By Kannaki Deka
(Reuters) -D.R. Horton Inc on Thursday forecast full-year revenue above estimates after reporting better-than-expected quarterly results on the back of strong pricing power as housing demand stays strong amid tight supply, sending its shares up 7.4%.
Mortgage rates started declining in tandem with U.S. Treasury yields after the turmoil in the banking sector last month, pulling some buyers back into the market.
Sales of new U.S. single-family homes and existing homes rebounded more than expected in February, with buyers eager to take advantage of any dip in mortgage rates and the first year-on-year decrease in prices in 11 years.
"Although higher interest rates and economic uncertainty may persist for some time, the supply of both new and existing homes at affordable price points remains limited, and demographics supporting housing demand remain favorable," D.R. Horton Chairman Donald Horton said.
The Arlington-based homebuilder forecast 2023 revenue between $31.5 billion and $33.0 billion, above analysts' estimates of $28.5 billion, according to Refinitiv.
"The company’s strategy to have inventory available to close within a short period continues to benefit D.R. Horton, particularly as mortgage rates remained relatively volatile during the quarter," said Robert Rulla, senior director and head of homebuilding at Fitch Ratings.
D.R. Horton posted revenue of $7.97 billion, compared with analysts' average estimate of $6.47 billion.
It reported net income of $2.73 per diluted share compared with estimates of $1.93 a share.