D.R. Horton Inc. (DHI)

D.R. Horton Inc (DHI) stock dropped by 6.39%, as well as other home builders, declined admist concerns about rising inflation and its potential impact on mortgage rates, which could weigh on housing demand.

• Inflation and Mortgage Rates: Higher-than-expected inflation data dashed investors' hopes for a June rate cut, leading to a shift in expectations regarding interest rates. The 10-year Treasury yield rose significantly, indicating a potential increase in mortgage rates. The average mortgage rate was 6.82% last week, according to Freddie Mac.
• Mortgage Demand and Economic Resilience: Higher rates were already affecting mortgage demand, with applications for home purchase loans at their lowest level since late February. Several Federal Reserve officials reiterated a patient posture on rate cuts, citing stubbornly high inflation and the economy's resiliency.
• Housing Costs and Rental Demand: Shelter costs rose 0.4% in March from the prior month and were up 5.7% from the year prior, contributing significantly to the monthly CPI increase. The median U.S. asking rent increased to $1,987 in March, up 0.8% from the previous year, leading to increased rental demand as home purchasing plans are delayed due to high monthly payments.

D.R. Horton Inc. (DHI) stock dropped by 9.06% due to mixed quarterly results and a challenging housing market with declining prices. DHI shares in response to the announcement.

• Quarterly Performance and Revenue Growth: In Q1 2024, D.R. Horton reported a 6.5% YoY increase in revenue to $7.73 billion, with a net income of *$947.4 million**, or $2.82 per share. However, these figures slightly missed analysts' expectations of $2.88 per share earnings on $7.59 billion in revenue.
• Impact of Falling Home Prices: Although the number of homes closed during the quarter rose by 12% to 19,340, their total value increased by only 8% to $7.3 billion due to declining home prices. The company also repurchased 3.3 million shares during the quarter for just over $398 million.
• Chairman's Perspective and Market Outlook: D.R. Horton Chairman Donald R. Horton acknowledged the challenges posed by inflation and higher mortgage rates. However, he highlighted a 35% YoY growth in net sales orders due to strong housing demand and limited supply, especially at affordable price points.
• Future Projections and Outlook: For the fiscal year, D.R. Horton adjusted its revenue expectations to a range of $36 billion to $37.3 billion and projected 87,000 to 90,000 homes closed by its homebuilding operations. The company also maintained its outlook for cash flow from homebuilding operations at $3 billion and share repurchases of $1.5 billion for the fiscal year.

D.R. Horton, Inc. Stock (DHI) dropped by 5.82% from $108.67 to $102.35 in the trading on Thursday October 12, 2023. The reasons why DHI stock down today include

• Mortgage rates hike: Mortgage rates hit a fresh 23-year high, prompting concern about a slowdown in demand. The average 30-year fixed mortgage rate in the U.S. hit 7.57% this week, which is the headwind causing DHI stock down today
• Site purchase: Builder D.R. Horton buys a 57-acre site from Walton Global Holdings for new homes, townhomes in Charlotte region.