Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

137K characters. Original on sec.gov · Markdown

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included in this quarterly report and with our annual report on Form 10-K for the fiscal year ended September 30, 2024. Some of the information contained in this discussion and analysis constitutes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those described in the “Forward-Looking Statements” section following this discussion.

BUSINESS

D.R. Horton, Inc. is the largest homebuilding company in the United States as measured by number of homes closed. We construct and sell homes through our operating divisions in 126 markets across 36 states. Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange under the ticker symbol “DHI.” Unless the context otherwise requires, the terms “D.R. Horton,” the “Company,” “we” and “our” used herein refer to D.R. Horton, Inc., a Delaware corporation, and its predecessors and subsidiaries.

Our business operations consist of homebuilding, rental, a majority-owned residential lot development company, financial services and other activities. Our homebuilding operations are our core business and primarily include the construction and sale of single-family homes with sales prices generally ranging from $250,000 to more than $1,000,000, with an average closing price of $373,700 during the six months ended March 31, 2025. Approximately 84% of our home sales revenue in the six months ended March 31, 2025 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes, duplexes and triplexes.

We have closed more than 1.1 million homes during our 46-year history, and we have been the largest volume homebuilder in the United States every year since 2002. Our product offerings include a broad range of homes for entry-level, move-up, active adult and luxury buyers.

At March 31, 2025, we owned 62% of the outstanding shares of Forestar Group Inc. (Forestar), a publicly traded residential lot development company listed on the New York Stock Exchange under the ticker symbol “FOR.” Forestar operates across many of our homebuilding operating markets and is a key part of our homebuilding strategy to maintain relationships with land developers and to control a large portion of our land and lot position through land purchase contracts.

Our financial services operations provide mortgage financing and title agency services to homebuyers in many of our homebuilding markets. DHI Mortgage, our wholly-owned subsidiary, provides mortgage financing services primarily to our homebuyers and sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers after origination. Our wholly-owned subsidiary title companies serve as title insurance agents by providing title insurance policies, examination, underwriting and closing services primarily to our homebuilding customers.

In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements. The results of these operations are immaterial for separate reporting and therefore are grouped together and presented as other.

OVERVIEW

During the six months ended March 31, 2025, our number of homes closed and our home sales revenues decreased 8% and 9%, respectively, compared to the prior year period, and our consolidated revenues decreased 9% to $15.3 billion compared to $16.8 billion. Our pre-tax income was $2.2 billion in the six months ended March 31, 2025 compared to $2.8 billion in the prior year period, and our pre-tax operating margin was 14.2% compared to 16.5%. Net income was $1.7 billion in the six months ended March 31, 2025 compared to $2.1 billion in the prior year period, and our diluted earnings per share were $5.19 compared to $6.34.

In the trailing twelve months ended March 31, 2025, our return on equity (ROE) was 17.4% compared to 22.2% in the prior year period, and our return on assets (ROA) was 12.2% compared to 15.1%. ROE is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances for the trailing five quarters divided by five. ROA is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average consolidated assets, where average consolidated assets is the sum of total asset balances for the trailing five quarters divided by five.

The 2025 spring selling season has begun, and new home demand has been slower than expected due to uncertainty among potential homebuyers caused by continued affordability constraints and declining consumer confidence. As a result, our net sales orders and homebuilding revenues in the second quarter decreased 15% from the prior year period, and our home sales gross margin decreased to 21.8% as we increased sales incentives such as buydowns of mortgage rates for our homebuyers. We strive to remain well-positioned with affordable product offerings and a flexible lot supply, and we will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of new home demand in each of our local markets. We expect our incentive levels to stay elevated and increase further, depending on market conditions and changes in mortgage interest rates.

We remain focused on our relationships with land developers across the country in order to maximize returns and capital efficiency. Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represent 75% of the lots owned and controlled at March 31, 2025 compared to 76% at September 30, 2024 and 77% at March 31, 2024. We are prioritizing the purchase of finished lots from Forestar and other land developers when possible. During the six months ended March 31, 2025, 65% of the homes we closed were on lots developed by either Forestar or a third party.

We believe our strong balance sheet and liquidity provide us with the flexibility to operate effectively through changing economic conditions. We plan to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.

STRATEGY

Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive positions to maximize the returns on our inventory investments and generate strong profits and cash flows from operations, while managing risk and maintaining financial flexibility to navigate changing economic conditions. Our strategy includes the following initiatives:

Developing and retaining highly experienced and productive teams of personnel throughout our company that are aligned and focused on continuous improvement in our operational execution and financial performance.
Maintaining a significant cash balance and strong overall liquidity position while controlling our level of debt.
Allocating and actively managing our inventory investments across our operating markets to diversify our geographic risk.
Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market.
Modifying product offerings, sales pace, home prices and incentives as necessary in each of our markets to meet consumer demand and maintain affordability.
Delivering high quality homes and a positive experience to our customers both during and after the sale.
Managing our inventory of homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.
Investing in lots, land and land development in desirable markets, while controlling the level of land and lots we own in each market relative to the local new home demand.
Controlling a significant portion of our land and finished lot position through purchase contracts and prioritizing the purchase of finished lots from Forestar and other land developers when possible.
Controlling the cost of labor and goods provided by subcontractors and vendors.
Improving the efficiency of our land development, construction, sales and other key operational activities.
Controlling our selling, general and administrative (SG&A) expense infrastructure to match production levels.
Ensuring that our financial services business provides high quality mortgage and title services to homebuyers efficiently and effectively.
Investing in the construction and leasing of single-family and multi-family rental properties to meet rental demand in high growth suburban markets and selling these properties profitably.
Opportunistically evaluating potential acquisitions to enhance our operating platform.

We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position. However, we cannot provide any assurances that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.

KEY RESULTS

Key financial results as of and for the three months ended March 31, 2025, as compared to the same period of 2024 unless otherwise indicated, were as follows:

Consolidated Results:

Consolidated revenues decreased 15% to $7.7 billion compared to $9.1 billion.
Consolidated pre-tax income decreased 30% to $1.1 billion compared to $1.5 billion.
Consolidated pre-tax income was 13.8% of consolidated revenues compared to 16.8%.
Income tax expense was $248.0 million compared to $344.8 million, and our effective tax rate was 23.2% compared to 22.6%.
Net income attributable to D.R. Horton decreased 31% to $810.4 million compared to $1.2 billion.
Diluted net income per common share attributable to D.R. Horton decreased 27% to $2.58 compared to $3.52.
Stockholders’ equity was $24.3 billion compared to $25.3 billion and $23.8 billion at September 30, 2024 and March 31, 2024, respectively.
Book value per common share increased to $78.82 compared to $78.12 and $72.13 at September 30, 2024 and March 31, 2024, respectively.
Debt to total capital was 21.1% compared to 18.9% and 20.0% at September 30, 2024 and March 31, 2024, respectively. Net debt to total capital was 14.3% compared to 5.2% and 10.8% at September 30, 2024 and March 31, 2024, respectively.

Homebuilding:

Homebuilding revenues decreased 15% to $7.2 billion compared to $8.5 billion.
Homes closed decreased 15% to 19,276 homes, and the average closing price of those homes decreased 1% to $372,500.
Net sales orders decreased 15% to 22,437 homes, and the value of net sales orders decreased 17% to $8.4 billion.
Sales order backlog decreased 21% to 14,164 homes, and the value of sales order backlog decreased 22% to $5.5 billion.
Home sales gross margin was 21.8% compared to 23.2%.
Homebuilding SG&A expense was 8.9% of homebuilding revenues compared to 7.2%.
Homebuilding pre-tax income decreased 31% to $935.0 million compared to $1.4 billion.
Homebuilding pre-tax income was 13.0% of homebuilding revenues compared to 16.0%.
Homebuilding pre-tax return on inventory was 24.3% compared to 29.9%.
Homebuilding cash and cash equivalents totaled $1.9 billion compared to $3.6 billion and $2.2 billion at September 30, 2024 and March 31, 2024, respectively.
Homebuilding inventories totaled $20.9 billion compared to $20.0 billion and $19.9 billion at September 30, 2024 and March 31, 2024, respectively.
Homes in inventory totaled 36,900 compared to 37,400 and 45,000 at September 30, 2024 and March 31, 2024, respectively.
Owned lots totaled 150,600 compared to 152,500 and 143,900 at September 30, 2024 and March 31, 2024, respectively. Lots controlled through purchase contracts totaled 462,500 compared to 480,400 and 473,300 at September 30, 2024 and March 31, 2024, respectively.
Homebuilding debt was $3.1 billion compared to $2.9 billion and $2.4 billion at September 30, 2024 and March 31, 2024, respectively.

