(Bloomberg) -- Homebuilder D.R. Horton Inc. reported weaker-than-expected quarterly orders as persistently high mortgage rates pressured the entry-level market the company focuses on.
- In the three months through June, buyers signed contracts for 23,001 homes, up 1% from a year earlier, according to a statement Thursday. Analysts estimated 24,718 orders, the average in a survey compiled by Bloomberg.
Key Insights
- D.R. Horton is more exposed to economic pressures than most other large US builders because so many of its offerings are aimed at price-conscious customers.
- Lower-income buyers are more likely to face problems qualifying for mortgages at a time when borrowing costs are high and delinquencies for other types of consumer credit, such as auto loans, are rising. The quarter was a challenging one for mortgage rates, with 30-year loan costs topping 7% for much of April and May.
- Builders of single-family houses in the US slowed construction starts in June as the inventory of unsold new properties grew. And single-family permits, a proxy for future construction, decreased to the slowest annual pace in more than a year, government data released Wednesday showed.
- At the end of June, D.R. Horton had 42,600 homes in inventory, of which 26,200 were unsold.
- The company projected closings for 90,000 to 90,500 homes for its full fiscal year. Analysts expect 90,414.
Market Reaction
- D.R. Horton shares were little changed in early trading. They had climbed 3.6% this year through Wednesday’s close, compared with a 14% gain for an S&P index of homebuilders.
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- The company will hold a conference call Thursday at 8:30 a.m. New York time.
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