D.R. Horton Posts a Rise
Of 16% in Home Orders
In a sign that larger home builders are less vulnerable to housing slowdowns in individual markets, D.R. Horton Inc. posted a healthy 16% increase in new-home orders for its fiscal first quarter, with sales rising in all of its regions from a year earlier.
The results come as some of its smaller rivals -- M.D.C. Holdings Inc., William Lyon Homes Inc. and Brookfield Homes Corp. -- posted declines in sales, primarily because of softening demand in certain markets, such as Northern California and Arizona.
UBS analyst Margaret Whelan said D.R. Horton is reaping the benefits of its diversity and broad geographical footprint. Ms. Whelan noted that other large home builders -- KB Home and Lennar Corp. -- also enjoyed robust order growth when they reported fiscal fourth-quarter results for the period that ended Nov. 30.
Ms. Whelan said smaller builders, such as William Lyon Homes, of Newport Beach, Calif., and Brookfield, of Del Mar, Calif., have a narrower geographical focus that makes them more vulnerable to regional slowdowns.
She said M.D.C.'s orders declined mainly because of a 50% increase in cancellations in the mid-Atlantic region. M.D.C. is based in Denver.
D.R. Horton, however, did show some slowing in price increases. The average price of new-home orders taken in its first quarter ended Dec. 31 rose 3%, down from the 6% pace the Fort Worth, Texas, company posted in the fiscal fourth quarter, Ms. Whelan said.
The UBS analyst said the average price was down 2% in the mid-Atlantic region, 4% in the Midwest and 5% in the West. This was in part offset by a 13% price increase in both the Southeast and Southwest. Ms. Whelan said the price declines in certain regions were likely related to product mix, not a pullback in demand. She said the company has been shifting its focus to build a greater number of smaller, more affordable homes.
Ms. Whelan said larger builders can use their geographical reach and variety of housing types to offset slower sales or pricing in individual markets.
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