Rental:

Rental revenues were $236.6 million compared to $371.3 million.
Rental pre-tax income was $22.8 million compared to $33.3 million.
Rental inventory totaled $3.1 billion compared to $2.9 billion and $3.1 billion at September 30, 2024 and March 31, 2024, respectively.
Single-family rental homes closed totaled 519 compared to 1,109.
Multi-family rental units closed totaled 300 compared to 424.

Forestar:

Forestar’s revenues increased 5% to $351.0 million compared to $333.8 million. Revenues in the current and prior year quarters included $267.8 million and $310.3 million, respectively, of revenue from land and lot sales to our homebuilding segment.
Forestar’s lots sold increased 4% to 3,411 compared to 3,289. Lots sold to D.R. Horton totaled 2,501 compared to 3,105.
Forestar’s pre-tax income was $40.7 million compared to $58.9 million.
Forestar’s pre-tax income was 11.6% of revenues compared to 17.6%.
Forestar’s cash and cash equivalents totaled $174.3 million compared to $481.2 million and $416.2 million at September 30, 2024 and March 31, 2024, respectively.
Forestar’s inventories totaled $2.8 billion compared to $2.3 billion and $2.1 billion at September 30, 2024 and March 31, 2024, respectively.
Forestar’s owned and controlled lots totaled 105,900 compared to 95,100 and 96,100 at September 30, 2024 and March 31, 2024, respectively. Of these lots, 43,900 were under contract to sell to or subject to a right of first offer with D.R. Horton compared to 37,700 and 34,300 at September 30, 2024 and March 31, 2024, respectively.
Forestar’s debt was $872.5 million compared to $706.4 million and $705.7 million at September 30, 2024 and March 31, 2024, respectively.

Financial Services:

Financial services revenues decreased 6% to $212.9 million compared to $225.6 million.
Financial services pre-tax income was $73.0 million compared to $78.0 million.
Financial services pre-tax income was 34.3% of financial services revenues compared to 34.6%.

Key financial results for the six months ended March 31, 2025, as compared to the same period of 2024, were as follows:

Consolidated Results:

Consolidated revenues decreased 9% to $15.3 billion compared to $16.8 billion.
Consolidated pre-tax income decreased 22% to $2.2 billion compared to $2.8 billion.
Consolidated pre-tax income was 14.2% of consolidated revenues compared to 16.5%.
Income tax expense was $506.0 million compared to $636.6 million, and our effective tax rate was 23.2% compared to 22.9%.
Net income attributable to D.R. Horton decreased 22% to $1.7 billion compared to $2.1 billion.
Diluted net income per common share attributable to D.R. Horton decreased 18% to $5.19 compared to $6.34.
Net cash provided by operations was $210.5 million compared to net cash used in operations of $470.1 million.

Homebuilding:

Homebuilding revenues decreased 9% to $14.4 billion compared to $15.8 billion.
Homes closed decreased 8% to 38,335 homes, and the average closing price of those homes decreased 1% to $373,700.
Net sales orders decreased 10% to 40,274 homes, and the value of net sales orders decreased 11% to $15.0 billion.
Home sales gross margin was 22.3% compared to 23.1%.
Homebuilding SG&A expense was 8.9% of homebuilding revenues compared to 7.7%.
Homebuilding pre-tax income decreased 21% to $1.9 billion compared to $2.5 billion.
Homebuilding pre-tax income was 13.6% of homebuilding revenues compared to 15.6%.
Net cash provided by homebuilding operations was $876.0 million compared to $408.3 million.

Rental:

Rental revenues were $454.3 million compared to $566.5 million.
Rental pre-tax income was $34.7 million compared to $64.6 million.
Single-family rental homes closed totaled 830 compared to 1,488.
Multi-family rental units closed totaled 804 compared to 724.

Forestar:

Forestar’s revenues decreased 6% to $601.3 million compared to $639.7 million. Revenues in the current and prior year periods included $486.4 million and $583.9 million, respectively, of revenue from land and lot sales to our homebuilding segment.
Forestar’s lots sold decreased 11% to 5,744 compared to 6,439. Lots sold to D.R. Horton totaled 4,613 compared to 5,939.
Forestar’s pre-tax income decreased 43% to $62.6 million compared to $110.1 million.
Forestar’s pre-tax income was 10.4% of revenues compared to 17.2%.

Financial Services:

Financial services revenues decreased 5% to $395.2 million compared to $418.2 million.
Financial services pre-tax income decreased 16% to $121.6 million compared to $144.0 million.
Financial services pre-tax income was 30.8% of financial services revenues compared to 34.4%.

RESULTS OF OPERATIONS - HOMEBUILDING

We conduct our homebuilding operations in the geographic regions, states and markets listed below. Our homebuilding operating divisions are aggregated into six reporting segments, also referred to as reporting regions, which comprise the markets below. Our financial statements and the notes thereto contain additional information regarding segment performance.


State	Reporting Region/Market	State	Reporting Region/Market	State	Reporting Region/Market

	Northwest Region		Southeast Region		North Region
Colorado	Colorado Springs	Alabama	Baldwin County	Delaware	Northern Delaware
	Denver		Birmingham		Southern Delaware
	Fort Collins		Huntsville	Illinois	Chicago
Oregon	Bend		Mobile	Indiana	Fort Wayne
	Eugene/Springfield		Montgomery		Indianapolis
	Medford		Tuscaloosa		Northwest Indiana
	Portland/Salem	Florida	Fort Myers/Naples	Iowa	Des Moines
Utah	Salt Lake City		Gainesville		Iowa City/Cedar Rapids
	St. George		Jacksonville	Kansas/Missouri	Kansas City
Washington	Bremerton		Lakeland	Kentucky	Louisville
	Central Washington		Melbourne/Vero Beach	Maryland	Baltimore
	Kennewick/Pasco/Richland		Miami/Fort Lauderdale		Eastern Maryland
	Seattle/Tacoma/Everett/Olympia		Ocala		Suburban Washington, D.C.
	Spokane		Orlando		Western Maryland
	Vancouver		Panama City	Minnesota	Minneapolis/St. Paul
			Pensacola	Nebraska	Omaha
	Southwest Region		Port St. Lucie	New Jersey	Northern New Jersey
Arizona	Phoenix		Tallahassee		Southern New Jersey
	Tucson		Tampa/Sarasota	Ohio	Cincinnati/Dayton
California	Bakersfield		Volusia County		Columbus
	Bay Area		West Palm Beach	Pennsylvania	Central Pennsylvania
	Fresno/Tulare	Louisiana	Baton Rouge		Philadelphia
	Los Angeles County		Lake Charles/Lafayette		Pittsburgh
	Modesto/Merced/Stockton	Mississippi	Gulf Coast	Virginia	Northern Virginia
	Redding/Chico/Yuba City		Hattiesburg		Richmond
	Riverside County		Jackson		Virginia Beach/Williamsburg
	Sacramento				Western Virginia
	San Bernardino County		East Region	West Virginia	Eastern West Virginia
Hawaii	Oahu	Georgia	Atlanta		Northern West Virginia
Nevada	Las Vegas		Augusta	Wisconsin	Southeast Wisconsin
	Reno		Central Georgia
New Mexico	Albuquerque		Savannah/Brunswick
	Santa Fe		Valdosta
		North Carolina	Asheville
	South Central Region		Charlotte
Arkansas	Little Rock		Greensboro/Winston-Salem
	Northwest Arkansas		New Bern/Greenville
Oklahoma	Oklahoma City		Raleigh/Durham/Fayetteville
	Tulsa		Wilmington
Texas	Abilene	South Carolina	Charleston
	Austin		Columbia
	Beaumont		Greenville/Spartanburg
	Bryan/College Station		Hilton Head
	Corpus Christi		Myrtle Beach
	Dallas	Tennessee	Chattanooga
	East Texas		Knoxville
	Fort Worth		Memphis
	Houston		Nashville
	Killeen/Temple/Waco		Northeast Tennessee
	Lubbock
	Midland/Odessa
	New Braunfels/San Marcos
	San Antonio

The following tables and related discussion set forth key operating and financial data for our homebuilding operations by reporting segment as of and for the three and six months ended March 31, 2025 and 2024.


