D.R. Horton expects to close fewer homes and book less revenue in fiscal 2027. The builder, which says it has been the largest in the U.S. by volume since 2002, issued initial guidance on Oct. 29 of $30.0 billion to $32.0 billion in consolidated revenue and 79,000 to 84,000 home closings. It closed 84,202 homes in the fiscal year that just ended and posted $33.0 billion in revenue. The guidance came in the Arlington, Texas-based company’s fourth-quarter and fiscal 2026 earnings release. In the same release, executive chairman David Auld said housing conditions “became more challenging” in the quarter and that buyer incentives would stay elevated through the coming year.
Even the top of the new revenue range is below what the company just reported. The low end of the closings range would be about 6% below fiscal 2026’s total.
Fourth-quarter numbers
For the three months ended Sept. 30, 2026, net income attributable to D.R. Horton fell 18% from a year earlier to $741.8 million. Earnings per diluted share fell 12% to $2.67. Consolidated revenue was $9.4 billion and pre-tax income $1.0 billion, a pre-tax margin of 10.8%.
The demand indicators were weaker than the closings. Homebuilding revenue slipped 2% to $8.4 billion on 22,915 closings, also down 2%. But net sales orders fell 7% to 18,619 homes and 9% in value to $6.6 billion. The cancellation rate rose to 23% of gross orders, up from 20% a year earlier. Homebuilding pre-tax income fell 11% to $891.0 million, a 10.6% margin.
The quarter also included $91.4 million of inventory impairment charges tied to nine multifamily rental projects. That left the rental segment with a $25.3 million pre-tax loss on $647.1 million of revenue. The segment sold 509 single-family rental homes for $134.3 million and 2,182 multifamily units for $512.8 million.
A full year below the original plan
For fiscal 2026, net income attributable to the company fell 19% to $2.9 billion, or $10.11 a diluted share, down 13%. Revenue of $33.0 billion compared with $34.3 billion in fiscal 2025. Closings slipped 1% to 84,202 homes, while net sales orders rose 2% to 84,995 homes and were flat in value at $30.9 billion.
Both figures fell short of the company’s own starting point. In its October 2025 release, D.R. Horton guided fiscal 2026 to $33.5 billion to $35.0 billion in revenue and 86,000 to 88,000 closings.
The builder ended the year with 28,200 homes in inventory, 17,700 of them unsold. Of the unsold homes, 8,800 were completed, including 600 that had been finished for more than six months. Sixty-eight percent of closings were on lots developed by its majority-owned lot developer, Forestar, or by third parties, up from 65% a year earlier. Forestar sold 13,545 lots in the year for $1.6 billion in revenue.
Incentives and pricing
Auld’s statement in the release was direct about demand. “Housing market conditions became more challenging during the fourth quarter as rising mortgage rates, affordability constraints and cautious consumer sentiment continued to pressure new home demand,” he said. The company responded “by adjusting incentives, pricing and starts on a community-by-community basis to align our inventory levels with current demand.”
“We expect incentives to remain elevated in fiscal 2027, the extent of which will depend on market conditions throughout the year,” he added.
That outlook fits the broader new-home data. The Census Bureau’s September report showed sales holding at a 676,000 annual pace as the average price fell 6.7% from a year earlier. In September, two-thirds of builders surveyed by the NAHB said they were offering incentives.
Cash returns continue
Lower earnings did not stop the buybacks. D.R. Horton repurchased 24.0 million shares for $3.6 billion in fiscal 2026, including 9.4 million shares for $1.4 billion in the fourth quarter, and paid $513.3 million in dividends. Shares outstanding fell 8% to 271.4 million. The board raised the quarterly dividend 11% to $0.50 a share, payable Nov. 19 to holders of record on Nov. 12. The company called it its thirteenth consecutive year of dividend growth. Fiscal 2027 guidance calls for about $3.0 billion of buybacks, roughly $500 million of dividends and about $3.5 billion of operating cash flow.
The balance sheet supports that pace. Operating cash flow was $3.5 billion in fiscal 2026, liquidity stood at $7.2 billion at year-end and debt to total capital was 20.8%. The company repaid $600 million of 1.3% senior notes at maturity in October and says it has no other senior note maturities in fiscal 2027.
On our reading, the guidance is the signal that matters. D.R. Horton sells homes generally priced between $200,000 and $700,000, and it said about 43,500 of its fiscal 2026 buyers were first-time buyers. When the country’s largest builder by volume plans for fewer closings and steady incentives, it is planning for an entry-level market that stays tight on affordability into 2027. D.R. Horton’s next report, for the first quarter of fiscal 2027, is scheduled for Jan. 19, 2027.
