D.R. Horton Inc.: Balancing Act

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D.R. Horton Inc.: Balancing Act

ght, FY guidance Price Performance Exchange-NYSE

reduced, and finished spec count rising. To be fair, we think cutting production is the right 52 Week range USD 184.54-129.22

strategy for DHI and the industry as a whole. Finished spec inventory atypically increased by

2,100 units sequentially in 3Q, although specs under construction declined by 1,700 q/q,

suggesting DHI is likely being nimble with respect to its inventory positioning heading into F’4Q,

and its reduced cycle times are allowing for this flexibility. Altogether, we view DHI’s strong

execution more so as making the best of a tough market, a view that we believe is not enough to

warrant a more positive stance on the stock today.

Source: IDC

On margins, we think there is risk of further compression as we move into 2027 beyond 4Q Link to Barclays Live for interactive charting

exiting flat with 3Q. First, management's expectation for stable incentives beyond 3Q appears

optimistic. Demand softened during 3Q and we think elevated rates and economic uncertainty

U.S. Homebuilding & Building

as we move into a seasonally lower demand quarter, where buyers tend to be more elastic vs

Products

the Spring, could warrant greater incentive pressure, especially with finished spec rising Matthew Bouley

sequentially. Second, while we could see modest construction cost relief in 4Q, we believe DHI +1 212 526 9029

has already pushed near its limit on driving more material cost savings from its supplier base. matthew.bouley@barclays.com

Lastly, we think lumber inflation since 4Q could materialize up to a ~50bp headwind into 2027, if BCI, US

current prices hold, likely reaching run-rate in F’2Q ‘27. Elizabeth Langan

+1 212 526 5960

elizabeth.langan@barclays.com

Barclays Capital Inc.