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D.R. Horton Inc - Stock Quote DHI

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Morningstar's D.R. Horton Inc Stock Analysis

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Higher Rates Likely to Cool Housing Market but Our Residential Construction Outlook Is Constructive

Analyst Note

| Brian Bernard, CFA, CPA |

Inflation-adjusted home prices eclipsed mid-2000's levels in 2021 as housing demand surged amid a tight supply of homes for sale. Still, homeownership affordability (measured by the median mortgage/income ratio) remained favorable, in our view, due to record low mortgage rates (the 30-year fixed rate mortgage averaged about 3% in 2021). However, affordability has since eroded due to the 30-year rate increasing 200 basis points since end-2021 (to over 5% in late April) and a continued uptick in home prices. We had been expecting a more gradual increase in mortgage rates. There's a recent precedent of slowing housing demand amid sharply increasing mortgage rates. In late 2018, home sales slowed considerably as the average 30-year fixed rate rose about 100 basis points to 5% in less than a year. However, the slowdown was short-lived as mortgage rates quickly moderated. We don't expect mortgage rates to quickly reverse course this time though.

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D.R. Horton Inc's Company Profile

Business Description

D.R. Horton is a leading homebuilder in the United States with operations in 98 markets across 31 states. D.R. Horton mainly builds single-family detached homes (over 90% of home sales revenue) and offers products to entry-level, move-up, luxury buyers, and active adults. The company offers homebuyers mortgage financing and title agency services through its financial services segment. D.R. Horton's headquarters are in Arlington, Texas, and it manages six regional segments across the United States.

1341 Horton Circle
Arlington, TX, 76011
T +1 817 390-8200
Sector Consumer Cyclical
Industry Residential Construction
Most Recent Earnings Mar 31, 2022
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 11,788

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