	Net Sales Orders (1)
	Three Months Ended March 31,
	Net Homes Sold				Value (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025		2024		% Change
Northwest	1,390	1,617	(14)	%	$	762.7	$	833.1	(8)	%	$	548,700	$	515,200	7	%
Southwest	2,371	3,068	(23)	%	1,143.7		1,512.3		(24)	%	482,400		492,900		(2)	%
South Central	5,958	7,021	(15)	%	1,853.5		2,287.2		(19)	%	311,100		325,800		(5)	%
Southeast	5,180	6,985	(26)	%	1,762.1		2,489.8		(29)	%	340,200		356,400		(5)	%
East	4,754	4,978	(4)	%	1,644.0		1,785.1		(8)	%	345,800		358,600		(4)	%
North	2,784	2,787	—	%	1,192.6		1,155.7		3	%	428,400		414,700		3	%
	22,437	26,456	(15)	%	$	8,358.6	$	10,063.2	(17)	%	$	372,500	$	380,400	(2)	%

	Six Months Ended March 31,
	Net Homes Sold				Value (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025		2024		% Change
Northwest	2,409	2,796	(14)	%	$	1,296.4	$	1,428.9	(9)	%	$	538,100	$	511,100	5	%
Southwest	4,545	5,231	(13)	%	2,193.1		2,547.3		(14)	%	482,500		487,000		(1)	%
South Central	10,517	11,853	(11)	%	3,284.2		3,841.8		(15)	%	312,300		324,100		(4)	%
Southeast	9,602	11,786	(19)	%	3,264.1		4,194.9		(22)	%	339,900		355,900		(4)	%
East	8,341	8,279	1	%	2,883.3		2,960.3		(3)	%	345,700		357,600		(3)	%
North	4,860	4,580	6	%	2,091.0		1,879.5		11	%	430,200		410,400		5	%
	40,274	44,525	(10)	%	$	15,012.1	$	16,852.7	(11)	%	$	372,700	$	378,500	(2)	%


	Sales Order Cancellations
	Three Months Ended March 31,
	Cancelled Sales Orders		Value (In millions)				Cancellation Rate (2)
	2025	2024	2025		2024		2025		2024
Northwest	198	215	$	115.7	$	111.9	12	%	12	%
Southwest	407	466	212.7		222.8		15	%	13	%
South Central	1,030	1,137	336.5		375.8		15	%	14	%
Southeast	1,111	1,406	382.5		508.6		18	%	17	%
East	919	920	326.5		323.4		16	%	16	%
North	590	502	248.2		203.7		17	%	15	%
	4,255	4,646	$	1,622.1	$	1,746.2	16	%	15	%

	Six Months Ended March 31,
	Cancelled Sales Orders		Value (In millions)				Cancellation Rate (2)
	2025	2024	2025		2024		2025		2024
Northwest	362	433	$	209.3	$	222.3	13	%	13	%
Southwest	777	877	395.4		423.1		15	%	14	%
South Central	2,021	2,268	658.4		758.6		16	%	16	%
Southeast	2,175	2,581	751.1		937.0		18	%	18	%
East	1,708	1,749	607.0		621.3		17	%	17	%
North	1,141	951	480.6		387.3		19	%	17	%
	8,184	8,859	$	3,101.8	$	3,349.6	17	%	17	%

(1)Net sales orders represent the number and dollar value of new sales contracts executed with customers (gross sales orders), net of cancelled sales orders.

(2)Cancellation rate represents the number of cancelled sales orders divided by gross sales orders.

Net Sales Orders

The value of net sales orders was $8.4 billion (22,437 homes) and $15.0 billion (40,274 homes) for the three and six months ended March 31, 2025, respectively, compared to $10.1 billion (26,456 homes) and $16.9 billion (44,525 homes) in the prior year periods. The decrease in value in both periods was primarily attributable to a decrease in the number of sales orders, along with a 2% decrease in the average selling price.

The number of net sales orders decreased 15% and 10% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods. The markets contributing most to the decrease in sales order volume in both periods were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, most of the Texas markets in the South Central and the Florida markets (particularly Tampa) in the Southeast.

New home demand has been slower than expected this spring due to uncertainty among potential homebuyers caused by continued affordability constraints and declining consumer confidence. We strive to remain well-positioned with affordable product offerings and a flexible lot supply, and we will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of new home demand in each of our local markets.


	Sales Order Backlog
	As of March 31,
	Homes in Backlog				Value (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025		2024		% Change
Northwest	665	733	(9)	%	$	387.2	$	393.3	(2)	%	$	582,300	$	536,600	9	%
Southwest	1,218	1,755	(31)	%	613.1		894.4		(31)	%	503,400		509,600		(1)	%
South Central	3,567	4,261	(16)	%	1,161.4		1,446.0		(20)	%	325,600		339,400		(4)	%
Southeast	3,040	4,990	(39)	%	1,067.3		1,893.1		(44)	%	351,100		379,400		(7)	%
East	3,413	4,019	(15)	%	1,227.4		1,503.7		(18)	%	359,600		374,100		(4)	%
North	2,261	2,115	7	%	1,020.3		908.8		12	%	451,300		429,700		5	%
	14,164	17,873	(21)	%	$	5,476.7	$	7,039.3	(22)	%	$	386,700	$	393,900	(2)	%

Sales Order Backlog

Sales order backlog represents homes under contract but not yet closed at the end of the period. Many of the contracts in our sales order backlog are subject to contingencies, including mortgage loan approval and buyers selling their existing homes, which can result in cancellations. A portion of the contracts in backlog will not result in closings due to cancellations.


	Homes Closed and Home Sales Revenue
	Three Months Ended March 31,
	Homes Closed				Value (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025		2024		% Change
Northwest	1,223	1,476	(17)	%	$	660.4	$	739.9	(11)	%	$	540,000	$	501,300	8	%
Southwest	2,206	2,665	(17)	%	1,063.6		1,282.9		(17)	%	482,100		481,400		—	%
South Central	4,968	6,098	(19)	%	1,530.0		1,958.4		(22)	%	308,000		321,200		(4)	%
Southeast	4,626	6,118	(24)	%	1,593.0		2,185.2		(27)	%	344,400		357,200		(4)	%
East	3,953	4,060	(3)	%	1,359.8		1,441.1		(6)	%	344,000		355,000		(3)	%
North	2,300	2,131	8	%	974.1		859.2		13	%	423,500		403,200		5	%
	19,276	22,548	(15)	%	$	7,180.9	$	8,466.7	(15)	%	$	372,500	$	375,500	(1)	%

	Six Months Ended March 31,
	Homes Closed				Value (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025		2024		% Change
Northwest	2,279	2,610	(13)	%	$	1,193.5	$	1,313.6	(9)	%	$	523,700	$	503,300	4	%
Southwest	4,541	4,883	(7)	%	2,203.6		2,334.2		(6)	%	485,300		478,000		2	%
South Central	9,704	11,219	(14)	%	3,016.5		3,622.4		(17)	%	310,900		322,900		(4)	%
Southeast	9,657	11,612	(17)	%	3,332.2		4,175.4		(20)	%	345,100		359,600		(4)	%
East	7,672	7,641	—	%	2,668.3		2,709.1		(2)	%	347,800		354,500		(2)	%
North	4,482	3,923	14	%	1,912.9		1,588.4		20	%	426,800		404,900		5	%
	38,335	41,888	(8)	%	$	14,327.0	$	15,743.1	(9)	%	$	373,700	$	375,800	(1)	%

Home Sales Revenue

Revenues from home sales were $7.2 billion (19,276 homes closed) and $14.3 billion (38,335 homes closed) for the three and six months ended March 31, 2025, respectively, compared to $8.5 billion (22,548 homes closed) and $15.7 billion (41,888 homes closed) in the prior year periods. The decrease in revenues in both periods was primarily attributable to a decrease in the number of homes closed, along with a 1% decrease in the average selling price.

