sales and Other Revenues
Land/lot sales and other revenues from our homebuilding operations were $17.7 million and $33.9 million in the three and six months ended March 31, 2026, respectively, and $22.0 million and $43.2 million in the prior year periods.
We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets. We generally purchase land and lots with the intent to build and sell homes on them. However, some of the land that we purchase includes commercially zoned parcels that we may sell to commercial developers. We may also sell residential lots or land parcels to manage our supply or for other strategic reasons. As of March 31, 2026, our homebuilding operations had $39.1 million of land held for sale that we expect to sell in the next twelve months.
Inventory and Land Option Charges
At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary. As a result of this review, there were $3.0 million of impairment charges recorded in our homebuilding segment during the three and six months ended March 31, 2026 compared to $5.4 million and $7.4 million in the respective prior year periods.
As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment. If the housing market or economic conditions are adversely affected for a prolonged period, we may be required to evaluate additional communities for potential impairment. These evaluations could result in impairment charges which could be significant.
During the three and six months ended March 31, 2026, earnest money and pre-acquisition cost write-offs related to our homebuilding segment's land purchase contracts that we have terminated or expect to terminate were $22.5 million and $32.7 million, respectively, compared to $24.0 million and $33.9 million in the prior year periods.
Selling, General and Administrative (SG&A) Expense
Homebuilding SG&A expense was $648.9 million and $1.28 billion in the three and six months ended March 31, 2026, respectively, compared to $637.8 million and $1.27 billion in the prior year periods. As a percentage of homebuilding revenues, SG&A expense increased to 9.2% and 9.4% in the three and six months ended March 31, 2026, respectively, from 8.9% in both prior year periods, due to the decrease in homebuilding revenues.
Employee compensation and related costs were $492.9 million and $967.6 million in the three and six months ended March 31, 2026, respectively, compared to $500.9 million and $994.0 million in the prior year periods. These costs represented 76% of SG&A costs in both the three and six months ended March 31, 2026 compared to 79% and 78% in the prior year periods. Our homebuilding operations employed 9,809 and 10,199 people at March 31, 2026 and 2025, respectively.
We attempt to control our homebuilding SG&A costs while ensuring that our infrastructure adequately supports our operations; however, we cannot make assurances that we will be able to maintain or improve upon the current SG&A expense as a percentage of revenues.
Interest Incurred
We capitalize interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. Interest incurred by our homebuilding operations increased 59% to $33.1 million and 63% to $63.2 million in the three and six months ended March 31, 2026, respectively, compared to $20.8 million and $38.8 million in the prior year periods. The increases were primarily due to increases in the weighted average interest rate of homebuilding debt outstanding in the three and six months ended March 31, 2026, as well as an increase of 27% in the average amount of that debt in both periods. Interest charged to cost of sales was 0.5% of homebuilding cost of sales (excluding inventory and land option charges) in both the three and six months ended March 31, 2026 compared to 0.4% in both prior year periods.
Other Income
Other income, net of other expenses, included in our homebuilding operations was $11.1 million and $28.3 million in the three and six months ended March 31, 2026, respectively, compared to $17.0 million and $46.9 million in the prior year periods. Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income are not significant, either individually or in the aggregate.
Business Acquisition
In October 2025, we acquired the homebuilding operations of SK Builders for approximately $80 million in cash. SK Builders operates in and around Greenville, South Carolina. The assets acquired included approximately 160 homes in inventory, 260 lots and a sales order backlog of 110 homes. Through the acquisition, we also obtained control of approximately 1,320 additional lots through land purchase contracts.
Homebuilding Results by Reporting Region
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
|
Homebuilding Revenues |
Homebuilding Pre-tax Income (1) |
Pre-tax Income as % of Revenues |
Homebuilding Revenues |
Homebuilding Pre-tax Income (1) |
Pre-tax Income as % of Revenues |
|||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Northwest | $ | 539.7 | $ | 54.6 | 10.1 | % | $ | 660.4 | $ | 93.7 | 14.2 | % | ||||||||||||||||||||||||||
| Southwest | 1,035.2 | 114.2 | 11.0 | % | 1,063.7 | 123.3 | 11.6 | % | ||||||||||||||||||||||||||||||
| South Central | 1,511.7 | 166.3 | 11.0 | % | 1,530.7 | 208.4 | 13.6 | % | ||||||||||||||||||||||||||||||
| Southeast | 1,558.5 | 165.4 | 10.6 | % | 1,613.8 | 211.3 | 13.1 | % | ||||||||||||||||||||||||||||||
| East | 1,381.9 | 134.8 | 9.8 | % | 1,360.0 | 171.8 | 12.6 | % | ||||||||||||||||||||||||||||||
| North | 1,036.2 | 122.6 | 11.8 | % | 974.3 | 126.5 | 13.0 | % | ||||||||||||||||||||||||||||||
| $ | 7,063.2 | $ | 757.9 | 10.7 | % | $ | 7,202.9 | $ | 935.0 | 13.0 | % | |||||||||||||||||||||||||||
| Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | |||||||||||||||||||||||||||||||||||||
|
Homebuilding Revenues |
Homebuilding Pre-tax Income (1) |
% of Revenues |
Homebuilding Revenues |
Homebuilding Pre-tax Income (1) |
% of Revenues |
|||||||||||||||||||||||||||||||||
| (In millions) | ||||||||||||||||||||||||||||||||||||||
| Northwest | $ | 1,086.4 | $ | 113.9 | 10.5 | % | $ | 1,193.6 | $ | 169.9 | 14.2 | % | ||||||||||||||||||||||||||
| Southwest | 1,929.9 | 202.8 | 10.5 | % | 2,203.8 | 291.7 | 13.2 | % | ||||||||||||||||||||||||||||||
| South Central | 2,901.2 | 339.7 | 11.7 | % | 3,017.6 | 429.7 | 14.2 | % | ||||||||||||||||||||||||||||||
| Southeast | 3,016.5 | 308.8 | 10.2 | % | 3,363.6 | 434.1 | 12.9 | % | ||||||||||||||||||||||||||||||
| East | 2,632.4 | 258.3 | 9.8 | % | 2,674.6 | 366.2 | 13.7 | % | ||||||||||||||||||||||||||||||
| North | 2,025.7 | 242.5 | 12.0 | % | 1,917.0 | 256.3 | 13.4 | % | ||||||||||||||||||||||||||||||
| $ | 13,592.1 | $ | 1,466.0 | 10.8 | % | $ | 14,370.2 | $ | 1,947.9 | 13.6 | % | |||||||||||||||||||||||||||
____________________
(1)Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office. The amortization of capitalized interest and property taxes is allocated to each segment based on the segment's cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment's inventory balances.
