TLDR
- D.R. Horton beat Q3 earnings expectations with EPS of $3.20 vs. the $2.97 forecast
- Revenue came in at $9.2 billion, slightly ahead of the $9.1 billion analysts expected
- Home sales gross margin of 20.7% topped the 19.9% Wall Street estimate
- Full-year revenue guidance was cut to $32.5Bâ$33.0B, down from $33.5Bâ$34.5B
- High mortgage rates, tariffs, and buyer incentives continue to pressure margins
D.R. Horton stock was trading down around 0.4% to $144.25 in pre-market Tuesday after the company beat third-quarter earnings but cut its full-year revenue outlook.
The nation’s largest home builder posted EPS of $3.20 on revenue of $9.2 billion for the quarter ended June 30. Analysts had expected $2.97 per share on $9.1 billion in revenue, according to FactSet.
The home sales gross margin came in at 20.7%, ahead of the 19.9% forecast. That’s still down from 21.8% in the same quarter a year ago.
$DHI Dr Horton Q3 2026 Earnings
-EPS $3.20 Vs. $3.36 Y/Y (Est $2.98)
-Sees FY Rev. $32.5B To $33.0B, Saw $33.5B To $34.5B
-Sees FY Homes Closed 83,800 To 84,300, Saw' 86,000 To 87,500
-Still Sees 2026 Div Payments Of About $500"— LiveSquawk (@LiveSquawk) July 21, 2026
Despite the beat, DHI trimmed its full-year consolidated revenue guidance to between $32.5 billion and $33.0 billion. The previous range was $33.5 billion to $34.5 billion. Analysts had expected $33.67 billion, per LSEG data.
Executive chairman David Auld pointed to a tough environment for buyers. “Affordability constraints and cautious consumer sentiment continue to impact new home demand,” he said.
To keep sales moving, D.R. Horton has been offering incentives like mortgage rate buydowns and shifting toward smaller, more affordable homes. Auld noted that incentive levels are expected to stay elevated in Q4.
Margins Under Pressure
Tariffs on construction materials and persistent inflation are adding to cost pressures for U.S. homebuilders. Those rising costs, combined with buyer incentives, have squeezed margins across the sector.
EPS for the quarter fell from $3.36 a year ago to $3.20, reflecting those ongoing pressures.
Auld said the company expects “sales incentives to remain elevated during the fourth quarter, with incentive levels dependent on demand, mortgage rates and other market conditions.”
DHI stock is up about 3.7% year-to-date, which is better than the broader iShares U.S. Home Construction ETF but behind smaller builders. LGI Homes and Hovnanian Enterprises are up 36% and 35% this year, respectively.
Smaller Builders Outperform
Smaller builders have had a strong run following Berkshire Hathaway’s deal for midsize builder Taylor Morrison, with investors looking at cheaper valuations in the space.
Beazer Homes is up more than 60% this year. Texas Capital Securities analyst Alex Rygiel has Buy ratings on Century Communities and LGI Homes, both trading below book value.
BTIG analyst Ryan Gilbert rates D.R. Horton Buy with a $188 price target. He said recent strength in the resale market could carry over into new home pricing, which would benefit gross margins.
PulteGroup is also set to report later this week, giving investors another read on the sector’s second-half outlook.
D.R. Horton is the largest U.S. home builder by market capitalization.
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