The number of homes closed decreased 15% and 8% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods. The markets contributing most to the decrease in home closings volume in both periods were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, most of the Texas markets in the South Central and the Florida markets in the Southeast. The markets contributing most to the increase in closings volume in the North were the suburban Washington, D.C., New Jersey and Chicago markets.


Homebuilding Operating Margin Analysis
	Percentages of Related Revenues
	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
Gross profit – home sales	21.8	%	23.2	%	22.3	%	23.1	%
Gross profit – land/lot sales and other	86.4	%	39.1	%	61.3	%	36.4	%
Inventory and land option charges	(0.4)	%	(0.2)	%	(0.3)	%	(0.1)	%
Gross profit – total homebuilding	21.6	%	23.0	%	22.1	%	23.0	%
Selling, general and administrative expense	8.9	%	7.2	%	8.9	%	7.7	%
Other (income) expense	(0.2)	%	(0.2)	%	(0.3)	%	(0.3)	%
Homebuilding pre-tax income	13.0	%	16.0	%	13.6	%	15.6	%

Home Sales Gross Profit

Gross profit from home sales decreased to $1.6 billion in the three months ended March 31, 2025 from $2.0 billion in the prior year period and decreased 140 basis points to 21.8% as a percentage of home sales revenues. The 140 basis point decrease was due to the average cost of our homes closed increasing while the average selling price of those homes decreased slightly.

Gross profit from home sales decreased to $3.2 billion in the six months ended March 31, 2025 from $3.6 billion in the prior year period and decreased 80 basis points to 22.3% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 80 basis points due to the average cost of our homes closed increasing along with a slight decrease in the average selling price of those homes.

We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. To adjust to changes in market conditions during recent years, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers. We expect our incentive levels to stay elevated and increase further, depending on market conditions and changes in mortgage interest rates.

Land/Lot Sales and Other Revenues

Land/lot sales and other revenues from our homebuilding operations were $22.0 million and $43.2 million in the three and six months ended March 31, 2025, respectively, and $6.9 million and $27.2 million in the prior year periods.

We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets. We generally purchase land and lots with the intent to build and sell homes on them. However, some of the land that we purchase includes commercially zoned parcels that we may sell to commercial developers. We may also sell residential lots or land parcels to manage our supply or for other strategic reasons. As of March 31, 2025, our homebuilding operations had $11.9 million of land held for sale that we expect to sell in the next twelve months.

Inventory and Land Option Charges

At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary. As a result of this review, there were $5.4 million and $7.4 million of impairment charges recorded in our homebuilding segment during the three and six months ended March 31, 2025, respectively, compared to $5.6 million in the three and six months ended March 31, 2024.

As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment. If the housing market or economic conditions are adversely affected for a prolonged period, we may be required to evaluate additional communities for potential impairment. These evaluations could result in impairment charges, which could be significant.

During the three and six months ended March 31, 2025, earnest money and pre-acquisition cost write-offs related to our homebuilding segment’s land purchase contracts that we have terminated or expect to terminate were $24.0 million and $33.9 million, respectively, compared to $7.5 million and $13.0 million in the prior year periods.

Selling, General and Administrative (SG&A) Expense

SG&A expense from homebuilding activities increased 4% to $637.8 million and 5% to $1.3 billion in the three and six months ended March 31, 2025, respectively, from $614.1 million and $1.2 billion in the prior year periods. SG&A expense as a percentage of homebuilding revenues was 8.9% in both the three and six months ended March 31, 2025 compared to 7.2% and 7.7%, respectively, in the prior year periods.

Employee compensation and related costs were $500.9 million and $994.0 million in the three and six months ended March 31, 2025, respectively, compared to $512.2 million and $999.4 million in the prior year periods. Employee compensation and related costs represented 79% and 78% of SG&A costs in the three and six months ended March 31, 2025, respectively, compared to 83% and 82% in the prior year periods. Our homebuilding operations employed 10,199 and 9,717 people at March 31, 2025 and 2024, respectively.

We attempt to control our homebuilding SG&A costs while ensuring that our infrastructure adequately supports our operations; however, we cannot make assurances that we will be able to maintain or improve upon the current SG&A expense as a percentage of revenues.

Interest Incurred

We capitalize interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. Interest incurred by our homebuilding operations increased 84% to $20.8 million and 71% to $38.8 million in the three and six months ended March 31, 2025, respectively, compared to $11.3 million and $22.7 million in the prior year periods. The increase was primarily due to an increase in the weighted average interest rate of the homebuilding debt outstanding during the periods, as well as an increase in the average amount of that debt. Interest charged to cost of sales was 0.4% of homebuilding cost of sales (excluding inventory and land option charges) in all four periods.

Other Income

Other income, net of other expenses, included in our homebuilding operations was $17.0 million and $46.9 million in the three and six months ended March 31, 2025, respectively, compared to $21.0 million and $50.4 million in the prior year periods. Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income are not significant, either individually or in the aggregate.

Homebuilding Results by Reporting Region


	Three Months Ended March 31,
	2025						2024
	Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues		Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues
	(In millions)
Northwest	$	660.4	$	93.7	14.2	%	$	742.1	$	109.3	14.7	%
Southwest	1,063.7		123.3		11.6	%	1,283.4		171.0		13.3	%
South Central	1,530.7		208.4		13.6	%	1,961.1		346.6		17.7	%
Southeast	1,613.8		211.3		13.1	%	2,185.8		361.5		16.5	%
East	1,360.0		171.8		12.6	%	1,441.8		254.5		17.7	%
North	974.3		126.5		13.0	%	859.4		114.7		13.3	%
	$	7,202.9	$	935.0	13.0	%	$	8,473.6	$	1,357.6	16.0	%

	Six Months Ended March 31,
	2025						2024
	Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues		Homebuilding Revenues		Homebuilding Pre-tax Income (1)		% of Revenues
	(In millions)
Northwest	$	1,193.6	$	169.9	14.2	%	$	1,320.0	$	178.8	13.5	%
Southwest	2,203.8		291.7		13.2	%	2,334.8		305.9		13.1	%
South Central	3,017.6		429.7		14.2	%	3,630.3		618.2		17.0	%
Southeast	3,363.6		434.1		12.9	%	4,185.4		690.9		16.5	%
East	2,674.6		366.2		13.7	%	2,710.1		459.1		16.9	%
North	1,917.0		256.3		13.4	%	1,589.7		200.8		12.6	%
	$	14,370.2	$	1,947.9	13.6	%	$	15,770.3	$	2,453.7	15.6	%

(1)Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office. The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.

Northwest Region — Homebuilding revenues decreased 11% and 10% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods due to decreases in the number of homes closed, particularly in our Salt Lake City market. The region generated pre-tax income of $93.7 million and $169.9 million in the three and six months ended March 31, 2025, respectively, compared to $109.3 million and $178.8 million in the prior year periods. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increased by 140 and 240 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 150 and 160 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 17% and 6% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Phoenix market. The region generated pre-tax income of $123.3 million and $291.7 million in the three and six months ended March 31, 2025, respectively, compared to $171.0 million and $305.9 million in the prior year periods. Home sales gross profit percentage was flat in the three month period, while it increased by 110 basis points in the six months ended March 31, 2025 compared to the prior year period, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 170 and 90 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 22% and 17% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed in most of the region’s markets. The region generated pre-tax income of $208.4 million and $429.7 million in the three and six months ended March 31, 2025, respectively, compared to $346.6 million and $618.2 million in the prior year periods. Home sales gross profit percentage decreased by 230 and 150 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 150 and 120 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southeast Region — Homebuilding revenues decreased 26% and 20% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Florida markets. The region generated pre-tax income of $211.3 million and $434.1 million in the three and six months ended March 31, 2025, respectively, compared to $361.5 million and $690.9 million in the prior year periods. Home sales gross profit percentage decreased by 220 and 240 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 180 and 130 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues decreased 6% and 1% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods. The region generated pre-tax income of $171.8 million and $366.2 million in the three and six months ended March 31, 2025, respectively, compared to $254.5 million and $459.1 million in the prior year periods. Home sales gross profit percentage decreased by 320 and 200 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased slightly. As a percentage of homebuilding revenues, SG&A expenses increased by 130 and 100 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to an increase in employee compensation costs.