Northwest Region - Homebuilding revenues decreased 18% and 9% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Seattle and Salt Lake City markets. The region generated pre-tax income of $54.6 million and $113.9 million in the three and six months ended March 31, 2026, respectively, compared to $93.7 million and $169.9 million in the prior year periods. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) decreased by 310 and 320 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing by more than the average selling price of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 130 and 60 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.
Southwest Region - Homebuilding revenues decreased 3% and 12% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Las Vegas and Southern California markets. The region generated pre-tax income of $114.2 million and $202.8 million in the three and six months ended March 31, 2026, respectively, compared to $123.3 million and $291.7 million in the prior year periods. Home sales gross profit percentage decreased by 80 and 210 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses decreased by 20 basis points and increased by 60 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods. The increase in the six month period was primarily due to the decrease in homebuilding revenues.
South Central Region - Homebuilding revenues decreased 1% and 4% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the average selling price of homes closed in the majority of the region's markets. The region generated pre-tax income of $166.3 million and $339.7 million in the three and six months ended March 31, 2026, respectively, compared to $208.4 million and $429.7 million in the prior year periods. Home sales gross profit percentage decreased by 120 and 130 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 70 basis points in both the three and six months ended March 31, 2026 compared to the prior year periods, primarily due to an increase in SG&A costs.
Southeast Region - Homebuilding revenues decreased 3% and 10% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Jacksonville and Tampa markets. The region generated pre-tax income of $165.4 million and $308.8 million in the three and six months ended March 31, 2026, respectively, compared to $211.3 million and $434.1 million in the prior year periods. Home sales gross profit percentage decreased by 140 and 160 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 40 and 70 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.
East Region - Homebuilding revenues increased 2% and decreased 2% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods. The increase in the three month period was primarily due to increases in the number of homes closed, particularly in our Atlanta and Greenville markets. The decrease in the six month period was primarily due to decreases in the number of homes closed, particularly in our Knoxville and Charleston markets. The region generated pre-tax income of $134.8 million and $258.3 million in the three and six months ended March 31, 2026, respectively, compared to $171.8 million and $366.2 million in the prior year periods. Home sales gross profit percentage decreased by 300 and 330 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased slightly. As a percentage of homebuilding revenues, SG&A expenses increased by 30 and 60 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to an increase in SG&A costs.
North Region - Homebuilding revenues increased 6% in both the three and six months ended March 31, 2026 compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our Pittsburgh and Southern Virginia markets. The region generated pre-tax income of $122.6 million and $242.5 million in the three and six months ended March 31, 2026, respectively, compared to $126.5 million and $256.3 million in the prior year periods. Home sales gross profit percentage decreased by 140 basis points in both the three and six months ended March 31, 2026 compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses decreased by 30 and 10 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the increase in homebuilding revenues.
HOMEBUILDING INVENTORIES, LAND AND LOT POSITION AND HOMES IN INVENTORY
We routinely enter into contracts to purchase land or developed residential lots at predetermined prices on a defined schedule commensurate with planned development or anticipated new home demand. At the time of purchase, the undeveloped land is generally vested with the rights to begin development or construction work, and we plan and coordinate the development of our land into residential lots for use in our homebuilding business. We manage our inventory of owned land and lots and homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.
Our homebuilding segment's inventories at March 31, 2026 and September 30, 2025 are summarized as follows:
| March 31, 2026 | |||||||||||||||||||||||||||||
|
Construction in Progress and Finished Homes |
Residential Land/Lots Developed and Under Development |
Land Held for Development |
Land Held for Sale |
Total Inventory | |||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||
| Northwest | $ | 792.5 | $ | 1,135.5 | $ | 16.5 | $ | 3.0 | $ | 1,947.5 | |||||||||||||||||||
| Southwest | 1,099.8 | 1,924.8 | 8.7 | 22.6 | 3,055.9 | ||||||||||||||||||||||||
| South Central | 1,791.1 | 2,239.8 | 0.3 | 2.5 | 4,033.7 | ||||||||||||||||||||||||
| Southeast | 1,809.3 | 2,360.7 | 12.6 | 7.3 | 4,189.9 | ||||||||||||||||||||||||
| East | 1,805.1 | 2,791.6 | - | 2.6 | 4,599.3 | ||||||||||||||||||||||||
| North | 1,232.8 | 1,550.3 | - | 0.6 | 2,783.7 | ||||||||||||||||||||||||
|
Corporate and unallocated (1)
|
151.9 | 206.4 | 0.5 | 0.5 | 359.3 | ||||||||||||||||||||||||
| $ | 8,682.5 | $ | 12,209.1 | $ | 38.6 | $ | 39.1 | $ | 20,969.3 | ||||||||||||||||||||
| September 30, 2025 | |||||||||||||||||||||||||||||
|
Construction in Progress and Finished Homes |
Residential Land/Lots Developed and Under Development |
Land Held for Development |
Land Held for Sale |
Total Inventory | |||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||
| Northwest | $ | 647.4 | $ | 1,225.3 | $ | 16.2 | $ | 2.9 | $ | 1,891.8 | |||||||||||||||||||
| Southwest | 1,003.8 | 2,047.1 | 8.7 | 8.9 | 3,068.5 | ||||||||||||||||||||||||
| South Central | 1,643.0 | 2,288.6 | 0.3 | - | 3,931.9 | ||||||||||||||||||||||||
| Southeast | 1,537.8 | 2,502.3 | 12.6 | 9.1 | 4,061.8 | ||||||||||||||||||||||||
| East | 1,561.4 | 2,836.3 | - | - | 4,397.7 | ||||||||||||||||||||||||
| North | 1,222.8 | 1,414.6 | - | 0.2 | 2,637.6 | ||||||||||||||||||||||||
|
Corporate and unallocated (1)
|
127.5 | 198.9 | 0.5 | 0.3 | 327.2 | ||||||||||||||||||||||||
| $ | 7,743.7 | $ | 12,513.1 | $ | 38.3 | $ | 21.4 | $ | 20,316.5 | ||||||||||||||||||||
__________
(1)Corporate and unallocated inventory consists primarily of capitalized interest and property taxes.
