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D.R. Horton’s Third-Quarter Earnings: A Snapshot

D.R. Horton, the largest and most valuable homebuilder in America, recently released its third-quarter earnings for the period ending June 30, highlighting both challenges and opportunities for investors.

Key Highlights from Earnings Report:

• Market Capitalization: $46 billion
• Fortune 500 Rank: No. 123

While D.R. Horton’s earnings report did not dazzle, it provided reassurance that the anticipated downturn has not accelerated beyond what had already been communicated earlier this year. This stability encouraged some investors to re-enter homebuilder stocks.

Curious about D.R. Horton’s performance? Below, we explore the factors that are influencing their sales and margins.

Incentive Spending and Home Sales

Staying Afloat Amidst Market Challenges
D.R. Horton’s net new orders during its fiscal Q3 demonstrated resilience:

• Overall Orders: Nearly flat year-over-year
• Southeast Division: Experienced a -10.1% drop, with Florida showing particular weakness.

“We see some of the same national trends. There’s been a lot of change in the Florida markets.”

• Michael Murray, COO of D.R. Horton

Sales Distribution by Region:

• North: 13%: Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Minnesota, Missouri, Nebraska, New Jersey, Ohio, Pennsylvania, Virginia, West Virginia.
• East: 21%: Georgia, North Carolina, South Carolina, Tennessee.
• South Central: 27%: Arkansas, Oklahoma, Texas.
• Southwest: 10%: Arizona, California, Hawaii, Nevada, New Mexico.
• Southeast: 24%: Alabama, Florida, Louisiana, Mississippi.

Average Sales Price: Trends and Insights

Current Average Sales Price
As of Q3 2025, D.R. Horton’s average sales price was $369,600, marking a 7.3% decrease from the peak in Q3 2022 at $398,800.

The company is opting to offer attractive incentives such as mortgage rate buydowns instead of outright price cuts. This indicates a strategic shift, as upward pricing trends appear to have plateaued in several markets.

Margins and Incentives: A Balancing Act

Margin Compression
D.R. Horton reported a gross margin of 21.8% for Q3 2025, down from 24.0% in Q3 2024. However, this margin is stable compared to Q2 2025’s gross margin.

“The trend is still pointing towards higher incentives,” said Jessica Hansen, IR head at D.R. Horton.

Expected Margins for Q4 2025:

D.R. Horton anticipates margins between 21.0% and 21.5%.

Labor and Construction Costs

No Issues with Labor Availability
Despite increased federal immigration crackdowns, D.R. Horton has confirmed sufficient labor availability, which has led to:

• Reduced cycle times for home construction
• Efficiency improvements across operations

“Our trades are looking for work… Given those efficiencies, reductions in stick and brick costs over time.”

• Paul Romanowski, CEO of D.R. Horton

Current Construction Costs
Stick-and-brick costs are down 2% year-over-year and 1% quarter-over-quarter, providing relief in these challenging times.

Market Reaction: Homebuilder Stocks

Post-Earnings Reactions
D.R. Horton’s report, along with those from other homebuilders like PulteGroup, caused a modest rebound in homebuilder stocks. Although this recovery does not return shares to September 2024 highs, it may signal a slowing in the momentum of margin compression.

Home Sales Trends: A National Perspective

Existing Home Sales Statistics
In June 2025, U.S. existing home sales totaled 391,000, a staggering 26% drop compared to pre-pandemic levels in June 2019.

• Seasonally Adjusted Annual Rate (SAAR): 3.93 million, indicating the projected sales pace over the next 12 months, if current trends continue.

As we navigate the evolving landscape of the real estate market, tools like Stessa can equip investors with essential financial tracking capabilities, while shifts in companies like D.R. Horton provide insights into broader economic trends. With careful management, there are still opportunities to thrive in this competitive environment.