North Region — Homebuilding revenues increased 13% and 21% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our suburban Washington, D.C., Chicago and New Jersey markets. The region generated pre-tax income of $126.5 million and $256.3 million in the three and six months ended March 31, 2025, respectively, compared to $114.7 million and $200.8 million in the prior year periods. Home sales gross profit percentage increased by 100 and 120 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 150 and 50 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to an increase in employee compensation costs.

HOMEBUILDING INVENTORIES, LAND AND LOT POSITION AND HOMES IN INVENTORY

We routinely enter into contracts to purchase land or developed residential lots at predetermined prices on a defined schedule commensurate with planned development or anticipated new home demand. At the time of purchase, the undeveloped land is generally vested with the rights to begin development or construction work, and we plan and coordinate the development of our land into residential lots for use in our homebuilding business. We manage our inventory of owned land and lots and homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.

Our homebuilding segment’s inventories at March 31, 2025 and September 30, 2024 are summarized as follows:


	March 31, 2025
	Construction in Progress and Finished Homes		Residential Land/Lots Developed and Under Development		Land Held for Development		Land Held for Sale		Total Inventory
	(In millions)
Northwest	$	799.6	$	1,121.7	$	15.6	$	1.2	$	1,938.1
Southwest	1,069.6		2,114.9		6.8		8.6		3,199.9
South Central	1,817.6		2,262.3		0.3		1.7		4,081.9
Southeast	1,966.5		2,305.5		12.6		—		4,284.6
East	1,753.7		2,717.2		—		—		4,470.9
North	1,231.3		1,414.1		—		0.2		2,645.6
Corporate and unallocated (1)	124.4		165.6		0.5		0.2		290.7
	$	8,762.7	$	12,101.3	$	35.8	$	11.9	$	20,911.7


	September 30, 2024
	Construction in Progress and Finished Homes		Residential Land/Lots Developed and Under Development		Land Held for Development		Land Held for Sale		Total Inventory
	(In millions)
Northwest	$	719.6	$	1,215.6	$	—	$	—	$	1,935.2
Southwest	1,378.1		1,889.3		6.8		4.7		3,278.9
South Central	1,701.5		2,024.5		0.3		1.7		3,728.0
Southeast	2,146.9		2,124.3		13.1		0.2		4,284.5
East	1,626.4		2,347.3		—		4.5		3,978.2
North	1,287.6		1,262.2		—		1.4		2,551.2
Corporate and unallocated (1)	126.0		148.5		0.3		0.2		275.0
	$	8,986.1	$	11,011.7	$	20.5	$	12.7	$	20,031.0

(1)Corporate and unallocated inventory consists primarily of capitalized interest and property taxes.

Our land and lot position and homes in inventory at March 31, 2025 and September 30, 2024 are summarized as follows:


	March 31, 2025
	Land/Lots Owned (1)		Lots Controlled Through Land and Lot Purchase Contracts (2)(3)		Total Land/Lots Owned and Controlled		Homes in Inventory (4)
Northwest	11,700		18,500		30,200		2,400
Southwest	21,200		28,700		49,900		3,700
South Central	37,700		109,500		147,200		9,500
Southeast	30,100		121,600		151,700		8,300
East	32,700		122,300		155,000		8,200
North	17,200		61,900		79,100		4,800
	150,600		462,500		613,100		36,900
	25	%	75	%	100	%


	September 30, 2024
	Land/Lots Owned (1)		Lots Controlled Through Land and Lot Purchase Contracts (2)(3)		Total Land/Lots Owned and Controlled		Homes in Inventory (4)
Northwest	13,000		18,600		31,600		2,100
Southwest	22,200		29,200		51,400		4,200
South Central	39,000		109,600		148,600		9,000
Southeast	29,500		134,300		163,800		9,700
East	32,500		129,300		161,800		7,500
North	16,300		59,400		75,700		4,900
	152,500		480,400		632,900		37,400
	24	%	76	%	100	%

(1)Land/lots owned included approximately 72,500 and 64,400 owned lots that are fully developed and ready for home construction at March 31, 2025 and September 30, 2024, respectively.

(2)The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2025 and September 30, 2024 was $25.6 billion and $25.2 billion, respectively, secured by earnest money deposits of $2.26 billion and $2.15 billion, respectively. The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2025 and September 30, 2024 included $2.2 billion and $1.9 billion, respectively, related to lot purchase contracts with Forestar, secured by $223.8 million and $193.3 million, respectively, of earnest money.

(3)Lots controlled at March 31, 2025 included approximately 43,900 lots owned by Forestar, 24,700 of which our homebuilding divisions had under contract to purchase and 19,200 of which our homebuilding divisions had a right of first offer to purchase. Of these, approximately 10,800 lots were in our Southeast region, 10,300 lots were in our East region, 8,500 lots were in our South Central region, 7,000 lots were in our North region, 4,600 lots were in our Southwest region and 2,700 lots were in our Northwest region. Lots controlled at September 30, 2024 included approximately 37,700 lots owned by Forestar, 20,500 of which our homebuilding divisions had under contract to purchase and 17,200 of which our homebuilding divisions had a right of first offer to purchase.

(4)Approximately 23,500 and 25,700 of our homes in inventory were unsold at March 31, 2025 and September 30, 2024, respectively. At March 31, 2025, approximately 8,400 of our unsold homes were completed, of which approximately 1,200 homes had been completed for more than six months. At September 30, 2024, approximately 10,300 of our unsold homes were completed, of which approximately 1,100 homes had been completed for more than six months. Homes in inventory exclude approximately 2,600 and 2,400 model homes at March 31, 2025 and September 30, 2024, respectively.

RESULTS OF OPERATIONS - RENTAL

Our rental segment consists of single-family and multi-family rental operations. The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes. The multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style apartment communities in high growth suburban markets. Single-family and multi-family rental property sales are recognized as revenues, and rental income is recognized as other income. The following tables provide further information regarding our rental operations as of and for the three and six months ended March 31, 2025 and 2024.


	Rental Homes/Units Closed and Revenue
	Three Months Ended March 31,
	Homes/Units Closed				Rental Revenue (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025	2024	% Change
Single-family	519	1,109	(53)	%	$	144.2	$	301.3	(52)	%	277,800	271,700	2	%
Multi-family	300	424	(29)	%	84.4		70.0		21	%	281,300	165,100	70	%
	819	1,533	(47)	%	$	228.6	$	371.3	(38)	%	279,100	242,200	15	%

	Six Months Ended March 31,
	Homes/Units Closed				Rental Revenue (In millions)						Average Selling Price
	2025	2024	% Change		2025		2024		% Change		2025	2024	% Change
Single-family	830	1,488	(44)	%	$	232.3	$	417.3	(44)	%	279,900	280,400	—	%
Multi-family	804	724	11	%	214.0		149.2		43	%	266,200	206,100	29	%
	1,634	2,212	(26)	%	$	446.3	$	566.5	(21)	%	273,100	256,100	7	%


	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
	(In millions)
Revenues
Single-family rental	$	144.2	$	301.3	$	232.3	$	417.3
Multi-family rental and other	92.4		70.0		222.0		149.2
Total revenues	236.6		371.3		454.3		566.5
Cost of sales
Single-family rental	112.7		244.3		184.8		331.5
Multi-family rental and other	70.1		58.5		177.4		112.6
Inventory and land option charges	0.3		0.3		3.9		0.6
Total cost of sales	183.1		303.1		366.1		444.7
Selling, general and administrative expense	58.0		61.4		104.3		108.8
Other (income) expense	(27.3)		(26.5)		(50.8)		(51.6)
Income before income taxes	$	22.8	$	33.3	$	34.7	$	64.6

Rental Operating Margin Analysis


	Percentages of Related Revenues
	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
Gross profit — rental	22.6	%	18.4	%	19.4	%	21.5	%
Selling, general and administrative expense	24.5	%	16.5	%	23.0	%	19.2	%
Other (income) expense	(11.5)	%	(7.1)	%	(11.2)	%	(9.1)	%
Rental pre-tax income	9.6	%	9.0	%	7.6	%	11.4	%

Revenues from our rental operations decreased to $236.6 million and $454.3 million during the three and six months ended March 31, 2025, respectively, from $371.3 million and $566.5 million in the prior year periods.