Our land and lot position and homes in inventory at March 31, 2026 and September 30, 2025 are summarized as follows:
| March 31, 2026 | |||||||||||||||||||||||
|
Land/Lots Owned (1) |
Lots Controlled Through Land and Lot Purchase Contracts (2)(3) |
Total Land/Lots Owned and Controlled |
Homes in Inventory (4) |
||||||||||||||||||||
| Northwest | 11,400 | 17,300 | 28,700 | 2,100 | |||||||||||||||||||
| Southwest | 18,000 | 29,000 | 47,000 | 3,700 | |||||||||||||||||||
| South Central | 31,100 | 116,800 | 147,900 | 10,300 | |||||||||||||||||||
| Southeast | 28,600 | 105,800 | 134,400 | 8,500 | |||||||||||||||||||
| East | 29,000 | 110,000 | 139,000 | 8,500 | |||||||||||||||||||
| North | 16,000 | 62,300 | 78,300 | 5,100 | |||||||||||||||||||
| 134,100 | 441,200 | 575,300 | 38,200 | ||||||||||||||||||||
| 23 | % | 77 | % | 100 | % | ||||||||||||||||||
| September 30, 2025 | |||||||||||||||||||||||
|
Land/Lots Owned (1) |
Lots Controlled Through Land and Lot Purchase Contracts (2)(3) |
Total Land/Lots Owned and Controlled |
Homes in Inventory (4) |
||||||||||||||||||||
| Northwest | 12,200 | 17,100 | 29,300 | 1,700 | |||||||||||||||||||
| Southwest | 19,600 | 31,200 | 50,800 | 3,200 | |||||||||||||||||||
| South Central | 35,900 | 111,900 | 147,800 | 7,700 | |||||||||||||||||||
| Southeast | 31,500 | 113,600 | 145,100 | 6,300 | |||||||||||||||||||
| East | 31,500 | 111,100 | 142,600 | 6,300 | |||||||||||||||||||
| North | 16,300 | 60,000 | 76,300 | 4,400 | |||||||||||||||||||
| 147,000 | 444,900 | 591,900 | 29,600 | ||||||||||||||||||||
| 25 | % | 75 | % | 100 | % | ||||||||||||||||||
___________________
(1)Land/lots owned included approximately 74,800 and 78,400 owned lots that are fully developed and ready for home construction at March 31, 2026 and September 30, 2025, respectively.
(2)The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2026 and September 30, 2025 was $26.7 billion and $26.0 billion, respectively, secured by earnest money deposits of $2.5 billion and $2.3 billion, respectively. The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2026 and September 30, 2025 included $2.1 billion and $2.0 billion, respectively, related to lot purchase contracts with Forestar, secured by $211.9 million and $200.2 million, respectively, of earnest money.
(3)Lots controlled at March 31, 2026 included approximately 41,000 lots owned by Forestar, 22,900 of which our homebuilding divisions had under contract to purchase and 18,100 of which our homebuilding divisions had a right of first offer to purchase. Of these, approximately 9,800 lots were in our South Central region, 9,800 lots were in our East region, 9,600 lots were in our Southeast region, 6,600 lots were in our North region, 3,400 lots were in our Southwest region and 1,800 lots were in our Northwest region. Lots controlled at September 30, 2025 included approximately 40,400 lots owned by Forestar, 22,800 of which our homebuilding divisions had under contract to purchase and 17,600 of which our homebuilding divisions had a right of first offer to purchase.
(4)Approximately 22,900 and 19,600 of our homes in inventory were unsold at March 31, 2026 and September 30, 2025, respectively. At March 31, 2026, approximately 5,500 of our unsold homes were completed, of which approximately 800 homes had been completed for more than six months. At September 30, 2025, approximately 9,300 of our unsold homes were completed, of which approximately 800 homes had been completed for more than six months. Homes in inventory exclude approximately 2,900 and 2,700 model homes at March 31, 2026 and September 30, 2025, respectively.
RESULTS OF OPERATIONS - RENTAL
Our rental segment consists of single-family and multi-family rental operations. Single-family rental operations construct homes within single-family rental (build-to-rent) communities and then either sell homes to an investor as they are completed or lease the homes and market the entire community for a bulk sale. Multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style apartment communities in high growth suburban markets. Single-family and multi-family rental property sales are recognized as revenues, and rental income is recognized as other income. The following tables provide further information regarding our rental operations as of and for the three and six months ended March 31, 2026 and 2025.
| Rental Homes/Units Closed and Revenue | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes/Units Closed | Rental Revenue (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Single-family | 566 | 519 | 9 | % | $ | 153.3 | $ | 144.2 | 6 | % | 270,800 | 277,800 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||
| Multi-family | 216 | 300 | (28) | % | 58.5 | 84.4 | (31) | % | 270,800 | 281,300 | (4) | % | ||||||||||||||||||||||||||||||||||||||||||||
| 782 | 819 | (5) | % | $ | 211.8 | $ | 228.6 | (7) | % | 270,800 | 279,100 | (3) | % | |||||||||||||||||||||||||||||||||||||||||||
| Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Homes/Units Closed | Rental Revenue (In millions) | Average Selling Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
2026 | 2025 |
% Change |
||||||||||||||||||||||||||||||||||||||||||||||||
| Single-family | 963 | 830 | 16 | % | $ | 262.8 | $ | 232.3 | 13 | % | 272,900 | 279,900 | (3) | % | ||||||||||||||||||||||||||||||||||||||||||
| Multi-family | 216 | 804 | (73) | % | 58.5 | 214.0 | (73) | % | 270,800 | 266,200 | 2 | % | ||||||||||||||||||||||||||||||||||||||||||||
| 1,179 | 1,634 | (28) | % | $ | 321.3 | $ | 446.3 | (28) | % | 272,500 | 273,100 | - | % | |||||||||||||||||||||||||||||||||||||||||||
|
Three Months Ended March 31, |
Six Months Ended March 31, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Single-family rental | $ | 153.3 | $ | 144.2 | $ | 262.8 | $ | 232.3 | |||||||||||||||
| Multi-family rental and other | 58.5 | 92.4 | 58.5 | 222.0 | |||||||||||||||||||
| Total revenues | 211.8 | 236.6 | 321.3 | 454.3 | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Single-family rental | 131.4 | 112.7 | 223.8 | 184.8 | |||||||||||||||||||
| Multi-family rental and other | 51.5 | 70.1 | 51.9 | 177.4 | |||||||||||||||||||
| Inventory and land option charges | 0.3 | 0.3 | 0.4 | 3.9 | |||||||||||||||||||
| Total cost of sales | 183.2 | 183.1 | 276.1 | 366.1 | |||||||||||||||||||
| Selling, general and administrative expense | 52.0 | 58.0 | 98.9 | 104.3 | |||||||||||||||||||
| Other (income) expense | (35.7) | (27.3) | (66.2) | (50.8) | |||||||||||||||||||
| Income before income taxes | $ | 12.3 | $ | 22.8 | $ | 12.5 | $ | 34.7 | |||||||||||||||
Rental Operating Margin Analysis
| Percentages of Rental Revenues | ||||||||||||||||||||||||||
|
Three Months Ended March 31, |
Six Months Ended March 31, |
|||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Gross profit - rental | 13.5 | % | 22.6 | % | 14.1 | % | 19.4 | % | ||||||||||||||||||
| Selling, general and administrative expense | 24.6 | % | 24.5 | % | 30.8 | % | 23.0 | % | ||||||||||||||||||
| Other (income) expense | (16.9) | % | (11.5) | % | (20.6) | % | (11.2) | % | ||||||||||||||||||
| Rental pre-tax income | 5.8 | % | 9.6 | % | 3.9 | % | 7.6 | % | ||||||||||||||||||
Revenues from our rental operations decreased to $211.8 million and $321.3 million during the three and six months ended March 31, 2026, respectively, from $236.6 million and $454.3 million in the prior year periods. Pre-tax income was $12.3 million and $12.5 million during the three and six months ended March 31, 2026, respectively, compared to $22.8 million and $34.7 million in the prior year periods. The decline in pre-tax income for both periods was due to a decrease in multi-family revenues due to fewer units closed, as well as a decrease in the gross profit percentage on both single-family and multi-family closings.
