US housing market demand remains persistently weak! Largest homebuilder D.R. Horton, Inc. (DHI.US) fourth-quarter earnings miss expectations, forecasts decline in home deliveries for fiscal 2027

D.R. Horton, Inc. (DHI.US), the largest homebuilder in the United States, reported fourth-quarter results on Thursday that fell short of market expectations and warned that the U.S. new-home market is facing more severe challenges as mortgage rates rise, housing affordability deteriorates, and consumers become more cautious about buying homes. The company expects it will still need to maintain above-normal sales incentives in the new fiscal year to stimulate weak housing demand. The earnings report showed that D.R. Horton, Inc.'s fourth-quarter earnings per share were $2.67, below the average analyst estimate of $3.02 compiled by Bloomberg. At the same time, the company is cautious about its home delivery outlook for fiscal 2027, expecting full-year deliveries could be as low as 79,000 homes, below the approximately 84,000 homes in fiscal 2026. Based on the lower end of this forecast, deliveries would decline by about 6% year over year. David Auld, executive chairman of D.R. Horton, Inc., said in a statement: "The housing market environment became more challenging in the fourth quarter. Rising mortgage rates, housing affordability constraints, and cautious consumer sentiment continued to weigh on new-home demand." As homebuying demand weakens, U.S. homebuilders are increasingly relying on price discounts and other sales incentives to attract buyers. These incentives typically include offering mortgage rates below market levels, covering some loan closing costs, and other homebuying subsidies. Although such measures help promote home sales, they also increase builders' costs and erode profit margins. According to data from the National Association of Home Builders (NAHB), more than half of homebuilders said in October that they were using sales incentives, reflecting the widespread pressure of insufficient demand in the current U.S. new-home market. D.R. Horton, Inc. said it expects it will still need to maintain above-normal sales incentives after entering fiscal 2027. This means that even if price cuts and subsidies drive home transactions, the company's profitability may remain under pressure. As the largest homebuilder in the United States, D.R. Horton, Inc.'s performance and sales outlook are regarded as important indicators for observing demand in the U.S. housing market. The earnings miss, together with the company's forecast that home deliveries may decline in the new fiscal year, further highlights the ongoing impact of high mortgage rates and housing affordability issues on the U.S. real estate market. Affected by the results and outlook, D.R. Horton, Inc.'s stock fell about 3% in U.S. premarket trading on Thursday, but erased the decline after the opening bell. As of publication, the stock was up 1.6% at $145.295.