Pre-tax income was $22.8 million and $34.7 million during the three and six months ended March 31, 2025, respectively, compared to $33.3 million and $64.6 million in the prior year periods. The decline in pre-tax income was due to a decrease in revenues due to fewer overall home and unit closings compared to the prior year periods.

At March 31, 2025, our rental property inventory of $3.1 billion included $813.2 million of inventory related to our single-family rental operations and $2.3 billion of inventory related to our multi-family rental operations. At September 30, 2024, our rental property inventory of $2.9 billion included $800.3 million of inventory related to our single-family rental operations and $2.1 billion of inventory related to our multi-family rental operations. Single-family rental homes and lots and multi-family rental units at March 31, 2025 and September 30, 2024 consisted of the following:


	Rental Inventory
	March 31, 2025	September 30, 2024
Single-family rental homes (1)	3,400	3,140
Single-family rental lots (2)	1,200	1,910
Multi-family rental units (3)	12,330	11,960

(1)Single-family rental homes at March 31, 2025 consist of 580 homes under construction and 2,820 completed homes compared to 340 homes under construction and 2,800 completed homes at September 30, 2024.

(2)Single-family rental lots at March 31, 2025 consist of 610 undeveloped lots and 590 finished lots compared to 910 undeveloped lots and 1,000 finished lots at September 30, 2024.

(3)Multi-family rental units at March 31, 2025 consist of 5,800 units under construction and 6,530 units that were substantially complete and in the lease-up phase compared to 7,900 units under construction and 4,060 units that were substantially complete at September 30, 2024.

RESULTS OF OPERATIONS – FORESTAR

At March 31, 2025, we owned 62% of the outstanding shares of Forestar. Forestar is a publicly traded residential lot development company with operations in 65 markets across 24 states as of March 31, 2025. (See Note B to the accompanying financial statements for additional Forestar segment information.)

Results of operations for the Forestar segment for the three and six months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
	(In millions)
Total revenues	$	351.0	$	333.8	$	601.3	$	639.7
Cost of land/lot sales and other	270.9		250.5		465.2		483.4
Inventory and land option charges	0.9		0.2		2.0		0.4
Total cost of sales	271.8		250.7		467.2		483.8
Selling, general and administrative expense	38.4		29.2		74.3		57.2
Other (income) expense	0.1		(5.0)		(2.8)		(11.4)
Income before income taxes	$	40.7	$	58.9	$	62.6	$	110.1

Forestar’s revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders and land bankers for homebuilders. The following tables provide further information regarding Forestar’s revenues and lot position as of and for the three and six months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
	Lots Sold		Value (In millions)
	2025	2024	2025		2024
Residential single-family lots sold
Lots sold to D.R. Horton	2,501	3,105	$	267.8	$	310.3
Total lots sold	3,411	3,289	$	346.9	$	325.9


	Six Months Ended March 31,
	Lots Sold		Value (In millions)
	2025	2024	2025		2024
Residential single-family lots sold
Lots sold to D.R. Horton	4,613	5,939	$	486.4	$	583.9
Total lots sold	5,744	6,439	$	594.2	$	630.1


	March 31, 2025	September 30, 2024
Residential single-family lots in inventory and under contract
Lots owned	68,400	57,800
Lots controlled through land purchase contracts	37,500	37,300
Total lots owned and controlled	105,900	95,100

Owned lots under contract to sell to D.R. Horton	24,700	20,500
Owned lots under contract to customers other than D.R. Horton	700	500
Total owned lots under contract	25,400	21,000

Owned lots subject to right of first offer with D.R. Horton	19,200	17,200
Owned lots fully developed	9,500	6,300

At March 31, 2025 and September 30, 2024, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.8 billion and $2.3 billion, respectively.

Forestar’s inventory and land option charges consisted of $0.9 million and $2.0 million of earnest money and pre-acquisition cost write-offs in the three and six months ended March 31, 2025, respectively, compared to $0.2 million and $0.4 million in the prior year periods. There were no impairment charges recorded in the current or prior year periods.

SG&A expense for the three and six months ended March 31, 2025 included charges of $1.8 million and $3.6 million, respectively, related to the shared services agreement between Forestar and D.R. Horton whereby D.R. Horton provides Forestar with certain administrative, compliance, operational and procurement services. Shared services charges were $1.4 million and $2.7 million, respectively, in the prior year periods.

Other expense in the three and six months ended March 31, 2025 includes a loss on extinguishment of debt of $1.1 million due to Forestar’s repurchase of $329.4 million of its $400 million principal amount of 3.85% senior notes due 2026 in March 2025.

The decline in Forestar’s pre-tax income was primarily due to lower gross margins on lot sales and higher SG&A costs.

RESULTS OF OPERATIONS – FINANCIAL SERVICES

The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the three and six months ended March 31, 2025 and 2024.


	Three Months Ended March 31,						Six Months Ended March 31,
	2025		2024		% Change		2025		2024		% Change
Number of first-lien loans originated or brokered by DHI Mortgage for D.R. Horton homebuyers	15,592		18,066		(14)	%	30,633		33,183		(8)	%
Number of homes closed by D.R. Horton	19,276		22,548		(15)	%	38,335		41,888		(8)	%
Percentage of D.R. Horton homes financed by DHI Mortgage	81	%	80	%			80	%	79	%
Loans sold by DHI Mortgage to third parties	13,839		16,029		(14)	%	30,735		32,956		(7)	%


	Three Months Ended March 31,						Six Months Ended March 31,
	2025		2024		% Change		2025		2024		% Change
	(In millions)
Loan origination and other fees	$	19.9	$	20.8	(4)	%	$	39.0	$	38.9	—	%
Gains on sale of mortgage loans and mortgage servicing rights	151.1		152.7		(1)	%	271.1		281.5		(4)	%
Servicing income	0.2		1.6		(88)	%	0.8		2.7		(70)	%
Total mortgage operations revenues	171.2		175.1		(2)	%	310.9		323.1		(4)	%
Title policy premiums	41.7		50.5		(17)	%	84.3		95.1		(11)	%
Total revenues	212.9		225.6		(6)	%	395.2		418.2		(5)	%
General and administrative expense	160.3		171.2		(6)	%	314.5		322.7		(3)	%
Other (income) expense	(20.4)		(23.6)		(14)	%	(40.9)		(48.5)		(16)	%
Financial services pre-tax income	$	73.0	$	78.0	(6)	%	$	121.6	$	144.0	(16)	%

Financial Services Operating Margin Analysis


	Percentages of Financial Services Revenues
	Three Months Ended March 31,				Six Months Ended March 31,
	2025		2024		2025		2024
General and administrative expense	75.3	%	75.9	%	79.6	%	77.2	%
Other (income) expense	(9.6)	%	(10.5)	%	(10.3)	%	(11.6)	%
Financial services pre-tax income	34.3	%	34.6	%	30.8	%	34.4	%

Mortgage Loan Activity

DHI Mortgage’s primary focus is to originate loans for our homebuilding operations, and those loan originations account for virtually all of its total loan volume. In the three and six months ended March 31, 2025, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers decreased 14% and 8%, respectively, corresponding to the decreases of 15% and 8%, respectively, in the number of homes closed by our homebuilding operations. The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 81% and 80% in the three and six months ended March 31, 2025, respectively, up from 80% and 79% in the prior year periods. These percentages reflect DHI Mortgage’s ongoing efforts to align their business with our homebuilding operations by offering competitive products and pricing.