At March 31, 2026, our rental property inventory of $3.0 billion included $347.2 million of single-family rental inventory and $2.7 billion of multi-family rental inventory. At September 30, 2025, our rental property inventory of $2.7 billion included $378.3 million of single-family rental inventory and $2.3 billion of multi-family rental inventory. Single-family rental homes and lots and multi-family rental units at March 31, 2026 and September 30, 2025 consisted of the following:
| Rental Inventory | |||||||||||
|
March 31, 2026 |
September 30, 2025 |
||||||||||
| Single-family rental homes (1) | 1,250 | 1,420 | |||||||||
| Single-family rental lots (2) | 1,480 | 1,150 | |||||||||
| Multi-family rental units (3) | 13,250 | 12,480 | |||||||||
__________
(1)Single-family rental homes at March 31, 2026 consist of 560 homes under construction and 690 completed homes compared to 370 homes under construction and 1,050 completed homes at September 30, 2025.
(2)Single-family rental lots at March 31, 2026 consist of 590 undeveloped lots and 890 finished lots compared to 440 undeveloped lots and 710 finished lots at September 30, 2025.
(3)Multi-family rental units at March 31, 2026 consist of 3,780 units under construction and 9,470 units that were substantially complete and in the lease-up phase compared to 4,910 units under construction and 7,570 units that were substantially complete at September 30, 2025.
RESULTS OF OPERATIONS - FORESTAR
At March 31, 2026, we owned 62% of the outstanding shares of Forestar. Forestar is a publicly traded residential lot development company with operations in 64 markets across 24 states as of March 31, 2026. (See Note B to the accompanying financial statements for additional Forestar segment information.)
Results of operations for the Forestar segment for the three and six months ended March 31, 2026 and 2025 were as follows:
|
Three Months Ended March 31, |
Six Months Ended March 31, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Total revenues | $ | 374.3 | $ | 351.0 | $ | 647.3 | $ | 601.3 | |||||||||||||||
| Cost of land/lot sales and other | 287.8 | 270.9 | 505.0 | 465.2 | |||||||||||||||||||
| Inventory and land option charges | 6.3 | 0.9 | 7.1 | 2.0 | |||||||||||||||||||
| Total cost of sales | 294.1 | 271.8 | 512.1 | 467.2 | |||||||||||||||||||
| Selling, general and administrative expense | 37.9 | 38.4 | 74.3 | 74.3 | |||||||||||||||||||
| Other (income) expense | (1.6) | 0.1 | (3.9) | (2.8) | |||||||||||||||||||
| Income before income taxes | $ | 43.9 | $ | 40.7 | $ | 64.8 | $ | 62.6 | |||||||||||||||
Forestar's revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders and land bankers for homebuilders. The following tables provide further information regarding Forestar's revenues for the three and six months ended March 31, 2026 and 2025 and lot position as of March 31, 2026 and September 30, 2025:
| Three Months Ended March 31, | |||||||||||||||||||||||
| Lots Sold | Value (In millions) | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Residential lots sold | |||||||||||||||||||||||
| Lots sold to D.R. Horton | 2,450 | 2,501 | $ | 284.4 | $ | 267.8 | |||||||||||||||||
| Total lots sold | 2,938 | 3,411 | $ | 331.4 | $ | 346.9 | |||||||||||||||||
| Tract acres sold | |||||||||||||||||||||||
| Tract acres sold to D.R. Horton | 56 | - | $ | 11.5 | $ | - | |||||||||||||||||
| Total tract acres sold | 388 | - | $ | 35.6 | $ | - | |||||||||||||||||
| Six Months Ended March 31, | |||||||||||||||||||||||
| Lots Sold | Value (In millions) | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Residential single-family lots sold | |||||||||||||||||||||||
| Lots sold to D.R. Horton | 4,077 | 4,613 | $ | 468.2 | $ | 486.4 | |||||||||||||||||
| Total lots sold | 4,882 | 5,744 | $ | 566.6 | $ | 594.2 | |||||||||||||||||
| Tract acres sold | |||||||||||||||||||||||
| Tract acres sold to D.R. Horton | 56 | - | $ | 11.5 | $ | - | |||||||||||||||||
| Total tract acres sold | 581 | - | $ | 64.9 | $ | - | |||||||||||||||||
|
March 31, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| Residential lots in inventory and under contract | |||||||||||||||||||||||
| Lots owned | 63,500 | 65,100 | |||||||||||||||||||||
| Lots controlled through land purchase contracts | 30,900 | 34,700 | |||||||||||||||||||||
| Total lots owned and controlled | 94,400 | 99,800 | |||||||||||||||||||||
| Owned lots under contract to sell to D.R. Horton | 22,900 | 22,800 | |||||||||||||||||||||
| Owned lots under contract to customers other than D.R. Horton | 1,200 | 1,000 | |||||||||||||||||||||
| Total owned lots under contract | 24,100 | 23,800 | |||||||||||||||||||||
| Owned lots subject to right of first offer with D.R. Horton | 18,100 | 17,600 | |||||||||||||||||||||
| Owned lots fully developed | 9,300 | 8,900 | |||||||||||||||||||||
At March 31, 2026 and September 30, 2025, Forestar's inventory, which includes land and lots developed, under development and held for development, totaled $2.7 billion and $2.6 billion, respectively.
