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D.R. Horton (DHI) reported mixed 4Q25 results as affordability challenges and incentives continued to pressure margins and earnings. The company’s 1Q26 and FY26 outlooks were generally in line with expectations, though home closings guidance came in light for Q1.

• EPS of $3.04 fell more than 22% yr/yr and badly missed expectations, marking the company’s third EPS miss in the past five quarters despite repurchasing 4.6 mln shares during the period.
• Homes closed dipped 1% yr/yr to 23,368, slightly below forecasts, underscoring affordability headwinds. Even so, revenue exceeded expectations at $10.5 bln, though it was still down 3.2% yr/yr.
• DHI’s underwhelming results follow weak reports from peers KB Home (KBH) and Lennar (LEN), extending a pattern of disappointing performance across the homebuilding sector.
• The company continued to rely on incentives and price reductions to sustain demand. The average sales price fell to $365,600 from $375,500 last year, while home sales gross margin declined to 20.0% from 21.8% in Q3.
• For 1Q26, revenue of $6.3-$6.8 bln was in line, but expected homes closed of 17,100-17,600 missed estimates. FY26 revenue of $33.5-$35.0 bln and homes closed of 86,000-88,000 were roughly in line with analysts' projections.

Briefing.com Analyst Insight:

DHI’s Q4 report adds to a mounting list of soft performances from major homebuilders as persistent affordability challenges continue to weigh on the industry. While the company managed to beat on revenue, the steep EPS miss and ongoing margin erosion reflect the cost of sustaining demand through heavy incentives and lower prices. The in-line FY26 outlook provides some stability, but near-term growth appears limited without meaningful relief in mortgage rates. Given the stock’s premium valuation relative to peers and a cooling housing backdrop, it’s difficult to see a near-term catalyst for upside. For now, the story remains one of solid execution in a tough market rather than accelerating growth.