While investors focused on Big Tech earnings, homebuilder gives dire warning
There could be trouble ahead for consumers and the economy if interest rates don’t come down, the latest financial results from D.R. Horton suggest. The Arlington, Texas-based homebuilder reported quarterly earnings that missed Wall Street analysts’ estimates, and gave disappointing guidance about future results before the market opened Tuesday, sending shares tumbling 11%. CEO David Auld said interest rate volatility is keeping some homebuyers on the sidelines. “While mortgage rates have decreased from their highs earlier this year, many potential homebuyers expect rates to be lower in 2025,” he said in a statement . DHI YTD mountain D.R. Horton year to date The rate for a 30-year fixed mortgage is currently 7%, according to Mortgage News Daily . That is down from the 8% it hit last October , but the highest since July 10, according to the website. Mortgage rates are tied to the yield on the 10-year Treasury note, which has recently spiked higher. Bond yields move inversely to prices. In fact, rates have actually increased since the Federal Reserve began its rate-cutting campaign in September, when it lowered the fed funds rate by half a percentage point . Strong economic data combined with uncertainty around the central bank’s path for future rate cuts have weighed on the benchmark Treasury security. D.R. Horton said it expects revenue between $36 billion and $37.5 billion in the fiscal year ending in September 2025, below the $38.91 billion FactSet consensus estimate derived from analysts’ estimates. For the fiscal fourth quarter that just ended, it reported earnings of $3.92 per share on revenue of $10 billion. Analysts polled by LSEG had anticipated earnings per share of $4.17 on revenue of $10.22 billion. The results also dragged down shares of other homebuilders, with Toll Brothers , Pulte Group and KB Home all sinking about 4%. The S & P Homebuilders ETF (XHB), which tracks the S & P 500′s homebuilders index, lost 3%. Among home improvement retailers, Home Depot and Lowe’s both slipped about 2%.
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