D.R. Horton, America's largest homebuilder, reported a 19.5% gross margin in fiscal Q4 2026 despite a challenging sales environment. The company guided for 79,000 to 84,000 closings in fiscal 2027, representing flat to down 6% versus 2026. This follows earlier expectations for 84,000 closings, reflecting caution after recent demand declines.
Horton achieved this by cutting starts sharply. In Q4, the company started just 13,100 homes, more than 5,500 below its 18,619 sales orders for the quarter. Unsold inventory totaled 17,700 homes at fiscal year-end, down 10% year over year and 35% lower than fiscal 2022 and 2023 peaks.
The company cautioned about a hesitant, affordability-strained consumer and near-term margin pressure. Horton noted it typically gains market share during weak periods, implying it would use incentives and pricing to capture volume from smaller builders.
Horton has deployed cash into share repurchases rather than growth. In the past two years, the company repurchased nearly $8 billion of stock, more than it had bought back in total before 2025.
Industry observers view Horton's volume restraint and inventory discipline as a signal for other builders to focus on restraint, which could limit margin pressure if the sales environment remains under pressure.