Forestar's inventory and land option charges consisted of $6.3 million and $7.1 million of earnest money and pre-acquisition cost write-offs in the three and six months ended March 31, 2026, respectively, compared to $0.9 million and $2.0 million in the prior year periods. There were no impairment charges recorded in the current or prior year periods.
SG&A expense for the three and six months ended March 31, 2026 included charges of $1.9 million and $3.6 million, respectively, related to the shared services agreement between Forestar and D.R. Horton whereby D.R. Horton provides Forestar with certain administrative, compliance, operational and procurement services. Shared services charges were $1.8 million and $3.6 million, respectively, in the prior year periods.
Other expense in the three and six months ended March 31, 2025 includes a loss on extinguishment of debt of $1.1 million due to Forestar's repurchase of $329.4 million of its $400 million principal amount of 3.85% senior notes due 2026 in March 2025.
RESULTS OF OPERATIONS - FINANCIAL SERVICES
The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the three and six months ended March 31, 2026 and 2025.
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Number of first-lien loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers | 15,851 | 15,592 | 2 | % | 29,882 | 30,633 | (2) | % | |||||||||||||||||||||||||||
| Number of homes closed by D.R. Horton | 19,486 | 19,276 | 1 | % | 37,304 | 38,335 | (3) | % | |||||||||||||||||||||||||||
| Percentage of D.R. Horton homes financed by DHI Mortgage | 81 | % | 81 | % | 80 | % | 80 | % | |||||||||||||||||||||||||||
| Total number of loans originated or brokered by DHI Mortgage | 15,909 | 15,674 | 1 | % | 30,035 | 30,798 | (2) | % | |||||||||||||||||||||||||||
| Loans sold by DHI Mortgage to third parties | 13,476 | 13,839 | (3) | % | 29,440 | 30,735 | (4) | % | |||||||||||||||||||||||||||
| Three Months Ended March 31, | Six Months Ended March 31, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Loan origination and other fees | $ | 20.0 | $ | 19.9 | 1 | % | $ | 37.7 | $ | 39.0 | (3) | % | |||||||||||||||||||||||
| Gains on sale of mortgage loans and mortgage servicing rights | 127.8 | 151.1 | (15) | % | 251.8 | 271.1 | (7) | % | |||||||||||||||||||||||||||
| Servicing income | 1.4 | 0.2 | 600 | % | 3.4 | 0.8 | 325 | % | |||||||||||||||||||||||||||
| Total mortgage operations revenues | 149.2 | 171.2 | (13) | % | 292.9 | 310.9 | (6) | % | |||||||||||||||||||||||||||
| Title policy premiums | 43.6 | 41.7 | 5 | % | 84.5 | 84.3 | - | % | |||||||||||||||||||||||||||
| Total revenues | 192.8 | 212.9 | (9) | % | 377.4 | 395.2 | (5) | % | |||||||||||||||||||||||||||
| General and administrative expense | 159.8 | 160.3 | - | % | 304.8 | 314.5 | (3) | % | |||||||||||||||||||||||||||
| Other (income) expense | (18.7) | (20.4) | (8) | % | (37.1) | (40.9) | (9) | % | |||||||||||||||||||||||||||
| Financial services pre-tax income | $ | 51.7 | $ | 73.0 | (29) | % | $ | 109.7 | $ | 121.6 | (10) | % | |||||||||||||||||||||||
Financial Services Operating Margin Analysis
|
Percentages of Financial Services Revenues |
|||||||||||||||||||||||
|
Three Months Ended March 31, |
Six Months Ended March 31, |
||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| General and administrative expense | 82.9 | % | 75.3 | % | 80.8 | % | 79.6 | % | |||||||||||||||
| Other (income) expense | (9.7) | % | (9.6) | % | (9.8) | % | (10.3) | % | |||||||||||||||
| Financial services pre-tax income | 26.8 | % | 34.3 | % | 29.1 | % | 30.8 | % | |||||||||||||||
Mortgage Loan Activity
DHI Mortgage's primary focus is to originate loans for our homebuilding operations, and those loan originations account for substantially all of its total loan volume. In the three and six months ended March 31, 2026, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 2% and decreased 2%, respectively, due to an increase of 1% and a decrease of 3% in the number of homes closed by our homebuilding operations in the respective periods. The percentage of homes closed for which DHI Mortgage handled our homebuyers' financing was 81% and 80% in the three and six months ended March 31, 2026, respectively, unchanged from the prior year periods.
The number of loans sold decreased 3% and 4% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods. Substantially all mortgage loans held for sale on March 31, 2026 were eligible for sale to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Government National Mortgage Association (Ginnie Mae). During the six months ended March 31, 2026, approximately 72% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 19% were sold to one other major financial entity. Changes in market conditions could result in a greater concentration of our mortgage sales in future periods to fewer financial entities and directly to Fannie Mae, Freddie Mac or Ginnie Mae, and we may need to make other adjustments to our mortgage operations.
Financial Services Revenues and Expenses
Total loan origination volume increased 1% and decreased 2% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods. Revenues from our mortgage operations decreased 13% to $149.2 million and 6% to $292.9 million, respectively, from $171.2 million and $310.9 million in the prior year periods, primarily due to reduced profit margin on loans sold. Revenues from our title operations were $43.6 million and $84.5 million in the three and six months ended March 31, 2026, respectively, compared to $41.7 million and $84.3 million in the prior year periods.
General and administrative (G&A) expense related to our financial services operations was $159.8 million and $304.8 million in the three and six months ended March 31, 2026, respectively, compared to $160.3 million and $314.5 million in the prior year periods. As a percentage of financial services revenues, G&A expense was 82.9% and 80.8%, respectively, compared to 75.3% and 79.6% in the prior year periods. Fluctuations in financial services G&A expense as a percentage of revenues can occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. Our financial services operations employed 2,872 and 3,121 people at March 31, 2026 and 2025, respectively.
Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary. Other income decreased 8% to $18.7 million and 9% to $37.1 million in the three and six months ended March 31, 2026, respectively, from $20.4 million and $40.9 million in the prior year periods, primarily due to a decrease in interest income because of lower interest rates on our loan originations.
