D.R. Horton Stock Falls on Earnings Miss. Buyer Incentives Are Hitting Margins.

Home builders have contended with tepid demand and concerns about higher costs because of tariffs. (Brandon Bell/Getty Images)

Key Points

• D.R. Horton reports fiscal fourth-quarter earnings that missed analysts’ estimates.
• D.R. Horton reports earnings of $3.04 a share, below expectations of $3.27.
• The company reports 20,078 orders, up from 19,035 in the fourth quarter of 2024, and better than Wall Street estimates.

The slow housing market took a bite out of D.R. Horton’s profits in its fourth quarter. Shares of the home builder were falling Tuesday after it posted fiscal fourth-quarter earnings that fell short of Wall Street expectations and guided to a lower than expected margin for the first quarter.

D.R. Horton reported earnings of $3.04 a share for the quarter, below the $3.27 analysts had anticipated, according to FactSet. The company reported 20,078 orders, however, up from 19,035 in the fourth quarter of 2024 and ahead of Wall Street’s call for 19,783.

Its home sales gross margin fell to 20% in the fourth quarter, down from 21.8% in the third quarter and 23.6% the year prior. Analysts had expected a 21.4% gross margin.

“New home demand is still being impacted by ongoing affordability constraints and cautious consumer sentiment,” David Auld, the company’s executive chairman, said in a statement.

D.R. Horton shares were down about 3% shortly after the market opened Tuesday.

Part of the margin decline was related to larger than usual one-time litigation costs, the company said on a conference call. But the slow home-selling environment didn’t help.

“New home demand is still being impacted by ongoing affordability constraints and cautious consumer sentiment, and we expect our sales incentives to remain elevated in fiscal 2026, the extent to which will depend on market conditions throughout the year,” Auld said in a statement.

The company expects a first-quarter gross margin in the range of 20% to 20.5%, below the 21.2% margin analysts were looking for.

Margins are of particular focus across the industry as builders contend with tepid demand, more competition from homeowners listing their properties, and investor fears of higher costs due to tariffs. The National Association of Home Builders’ measure of industry sentiment has remained in pessimistic territory all year, with plenty of builders offering incentives or cutting prices to keep homes selling.

These headwinds have made it hard for builders and related companies to get off the ground. The exchange-traded fund was up 0.6% this year as of Friday’s close, according to Dow Jones Market Data.

D.R. Horton expects to report 86,000 to 88,000 homes closed by homebuilding operations in 2026, up from 84,863 in 2025. Revenue, however, is expected to remain roughly flat at between $33.5 billion to $35 billion in the next fiscal year.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com