301 Commerce St.
Fort Worth 76102
The housing market – particularly in Texas – is booming and Fort Worth’s D.R. Horton Inc. it taking full advantage of the opportunity.
For 2015, revenue was $10.8 billion, up from $8.3 billion in 2014. The good news has continued into 2016. Net income for the three months through March climbed to $195.1 million, or 52 cents a share, from $147.9 million, or 40 cents, a year earlier. The average estimate of 16 analysts was for earnings of 46 cents a share, according to data compiled by Bloomberg.
But it wasn’t just the luck of a growing economy and the resulting strength of the residential real estate sector that has pushed the Fort Worth-based homebuilder to the top. The company has been strategic in the home products it is bringing to the market. Perhaps most significantly, it has been first-to-market with a line of entry-level homes.
D.R. Horton has boosted sales volumes with the help of its entry-level Express Brand, which appeals to buyers facing a persistently small number of existing homes listed for sale. D.R. Horton now collects 14 percent of its revenue from its Express brand, which it started last year and plans to expand in 2016 to most of its 79 markets.
There were 1.98 million houses on the market at the end of March, down 1.5 percent from a year earlier, the National Association of Realtors reported Wednesday.
“Horton ‘s early push into the entry-level has given them an early-mover advantage relative to peers, which, until more recently, have focused almost exclusively on the move-up segment,” Drew Reading, a Bloomberg Intelligence analyst, wrote in an e-mail. “Their view, which has been validated, was that a lack of inventory at affordable price points was holding back demand.”
D.R. Horton is credited with being the first to focus on this entry level market.
“When D.R. Horton first announced that it was going to go after the entry level portion of the market, a lot of other builders wanted to wait and see how it turned out,” Brad Hunter, chief economist for housing-research firm Metrostudy, said. “Now that they’ve seen the concept proven, they’re figuring out their own way to provide a home that’s more affordable.”
And, if imitation is the sincerest form of flattery, D.R. Horton should be blushing – other homebuilders are quickly adopting similar strategies. The push to build bigger may be slowing. The median size of a new single-family home was 2,445 square feet (227 square meters) in the third quarter, little changed from a year earlier, after rising 17 percent over six years from a low in 2008, according to an analysis of U.S. Census Bureau data by Robert Dietz, an economist with the National Association of Home Builders.
“Solid performance in our three core brands is enabling us to capitalize on market opportunities and expand our industry-leading market share,” Chairman Donald Horton said. “We are well-positioned for the second half of fiscal 2016.”
– additional reporting from Washington Post/Bloomberg