Homebuilder Horton sees 2020 home sales above estimates, shares rise
Tue Nov 12 2019
Lucy Harlow (2746 articles)

Homebuilder Horton sees 2020 home sales above estimates, shares rise

 D.R. Horton Inc (DHI.N) topped expectations for profit and revenue in the fourth quarter and forecast 2020 home sales above analysts’ estimates, as cheaper mortgage rates buoyed demand from buyers, sending shares in the biggest U.S. homebuilder up 3%.

Home sales rose 9.2% to 16,024 units in the quarter, underpinning a 10-cent beat on profit as it predicted it would sell more than 60,000 homes next year.

JMP Securities analyst Peter Martin said that lower official interest rates and the company’s strategy of building more affordable homes had eased some of the tensions hurting its results a year ago.

“Last year this time we had the highest pessimism because of rising interest rates, people were pulling back on affordability and builders were out of homes at the lower-end price points,” he said.

“If they (Horton) can keep supplying homes at a lower price point, and stay in the current range of interest rates, I think they are going to have a very nice year.”

The Federal Reserve has lowered borrowing costs twice this year to offset headwinds caused by more than a year long trade war between the United States and China, and slowing global growth.

Horton, which builds roughly 10% of all new U.S. homes, said it expects sales in 2020 to be between 60,000 and 61,000 homes, compared with analysts’ estimates of 59,737 homes.

Orders, an indicator of future demand, rose 14.1% to 13,130 homes in the quarter.

U.S. homebuilding tumbled from a more than a 12-year high in September, but single-family home construction rose for a fourth straight month, suggesting the housing market remains supported by lower mortgage rates even as the economy is slowing.

Horton also forecast 2020 revenue between $ 18.5 billion and $ 19.0 billion, compared with estimates of $ 18.58 billion.

Net income attributable to the company rose 8.4% to $ 505.3 million, or $ 1.35 per share, in the quarter ended Sept. 30. Revenue rose 11.7% to $ 5.04 billion.

 

Lucy Harlow

Lucy Harlow

Lucy Harlow is a senior Correspondent who has been reporting about Commodities, Currencies, Bonds etc across the globe for last 10 years. She reports from New York and tracks daily movement of various indices across the Globe