D.R. Horton closes out fiscal year with revenue increase despite housing market woes


D.R. Horton closes out fiscal year with revenue increase despite housing market woes

Dallas Business Journal Article

Homebuilding behemoth D.R. Horton Inc. saw its revenue increase this fiscal year despite persistent uncertainty clouding the housing market. The Arlington-based company’s homebuilding revenue, however, took a downturn.

The company ended its 2023 fiscal year with a 6% increase in revenue compared with fiscal 2022, with net income falling 19% in fiscal 2023. The homebuilder expects continued uncertainty in the economy to weigh on its operations going into the new year.

Homebuilding revenue for D.R. Horton (NYSE:DHI) fell 6% in fiscal Q4, which ended Sept. 30, compared with the same time last year, and homebuilding revenue was down 1% for the entire year. In total, the firm closed almost 83,000 homes in the last fiscal year.

The company brought in $35.5 billion in consolidated revenue for fiscal 2023. Of that, $31.7 billion came from homebuilding revenue, executives said in a Nov. 7 earnings call.

The company provided initial guidance for fiscal 2024, with highlights including consolidated revenue of roughly $36 billion to $37 billion.

Rising interest rates have cooled demand for housing, squeezing the wallets of many would-be homebuyers. Uncertainty remains prevalent in the market, and future rate hikes may still be in store.

The company has adapted to the environment — a whopping 60% of the company’s customers have used some type of rate buydowns to get into a home. A buydown is a way for a borrower to obtain a lower interest rate by paying discount points at closing.

Using those buydowns, D.R. Horton’s customers typically end up paying a rate of about 6%, executives said.

The company’s rental operations, including build-to-rent single-family homes and apartment construction, have grown sharply this fiscal year. In the fourth quarter, the company brought in $1.4 billion in revenue, compared with just $21 million in the prior fiscal year’s Q4.

The company sold 3,006 single-family rental homes for a little under $1 billion last quarter. During fiscal 2023, the company sold 6,175 single-family rental homes for $2 billion.

D.R. Horton recently saw a changing of the guard. In September, the firm named Paul Romanowski president and CEO. Romanowski, previously the company’s executive vice president and co-chief operating officer, took the role last month.

“We are well positioned heading into the new year and I look forward to everything we will accomplish together in fiscal 2024,” Romanowski said in the earnings call.

David Auld transitioned from his role as president and CEO to executive vice chair of the company’s board. Donald Horton continued his role as chairman of the board, but no longer serves as an executive officer of the company.

Billionaire Warren Buffett’s conglomerate Berkshire Hathaway Inc. bought $700 million worth of shares in D.R. Horton this spring, signaling a big bet on the company and the housing market overall by the Oracle of Omaha.

Berkshire Hathaway (NYSE: BRK) disclosed the investment in D.R. Horton and much smaller investments in homebuilders Lennar Corp. and NVR Corp. in a quarterly filing with the Securities and Exchange Commission in August.

Locally, D.R. Horton recently purchased land for 1,000 new homes in southwest Fort Worth. The company snagged 151 acres from real estate investment and land asset management company Walton Global.

The proposed development, to be called Longhorn Estates, will be located at West Cleburne Crowley Road and South Hulen Street, about 20 minutes from downtown Fort Worth and close to The Shops at Chisholm Trail and The Crossing at Chisholm Trail, as well as several large parks.

In addition to Longhorn Estate’s residential component, the community will have two commercial sites. Homes will start being delivered in 2024, said Todd Horton, division president for D.R. Horton-DFW West.