D.R. Horton reported Q4 FY25 results in line with its earlier guide, with homebuilding gross margin of 20% (including 60bps of unusual litigation costs). Management guided FY26 to modest volume growth (86-88k closings) but continued margin pressure from elevated incentives and sticky lot costs. The company emphasized its affordable price positioning and plan to renegotiate stick-and-brick costs, while keeping inventory lean and maintaining strong cash flow generation. Q4 FY25 homebuilding gross margin of 20% missed the low-end of guidance by ~40bps, driven by higher-than-expected incentives; unusual litigation costs added 60bps but are not expected to repeat.
D.R. Horton reported Q4 FY25 results in line with its earlier guide, with homebuilding gross margin of 20% (including 60bps of unusual litigation costs). Management guided FY26 to modest volume growth (86-88k closings) but continued margin pressure from elevated incentives and sticky lot costs. The company emphasized its affordable price positioning and plan to renegotiate stick-and-brick costs, while keeping inventory lean and maintaining strong cash flow generation. Q4 FY25 homebuilding gross margin of 20% missed the low-end of guidance by ~40bps, driven by higher-than-expected incentives; unusual litigation costs added 60bps but are not expected to repeat.
D.R. Horton reported Q4 FY25 results in line with its earlier guide, with homebuilding gross margin of 20% (including 60bps of unusual litigation costs). Management guided FY26 to modest volume growth (86-88k closings) but continued margin pressure from elevated incentives and…
Reported gross margin was 21.67%, reinforcing the quarter's better-than-guided profitability.
FY26 full-year guidance: consolidated revenues $33.5-35B, closings 86,000-88,000 homes, operating cash flow at least $3B.
Q1 FY26 guide: revenues $6.3-6.8B, closings 17,100-17,600, homebuilding gross margin 20-20.5%, consolidated pre-tax margin 11.3-11.8%.
Management guided to higher closings volume but with continued margin pressure from incentives and sticky lot costs, and a lower share repurchase plan, reflecting cautious optimism balanced by affordability headwinds.
Management discussed reducing inventory levels deliberately, with land, lot, and development investments of $8.5 billion in fiscal 2025, while expecting to adjust starts pace based on market conditions. They are actively managing investments in lots, land, and development, and expect to increase starts in the first half of fiscal 2026 in preparation for the spring selling season.
Management repeatedly emphasized adapting to market conditions, affordability constraints, and uncertainty, while expressing confidence in their positioning and long-term outlook.
“Our average sales price is lower than the average sales price of new homes in the United States by $140,000, or almost 30%. Additionally, the median sales price of our homes is $65,000 lower than the median price of an existing home.”
| Metric | Period | Range | Midpoint | Status |
|---|---|---|---|---|
| Free cash flow | FY2026 | $3B | $3B | GUIDED |
| Gross marginHOMEBUILDING | FY2026 Q1 | 20%–20.5% | 20.25% | GUIDED |
| Op margin | FY2026 Q1 | 11.3%–11.8% | 11.55% | GUIDED |
| Revenue | FY2026 Q1 | $6.3B–$6.8B | $6.55B | GUIDED |
| Revenue | FY2026 | $33.5B–$35B | $34.25B | GUIDED |
| UnitsHOMEBUILDING | FY2026 Q1 | 17100–17600 | 17350 | GUIDED |
| UnitsHOMEBUILDING | FY2026 | 86000–88000 | 87000 | GUIDED |
| Issued | Metric | Target | Guide | Actual | Outcome |
|---|---|---|---|---|---|
| FY2026 Q2 | Gross margin | FY2026 Q3 | 19.7%–20.2% | 20.7% | Met / beat |
| FY2026 Q2 | Op margin | FY2026 Q3 | 12.2%–12.7% | 13.29% | Met / beat |
| FY2026 Q2 | Revenue | FY2026 Q3 | $8.8B–$9.3B | $9.2271B | Met / beat |
| FY2026 Q1 | Op margin | FY2026 Q2 | 10.6%–11.1% | 10.58% | Met / beat |
| FY2026 Q1 | Revenue | FY2026 Q2 | $7.3B–$7.8B | $7.5581B | Met / beat |
| FY2026 Q1 | Units | FY2026 Q2 | $19.7K–$20.2K | $19.486K | Missed |
D.R. Horton's average selling price is ~30% below the U.S. new-home average and $65,000 below the median existing-home price, reinforcing its affordable-price positioning that can steal share from both new-home competitors and the resale market. — Sustained affordability advantage lets D.R. Horton capture incremental demand in a rate-sensitive environment while competitors with higher price points may lose share.
Mike? Net income for the quarter was $905.3 million, or $3.04 per diluted share, on consolidated revenues of $9.7 billion. For the year, net income was $3.6 billion, or $11.57 per diluted share on revenues of $34.3 billion. Our fourth quarter home sales revenues were $8.5 billion on 23,368 homes closed. Our average closing sales price for the quarter of $365,600 is down 1% sequentially down 3% year over year, and is down 9% from our peak sales price of more than $400,000 in 2022. Our average sales price is lower than the average sales price of new homes in the United States by $140,000, or almost 30%. Additionally, the median sales price of our homes is $65,000 lower than the median price of an existing home. Bill?