ConDig (20-Apr-17). Profit at US homebuilder D.R. Horton surged 17% in its fiscal second quarter on higher sales, with the largest U.S. homebuilder also upping its revenue forecast for the year.
The Forth-Worth, Texas-based homebuilder posted net income of $229.2 million for the quarter ended March 31 2017 compared to $195.1 million in the same period last year and was also up on profit of $206.9 million in its fiscal first quarter.
It comes as revenue for the second quarter rose 17% to $3.2 billion from $2.7 billion in the same quarter of fiscal 2016 and was also up on revenue of $2.8 billion in the prior quarter.
Orders, an indicator of future revenue for homebuilders, jumped 13.8% to 13,991 homes in the second quarter from 12,292 homes in the same quarter last year and were also higher than the 9,241 homes in the first quarter.
Homes closed in the quarter increased 15% to 10,685 homes compared to 9,262 homes in the prior year quarter and 9,404 in the first quarter.
D.R. Horton said it expects to sell 44,500-46,000 homes this year compared to its previous forecast of 43,500-45,500 homes, while it also raised its revenues forecast to a range of $13.6 billion-$14 billion from a previous range of $13.4 billion-$13.8 billion.
“The spring selling season is going well,” said company chairman Donald R. Horton.
“With 27,100 homes in inventory at the end of March and a robust supply of lots, we are well-positioned for the remainder of the spring and the second half of fiscal 2017,” he added.
Homebuilders like D.R. Horton continue to benefit from robust housing market conditions amid strong demand and languishing inventory levels, while mortgage rates remain near historic lows despite recent moves higher.
But there are concerns that growth in the housing sector this year could be tempered by further rises in mortgage rates that could leave many price-sensitive first-time buyers on the sidelines of the market, while labor and material costs continue to be elevated.
Latest Commerce Department figures released this week show that housing starts dropped 6.8% last month to a seasonally adjusted annual rate of 1.215 million, but were still up 9.2% on the year-ago period of 1.113 million.