RESULTS OF OPERATIONS - OTHER BUSINESSES
In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements. The pre-tax income of all of our subsidiaries engaged in other business activities was $9.5 million and $17.7 million in the three and six months ended March 31, 2026, respectively, compared to $11.2 million and $22.7 million in the prior year periods.
RESULTS OF OPERATIONS - CONSOLIDATED
Income before Income Taxes
Pre-tax income for the three and six months ended March 31, 2026 was $867.4 million and $1.7 billion, respectively, compared to $1.1 billion and $2.2 billion in the prior year periods. The decreases were primarily due to a decrease in the pre-tax income of our homebuilding operations.
Income Taxes
Our income tax expense for the three and six months ended March 31, 2026 was $209.4 million and $406.0 million, respectively, compared to $248.0 million and $506.0 million in the prior year periods. Our effective tax rate was 24.1% and 24.4% for the three and six months ended March 31, 2026, respectively, compared to 23.2% in both prior year periods. The effective tax rates for all periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient home tax credits.
At March 31, 2026, we had deferred tax liabilities, net of deferred tax assets, of $8.4 million, after consideration of a valuation allowance of $14.6 million recorded against certain deferred tax assets. At September 30, 2025, we had deferred tax assets, net of deferred tax liabilities, of $44.5 million, after consideration of a valuation allowance of $14.6 million recorded against certain deferred tax assets. The valuation allowance for both periods relates to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized. We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL and tax credit carryforwards. Reversal of any portion of the valuation allowance in future periods would impact our effective tax rate.
CAPITAL RESOURCES AND LIQUIDITY
We have historically funded our operations with cash flows from operating activities, borrowings under bank credit facilities and the issuance of new debt securities. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.
We continue to invest in our homebuilding and rental inventories to expand our operations and consolidate market share. We are also returning capital to shareholders through repurchases of our common stock and dividend payments. We are maintaining significant homebuilding cash balances and liquidity to support the scale and level of activity in our business and to provide flexibility to adjust to changing market conditions and opportunities.
At March 31, 2026, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $6.6 billion. $2.3 billion was payable within 12 months, which includes $1.5 billion outstanding under our mortgage repurchase facilities and $600 million principal amount of 1.3% homebuilding senior notes maturing in October 2026.
At March 31, 2026, our ratio of debt to total capital (notes payable divided by stockholders' equity plus notes payable) was 21.7% compared to 19.8% at September 30, 2025 and 21.1% at March 31, 2025. Our net debt to total capital (notes payable net of cash divided by stockholders' equity plus notes payable net of cash) was 16.4% at March 31, 2026 compared to 11.0% at September 30, 2025 and 14.3% at March 31, 2025. Over the long term, we intend to maintain our ratio of debt to total capital around 20%.
At March 31, 2026, we had outstanding letters of credit of $262.7 million and surety bonds of $3.3 billion issued by third parties to secure performance under various contracts. We expect that our performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms. When we complete our performance obligations, the related letters of credit and bonds are generally released shortly thereafter, leaving us with no continuing obligations. We have no material third-party guarantees.
We regularly assess our projected capital requirements to fund growth in our business, repay debt obligations, pay dividends, repurchase our common stock and maintain sufficient cash and liquidity levels to support our other operational needs, and we regularly evaluate our opportunities to raise additional capital. D.R. Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2024, registering debt and equity securities that may be issued from time to time in amounts to be determined. Forestar also has an effective shelf registration statement filed with the SEC in September 2024, registering $750 million of equity securities, of which $300 million is reserved for sales under its at-the-market equity offering (ATM) program that was entered into in November 2024. As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facilities and ability to access the capital markets or obtain additional bank financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations for the next 12 months and for the foreseeable future thereafter.
Capital Resources - Homebuilding
Cash and Cash Equivalents - At March 31, 2026, cash and cash equivalents of our homebuilding segment totaled $1.1 billion.
Bank Credit Facility - We have a senior unsecured homebuilding revolving credit facility that was amended in March 2026 to increase its capacity from $2.305 billion to $3.295 billion. The amendment also extended the maturity dates of the facility. Of the total commitments, $265 million matures on October 28, 2027, $1,012.5 million matures on March 27, 2029 and $2,017.5 million matures on March 27, 2031. The facility has an uncommitted accordion feature that allows for an increase in its size to $4.0 billion, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments. Letters of credit issued under the facility reduce the available borrowing capacity. At March 31, 2026, there were $250 million of borrowings outstanding at a 4.5% annual interest rate and $219.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.825 billion.
Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if our leverage ratio exceeds a certain level. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. The credit agreement governing the facility imposes restrictions on the creation of secured debt and liens.
Public Unsecured Debt - At March 31, 2026, we had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2026 through October 2035. The indenture governing our senior notes imposes restrictions on the creation of secured debt and liens.
Compliance and Guarantors - At March 31, 2026, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility and public debt obligations. Our homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R. Horton, Inc.'s significant wholly owned homebuilding subsidiaries.
Debt and Stock Repurchase Authorizations - In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities. In April 2025, the Board authorized the repurchase of up to $5.0 billion of our common stock, replacing the previous authorization. During the six months ended March 31, 2026, we repurchased 10.4 million shares at a total cost including commissions and excise taxes of $1.6 billion. At March 31, 2026, the full amount of the debt repurchase authorization was remaining, and $1.7 billion of the stock repurchase authorization was remaining. The debt and stock repurchase authorizations have no expiration date.
Capital Resources - Rental
During the past few years, we have made significant investments in our rental operations. The inventory in our rental segment totaled $3.0 billion at March 31, 2026 compared to $2.7 billion at September 30, 2025 and $3.1 billion at March 31, 2025.
Cash and Cash Equivalents - At March 31, 2026, cash and cash equivalents of our rental segment totaled $142.5 million.
Bank Credit Facility - Our rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental's real estate assets and unrestricted cash. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. The facility was amended in March 2026 to extend its maturity date to March 27, 2030. At March 31, 2026, there were $865 million of borrowings outstanding at a 5.4% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $185 million.
The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
Compliance and Guarantors - At March 31, 2026, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility. The rental revolving credit facility is guaranteed by DRH Rental's wholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. The rental revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or financial services operations.
Capital Resources - Forestar
Forestar's achievement of its long-term growth objectives will depend on its ability to obtain financing and generate sufficient cash flows from operations. As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity. At March 31, 2026, Forestar's ratio of debt to total capital (notes payable divided by stockholders' equity plus notes payable) was 30.4% compared to 31.2% at September 30, 2025 and 34.7% at March 31, 2025. Forestar's ratio of net debt to total capital (notes payable net of cash divided by stockholders' equity plus notes payable net of cash) was 19.2% compared to 19.3% at September 30, 2025 and 29.8% at March 31, 2025.