The number of loans sold decreased 14% and 7% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods. Virtually all of the mortgage loans held for sale on March 31, 2025 were eligible for sale to Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) or Government National Mortgage Association (Ginnie Mae). During the six months ended March 31, 2025, approximately 69% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 29% were sold to one other major financial entity. Changes in market conditions could result in a greater concentration of our mortgage sales in future periods to fewer financial entities and directly to Fannie Mae, Freddie Mac or Ginnie Mae, and we may need to make other adjustments to our mortgage operations.

Financial Services Revenues and Expenses

Total loan origination volume decreased 14% and 8% in the three and six months ended March 31, 2025, respectively, and revenues from our mortgage operations decreased 2% to $171.2 million and 4% to $310.9 million in the three and six months ended March 31, 2025, respectively, from $175.1 million and $323.1 million in the prior year periods. Revenues from our title operations decreased 17% to $41.7 million and 11% to $84.3 million in the three and six months ended March 31, 2025, respectively, from $50.5 million and $95.1 million in the prior year periods, due to a decrease in transactions closed through our title operations.

General and administrative (G&A) expense related to our financial services operations decreased 6% to $160.3 million and 3% to $314.5 million in the three and six months ended March 31, 2025, respectively, from $171.2 million and $322.7 million in the prior year periods. As a percentage of financial services revenues, G&A expense was 75.3% and 79.6% in the three and six months ended March 31, 2025, respectively, compared to 75.9% and 77.2% in the prior year periods. Fluctuations in financial services G&A expense as a percentage of revenues can occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. Our financial services operations employed 3,121 and 3,016 people at March 31, 2025 and 2024, respectively.

Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary. Other income decreased 14% to $20.4 million and 16% to $40.9 million in the three and six months ended March 31, 2025, respectively, from $23.6 million and $48.5 million in the prior year periods, primarily due to a decrease in interest income on our loan origination volume.

RESULTS OF OPERATIONS - OTHER BUSINESSES

In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries. We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements. The pre-tax income of all of our subsidiaries engaged in other business activities was $11.2 million and $22.7 million in the three and six months ended March 31, 2025, respectively, compared to $9.2 million and $19.1 million in the prior year periods.

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

Pre-tax income for the three and six months ended March 31, 2025 was $1.1 billion and $2.2 billion, respectively, compared to $1.5 billion and $2.8 billion in the prior year periods. The decreases were primarily due to a decrease in the pre-tax income of our homebuilding operations.

Income Taxes

Our income tax expense for the three and six months ended March 31, 2025 was $248.0 million and $506.0 million, respectively, compared to $344.8 million and $636.6 million in the prior year periods. Our effective tax rate was 23.2% for both the three and six months ended March 31, 2025 compared to 22.6% and 22.9% in the prior year periods. The effective tax rates for all periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

Our deferred tax assets, net of deferred tax liabilities, were $89.5 million at March 31, 2025 compared to $182.4 million at September 30, 2024. We have a valuation allowance of $14.9 million at March 31, 2025 and September 30, 2024 related to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized. We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL and tax credit carryforwards. Any reversal of the valuation allowance in future periods will impact our effective tax rate.

CAPITAL RESOURCES AND LIQUIDITY

We have historically funded our operations with cash flows from operating activities, borrowings under bank credit facilities and the issuance of new debt securities. Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.

We are making investments in our homebuilding and rental inventories to expand our operations and consolidate market share. We are also returning capital to our shareholders through repurchases of our common stock and dividend payments. We are maintaining significant homebuilding cash balances and liquidity to support the increased scale and level of activity in our business and to provide flexibility to adjust to changing market conditions and opportunities.

At March 31, 2025, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $6.6 billion. $2.1 billion was payable within 12 months, including $1.4 billion which is outstanding under our mortgage repurchase facilities and $500 million principal amount of 2.6% homebuilding senior notes maturing in October 2025.

At March 31, 2025, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 21.1% compared to 18.9% at September 30, 2024 and 20.0% at March 31, 2024. Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 14.3% at March 31, 2025 compared to 5.2% at September 30, 2024 and 10.8% at March 31, 2024. Over the long term, we intend to maintain our ratio of debt to total capital around 20%.

At March 31, 2025, we had outstanding letters of credit of $234.2 million and surety bonds of $3.4 billion issued by third parties to secure performance under various contracts. We expect that our performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms. When we complete our performance obligations, the related letters of credit and bonds are generally released shortly thereafter, leaving us with no continuing obligations. We have no material third-party guarantees.

We regularly assess our projected capital requirements to fund growth in our business, repay debt obligations, pay dividends, repurchase our common stock and maintain sufficient cash and liquidity levels to support our other operational needs, and we regularly evaluate our opportunities to raise additional capital. D.R. Horton has an automatically effective universal shelf registration statement filed with the Securities and Exchange Commission (SEC) in July 2024, registering debt and equity securities that may be issued from time to time in amounts to be determined. Forestar also has an effective shelf registration statement filed with the SEC in September 2024, registering $750 million of equity securities, of which $300 million is reserved for sales under its at-the-market equity offering (ATM) program that was entered into in November 2024. As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. We believe that our existing cash resources, revolving credit facilities, mortgage repurchase facilities and ability to access the capital markets or obtain additional bank financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations for the next 12 months and for the foreseeable future thereafter.

Capital Resources - Homebuilding

Cash and Cash Equivalents — At March 31, 2025, cash and cash equivalents of our homebuilding segment totaled $1.9 billion.

Bank Credit Facility — We have a senior unsecured homebuilding revolving credit facility that was amended in December 2024 to increase its capacity from $2.19 billion to $2.23 billion. The amendment also extended the maturity date of the facility. The facility includes bank commitments of $1.965 billion maturing on December 18, 2029 and $265 million maturing on October 28, 2027. The facility has an uncommitted accordion feature that could increase its size to $3.0 billion, subject to certain conditions and availability of additional bank commitments. The facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments. Letters of credit issued under the facility reduce the available borrowing capacity. At March 31, 2025, there were no borrowings outstanding and $211.9 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.02 billion.

Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if our leverage ratio exceeds a certain level. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. The credit agreement governing the facility imposes restrictions on the creation of secured debt and liens.

Public Unsecured Debt — At March 31, 2025, we had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2025 through October 2035. In October 2024, we repaid $500 million principal amount of our 2.5% senior notes at maturity. In February 2025, we issued $700 million principal amount of 5.5% senior notes due October 15, 2035, with interest payable semi-annually. The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.6%. The indenture governing our senior notes imposes restrictions on the creation of secured debt and liens.

At March 31, 2025, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility and public debt obligations. Our homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R. Horton, Inc.’s significant wholly-owned homebuilding subsidiaries.

Debt and Stock Repurchase Authorizations — In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities and up to $4.0 billion of our common stock, replacing the previous authorizations. During the six months ended March 31, 2025, we repurchased 16.5 million shares at a total cost, including commissions and excise taxes, of $2.4 billion. At March 31, 2025, the full amount of the debt repurchase authorization was remaining, and $1.2 billion of the stock repurchase authorization was remaining. In April 2025, our Board of Directors authorized the repurchase of up to $5.0 billion of our common stock, replacing the previous authorization, which at that time had $1.1 billion remaining due to repurchases made subsequent to quarter end. The debt and stock repurchase authorizations have no expiration date.

Capital Resources - Rental

During the past few years, we have made significant investments in our rental operations. The inventory in our rental segment totaled $3.1 billion at March 31, 2025 compared to $2.9 billion at September 30, 2024 and $3.1 billion at March 31, 2024.

Cash and Cash Equivalents — At March 31, 2025, cash and cash equivalents of our rental segment totaled $98.6 million.

Bank Credit Facility — Our rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. The maturity date of the facility is October 10, 2027. Borrowings and repayments under the facility totaled $790 million and $485 million, respectively, during the six months ended March 31, 2025. At March 31, 2025, there were $1.05 billion of borrowings outstanding at a 6.4% annual interest rate and no letters of credit issued under the facility, resulting in no available capacity.

The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require DRH Rental to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity. At March 31, 2025, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

The rental revolving credit facility is guaranteed by DRH Rental’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. The rental revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or financial services operations.

