D.R. Horton warns mortgage pressure will persist into fiscal 2027

US homebuilder D.R. Horton reported fiscal fourth-quarter 2026 results on October 29. Coverage said a recent rise in mortgage rates weakened orders, increased cancellations and reduced net income; the company warned that the slump would likely continue into fiscal 2027.^[1][2]

Quarterly net income was $741.8 million. Diluted earnings per share—profit per share after allowing for potential additional shares—were $2.67, below analysts' $3.03 estimate. Revenue of $9.371 billion exceeded the $8.988 billion estimate.^[3][2]

Higher mortgage rates raise monthly payments for the same loan amount, prompting some buyers to delay purchases or cancel orders and weakening builders' future sales pipeline.^[1] The 10-year Treasury yield, a benchmark that helps shape mortgage pricing, stood at 4.98% on October 29, down from 5.05% the previous session.

To attract buyers with stretched budgets, builders may need to offer more incentives, leaving less profit from each sale. Coverage of Horton's results already points to weak demand and higher incentives squeezing margins—the share of revenue left as profit.^[4] If weak orders persist and lead builders to reduce new-home starts, demand for building materials and construction services could also fall.^[1]

Impact

What to watch next

• October 30: The third-quarter Employment Cost Index is expected to rise 0.8% quarter over quarter, versus 0.9% previously. It will show whether labor-cost pressure is easing, with implications for rate expectations and mortgage financing costs.
• November 4: The MBA 30-year mortgage rate for the week of October 30 follows a previous reading of 7.37%. A decline would help affordability; a persistently high reading would indicate continued financing pressure on buyers.