Cash and Cash Equivalents - At March 31, 2026, Forestar had cash and cash equivalents of $362.2 million.
Bank Credit Facility - Forestar has a $715 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $1.0 billion, subject to certain conditions and availability of additional bank commitments. The current capacity of the facility reflects additional bank commitments of $25 million and $50 million obtained in October 2025 and March 2026, respectively. Of the total commitments, $650 million matures on December 18, 2029, and $65 million matures on October 28, 2026. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar's real estate assets and unrestricted cash. Letters of credit issued under the facility reduce the available borrowing capacity. At March 31, 2026, there were no borrowings outstanding and $42.9 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $672.1 million.
The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.
Unsecured Debt - As of March 31, 2026, Forestar had $800 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, that mature from March 2028 through March 2033 and represent unsecured obligations of Forestar.
Compliance and Guarantors - At March 31, 2026, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations. Forestar's revolving credit facility and its senior notes are guaranteed by Forestar's wholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. They are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or financial services operations.
Debt Repurchase Authorization - In April 2020, Forestar's Board of Directors authorized the repurchase of up to $30 million of Forestar's debt securities. All of the $30 million authorization was remaining at March 31, 2026, and the authorization has no expiration date.
Issuance of Common Stock - During the six months ended March 31, 2026, there were no shares issued under Forestar's ATM program. At March 31, 2026, $750 million remained available for issuance under Forestar's shelf registration statement, with $300 million reserved for sales under the ATM program.
Capital Resources - Financial Services
Cash and Cash Equivalents - At March 31, 2026, cash and cash equivalents of our financial services segment totaled $242.4 million.
Mortgage Repurchase Facilities - Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. DHI Mortgage then has the right and obligation to repurchase the loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.
The committed mortgage repurchase facility has a total capacity of $1.4 billion and a maturity date of May 6, 2026. The capacity of the facility can be increased to $2.0 billion subject to the availability of additional commitments. At March 31, 2026, DHI Mortgage had an obligation of $1.1 billion under the committed mortgage repurchase facility at a 5.4% annual interest rate. DHI Mortgage is currently in discussions with its lenders and expects to renew and extend the facility prior to its maturity date.
At March 31, 2026, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $416.1 million at a 4.9% annual interest rate.
At March 31, 2026, $2.31 billion of mortgage loans held for sale with a collateral value of $2.26 billion were pledged under the committed mortgage repurchase facility, and $464.6 million of mortgage loans held for sale with a collateral value of $430.7 million were pledged under the uncommitted mortgage repurchase facility.
The mortgage repurchase facilities contain financial covenants as to the mortgage subsidiary's minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity.
In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher-than-normal volumes of mortgages held for sale. The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility, utilize the uncommitted mortgage repurchase facility or obtain other additional financing in sufficient capacities.
Compliance and Guarantors - At March 31, 2026, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities. The mortgage repurchase facilities are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.
Operating Cash Flow Activities
In the six months ended March 31, 2026, net cash provided by operating activities was $441.5 million compared to $210.5 million in the prior year period. Cash provided by operating activities in the current year period primarily consisted of $618.8 million and $136.6 million of cash provided by our homebuilding and financial services segments, respectively, partially offset by $321.0 million and $5.1 million of cash used in our rental and Forestar segments, respectively.
The most significant source of cash provided by operating activities in both years was net income, partially offset by increases in our inventories which was the most significant use of cash. In the six months ended March 31, 2026 and 2025, cash used to increase inventories was $689.4 million and $1.4 billion, respectively, and cash used to increase our rental properties was $297.5 million and $216.0 million in those periods.
Investing Cash Flow Activities
In the six months ended March 31, 2026, net cash used in investing activities was $160.4 million compared to $94.5 million in the prior year period. In the current year period, uses of cash included the payment of $87.9 million related to a business acquisition and purchases of property and equipment totaling $64.6 million. In the prior year period, uses of cash included the payment of $53.1 million related to a business acquisition and purchases of property and equipment totaling $47.6 million.
Financing Cash Flow Activities
We expect the short-term financing needs of our operations will be funded with existing cash, cash generated from operations and borrowings under our credit facilities. Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.
During the six months ended March 31, 2026, net cash used in financing activities was $1.3 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.6 billion and payment of cash dividends totaling $261.2 million. These uses of cash were partially offset by net borrowings on our rental and homebuilding revolving credit facilities of $265 million and $250 million, respectively, and net borrowings on our mortgage repurchase facilities of $69.9 million.
During the six months ended March 31, 2025, net cash used in financing activities was $2.1 billion, consisting primarily of cash used to repurchase shares of our common stock of $2.4 billion, repayment of $500 million principal amount of our 2.5% homebuilding senior notes at maturity, early repurchase of $329.4 million of Forestar's $400 million principal amount 3.85% senior notes, payment of cash dividends totaling $254.0 million and net payments on our mortgage repurchase facilities of $86.4 million. These uses of cash were partially offset by note proceeds from our issuance of $700 million principal amount of 5.5% homebuilding senior notes, note proceeds from Forestar's issuance of $500 million principal amount of 6.5% senior notes and net borrowings on our rental revolving credit facility of $305 million.
During each of the first two quarters of fiscal 2026, our Board of Directors approved a quarterly cash dividend of $0.45 per share, the most recent of which was paid on February 12, 2026 to stockholders of record on February 5, 2026. Cash dividends declared and paid in the three and six months ended March 31, 2026 totaled $129.7 million and $261.2 million, respectively. Cash dividends of $0.40 per share were approved and paid in each quarter of fiscal 2025.
In April 2026, our Board of Directors approved a quarterly cash dividend of $0.45 per share, payable on May 14, 2026 to stockholders of record on May 7, 2026. The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.
SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION
As of March 31, 2026, D.R. Horton, Inc. had $3.0 billion principal amount of homebuilding senior notes outstanding due through October 2035 and $250 million outstanding on its homebuilding revolving credit facility.
All of the homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of D.R. Horton, Inc. (Guarantors or Guarantor Subsidiaries). Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by D.R. Horton, Inc. Our subsidiaries associated with the single-family and multi-family rental operations, Forestar lot development operations, financial services operations and certain other subsidiaries do not guarantee the homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries). The guarantees are senior unsecured obligations of each Guarantor and rank equal with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor. The guarantees are effectively subordinated to any secured debt of such Guarantor to the extent of the value of the assets securing such debt. The guarantees will be structurally subordinated to indebtedness and other liabilities of Non-Guarantor Subsidiaries of the Guarantors.
The guarantees by a Guarantor Subsidiary will be automatically and unconditionally released and discharged upon: (1) the sale or other disposition of its common stock whereby it is no longer a subsidiary of ours; (2) the sale or other disposition of all or substantially all of its assets (other than to us or another Guarantor); (3) its merger or consolidation with an entity other than us or another Guarantor; or (4) its ceasing to guarantee any of our publicly traded debt securities and ceasing to guarantee any of our obligations under our homebuilding revolving credit facility.
The enforceability of the obligations of the Guarantor Subsidiaries under their guarantees may be subject to review under applicable federal or state laws relating to fraudulent conveyance or transfer, voidable preference and similar laws affecting the rights of creditors generally. In certain circumstances, a court could void the guarantees, subordinate amounts owing under the guarantees or order other relief detrimental to the holders of our guaranteed obligations. The indenture governing our homebuilding senior notes contains a "savings clause," which limits the liability of each Guarantor on its guarantee to the maximum amount that such Guarantor can incur without risk that its guarantee will be subject to avoidance as a fraudulent transfer. This provision may not be effective to protect such guarantees from fraudulent transfer challenges or, if it does, it may reduce such Guarantor's obligation such that the remaining amount due and collectible under the guarantees would not suffice, if necessary, to pay the notes in full when due.
The following tables present summarized financial information for D.R. Horton, Inc. and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among D.R. Horton, Inc. and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.
| D.R. Horton, Inc. and Guarantor Subsidiaries | ||||||||||||||
| Summarized Balance Sheet Data | March 31, 2026 | September 30, 2025 | ||||||||||||
| (In millions) | ||||||||||||||
| Assets | ||||||||||||||
|
Cash
|
$ | 1,068.2 | $ | 2,140.3 | ||||||||||
|
Inventories
|
20,981.3 | 20,321.9 | ||||||||||||
|
Amount due from Non-Guarantor Subsidiaries
|
1,429.8 | 1,540.0 | ||||||||||||
|
Total assets
|
27,746.1 | 28,108.0 | ||||||||||||
| Liabilities & Stockholders' Equity | ||||||||||||||
|
Notes payable
|
$ | 3,427.1 | $ | 3,154.4 | ||||||||||
|
Total liabilities
|
7,522.8 | 7,196.2 | ||||||||||||
|
Stockholders' equity
|
20,223.3 | 20,911.8 | ||||||||||||
| Summarized Statement of Operations Data |
Six Months Ended March 31, 2026 |
Year Ended September 30, 2025 |
||||||||||||
| (In millions) | ||||||||||||||
| Revenues | $ | 13,470.8 | $ | 31,271.6 | ||||||||||
| Cost of sales | 10,776.6 | 24,646.7 | ||||||||||||
| Selling, general and administrative expense | 1,249.7 | 2,565.9 | ||||||||||||
| Income before income taxes | 1,457.6 | 4,130.0 | ||||||||||||
| Net income | 1,102.5 | 3,154.8 | ||||||||||||
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
As disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2025, our most critical accounting policies relate to revenue recognition, inventories and cost of sales, and legal claims and insurance. Since September 30, 2025, there have been no significant changes to those critical accounting policies.
As disclosed in our critical accounting policies in our Form 10-K for the fiscal year ended September 30, 2025, our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. At March 31, 2026 and September 30, 2025, we had reserves for approximately 860 and 875 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the six months ended March 31, 2026, we were notified of approximately 165 new construction defect claims and resolved 180 construction defect claims for a total cost of $46.0 million. At March 31, 2025 and September 30, 2024, we had reserves for approximately 970 and 825 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the six months ended March 31, 2025, we were notified of approximately 330 new construction defect claims and resolved 185 construction defect claims for a total cost of $17.4 million.
SEASONALITY
Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year. The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, rental, lot development and financial services operations. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.
Forward-Looking Statements
Some of the statements contained in this report, as well as in other materials we have filed or will file with the SEC, statements made by us in periodic press releases and oral statements we make to analysts, stockholders and the press in the course of presentations about us, may be construed as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management's beliefs as well as assumptions made by, and information currently available to, management. These forward-looking statements typically include the words "anticipate," "believe," "consider," "continue," "could," "estimate," "expect," "forecast," "goal," "intend," "likely," "may," "outlook," "plan," "possible," "potential," "predict," "projection," "seek," "should," "strategy," "target," "will," "would" or other words of similar meaning. Any or all of the forward-looking statements included in this report and in any other of our reports or public statements may not approximate actual experience, and the expectations derived from them may not be realized, due to risks, uncertainties and other factors. As a result, actual results may differ materially from the expectations or results we discuss in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:
•the cyclical nature of the homebuilding, rental and lot development industries and changes in economic, real estate or other conditions;
•adverse developments affecting the capital markets and financial institutions, which could limit our ability to access capital, increase our cost of capital and impact our liquidity and capital resources;
•reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates;
•the risks associated with our land, lot and rental inventory;
•our ability to effect our growth strategies, acquisitions, investments or other strategic initiatives successfully;
•the impact of an inflationary, deflationary or higher interest rate environment;
•risks of acquiring land, building materials and skilled labor and challenges obtaining regulatory approvals;
•the effects of public health issues such as a major epidemic or pandemic on the economy and our businesses;
•the effects of weather conditions and natural disasters on our business and financial results;
•home warranty and construction defect claims;
•the effects of health and safety incidents;
•reductions in the availability of performance bonds;
•increases in the costs of owning a home;
•the effects of information technology failures, cybersecurity incidents, and the failure to satisfy privacy and data protection laws and regulations;
•the effects of governmental regulations and environmental matters on our land development and housing operations;
•the effects of changes in income tax and securities laws;
•the effects of governmental regulations on our financial services operations;
•the effects of competitive conditions within the industries in which we operate;
•our ability to manage and service our debt and comply with related debt covenants, restrictions and limitations;
•the effects of negative publicity;
•the effects of the loss of key personnel; and
•the effects of actions by activist stockholders.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. Additional information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained in our annual report on Form 10-K for the fiscal year ended September 30, 2025, including the section entitled "Risk Factors," which is filed with the SEC.
D.R. Horton Inc. published this content on April 23, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 23, 2026 at 18:32 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]