Capital Resources - Forestar

Forestar’s achievement of its long-term growth objectives will depend on its ability to obtain financing and generate sufficient cash flows from operations. As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity. At March 31, 2025, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 34.7% compared to 30.7% at September 30, 2024 and 32.4% at March 31, 2024. Forestar’s ratio of net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 29.8% compared to 12.4% at September 30, 2024 and 16.4% at March 31, 2024.

Cash and Cash Equivalents — At March 31, 2025, Forestar had cash and cash equivalents of $174.3 million.

Bank Credit Facility — Forestar has a senior unsecured revolving credit facility that was amended in December 2024 to increase its capacity from $410 million to $640 million and to raise the uncommitted accordion feature that could increase the size of the facility to $1.0 billion, subject to certain conditions and availability of additional bank commitments. The amendment also extended the maturity date of the facility. The facility includes bank commitments of $575 million maturing on December 18, 2029 and $65 million maturing on October 28, 2026. The facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. Borrowings under the revolving credit facility are subject to a borrowing base calculation based on the book value of Forestar’s real estate assets and unrestricted cash. Letters of credit issued under the facility reduce the available borrowing capacity. At March 31, 2025, there were no borrowings outstanding and $22.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $617.7 million.

The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants. The financial covenants require Forestar to maintain a minimum level of tangible net worth, a minimum level of liquidity and a maximum allowable leverage ratio. These covenants are measured as defined in the credit agreement governing the facility and are reported to the lenders quarterly. A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.

Unsecured Debt — As of March 31, 2025, Forestar had $870.6 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which mature from May 2026 through March 2033 and represent unsecured obligations of Forestar. In March 2025, Forestar issued $500 million principal amount of 6.5% senior notes due March 15, 2033, with interest payable semi-annually. The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 6.7%. The net proceeds from this issuance were primarily used to fund Forestar’s tender offer to purchase any and all of its outstanding $400 million principal amount of 3.85% senior notes due 2026 (of which $329.4 million aggregate principal amount was tendered). The repurchase price of $333.4 million included accrued and unpaid interest of $4.2 million. Forestar recognized a $1.1 million loss on extinguishment of debt upon repurchase of the notes.

At March 31, 2025, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations. Forestar’s revolving credit facility and its senior notes are guaranteed by Forestar’s wholly-owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. They are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or financial services operations.

Debt Repurchase Authorization — In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities. All of the $30 million authorization was remaining at March 31, 2025, and the authorization has no expiration date.

Issuance of Common Stock — During the six months ended March 31, 2025, there were no shares issued under Forestar’s ATM program. At March 31, 2025, $750 million remained available for issuance under Forestar’s shelf registration statement, with $300 million reserved for sales under the ATM program.

Capital Resources - Financial Services

Cash and Cash Equivalents — At March 31, 2025, cash and cash equivalents of our financial services segment totaled $269.1 million.

Mortgage Repurchase Facilities — Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties. DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.

The committed mortgage repurchase facility has a total capacity of $1.6 billion and a maturity date of May 9, 2025. The capacity of the facility can be increased to $2.0 billion subject to the availability of additional commitments. At March 31, 2025, DHI Mortgage had an obligation of $1.4 billion under the committed mortgage repurchase facility at a 6.0% annual interest rate.

At March 31, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $82.5 million at a 5.6% annual interest rate.

At March 31, 2025, $2.35 billion of mortgage loans held for sale with a collateral value of $2.31 billion were pledged under the committed mortgage repurchase facility, and $90.5 million of mortgage loans held for sale with a collateral value of $85.8 million were pledged under the uncommitted mortgage repurchase facility.

The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity. At March 31, 2025, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities. These mortgage repurchase facilities are not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.

In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher than normal volumes of mortgages held for sale. The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility or to obtain other additional financing in sufficient capacities.

Operating Cash Flow Activities

In the six months ended March 31, 2025, net cash provided by operating activities was $210.5 million compared to $470.1 million of cash used in operating activities in the prior year period. Cash provided by operating activities in the current year period primarily consisted of $876.0 million and $197.2 million of cash provided by our homebuilding and financial services segments, respectively, partially offset by $469.8 million and $381.6 million of cash used in our Forestar and rental segments, respectively.

Cash provided by a decrease in construction in progress and finished home inventory was $229.8 million in the current year period, reflecting a decrease in our completed unsold homes in the current period. Cash used to increase residential land and lots was $1.6 billion in the current year period compared to $1.4 billion in the prior year period.

Investing Cash Flow Activities

In the six months ended March 31, 2025, net cash used in investing activities was $94.5 million compared to $66.0 million in the prior year period. In the current year period, uses of cash included the payment of $53.1 million related to a business acquisition in our South Central region and purchases of property and equipment totaling $47.6 million. In the prior year period, uses of cash included purchases of property and equipment totaling $71.3 million.

Financing Cash Flow Activities

We expect the short-term financing needs of our operations will be funded with existing cash, cash generated from operations and borrowings under our credit facilities. Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.

During the six months ended March 31, 2025, net cash used in financing activities was $2.1 billion, consisting primarily of cash used to repurchase shares of our common stock of $2.4 billion, repayment of $500 million principal amount of our 2.5% homebuilding senior notes at maturity, early repurchase of $329.4 million of Forestar’s $400 million principal amount 3.85% senior notes, payment of cash dividends totaling $254.0 million and net payments on our mortgage repurchase facilities of $86.4 million,. These uses of cash were partially offset by note proceeds from our issuance of $700 million principal amount of 5.5% homebuilding senior notes, note proceeds from Forestar’s issuance of $500 million principal amount of 6.5% senior notes and net borrowings on our rental revolving credit facility of $305 million.

During the six months ended March 31, 2024, net cash used in financing activities was $270.6 million, consisting primarily of cash used to repurchase shares of our common stock of $794.5 million and payment of cash dividends totaling $199.1 million. These uses of cash were partially offset by net borrowings on our rental revolving credit facility and mortgage repurchase facilities of $585 million and $214.4 million, respectively.

During each of the first two quarters of fiscal 2025, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, the most recent of which was paid on February 14, 2025 to stockholders of record on February 7, 2025. Cash dividends declared and paid in the three and six months ended March 31, 2025 totaled $125.5 million and $254.0 million, respectively. In April 2025, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, payable on May 9, 2025 to stockholders of record on May 2, 2025. Cash dividends of $0.30 per common share were approved and paid in each quarter of fiscal 2024. The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

As of March 31, 2025, D.R. Horton, Inc. had $3.0 billion principal amount of homebuilding senior notes outstanding due through October 2035 and no amounts outstanding on its homebuilding revolving credit facility.

All of the homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of D.R. Horton, Inc. (Guarantors or Guarantor Subsidiaries). Each of the Guarantor Subsidiaries is 100% owned, directly or indirectly, by D.R. Horton, Inc. Our subsidiaries associated with the single-family and multi-family rental operations, Forestar lot development operations, financial services operations and certain other subsidiaries do not guarantee the homebuilding senior notes or the homebuilding revolving credit facility (collectively, Non-Guarantor Subsidiaries). The guarantees are senior unsecured obligations of each Guarantor and rank equal with all existing and future senior debt of such Guarantor and senior to all subordinated debt of such Guarantor. The guarantees are effectively subordinated to any secured debt of such Guarantor to the extent of the value of the assets securing such debt. The guarantees will be structurally subordinated to indebtedness and other liabilities of Non-Guarantor Subsidiaries of the Guarantors.

The guarantees by a Guarantor Subsidiary will be automatically and unconditionally released and discharged upon: (1) the sale or other disposition of its common stock whereby it is no longer a subsidiary of ours; (2) the sale or other disposition of all or substantially all of its assets (other than to us or another Guarantor); (3) its merger or consolidation with an entity other than us or another Guarantor; or (4) its ceasing to guarantee any of our publicly traded debt securities and ceasing to guarantee any of our obligations under our homebuilding revolving credit facility.

The enforceability of the obligations of the Guarantor Subsidiaries under their guarantees may be subject to review under applicable federal or state laws relating to fraudulent conveyance or transfer, voidable preference and similar laws affecting the rights of creditors generally. In certain circumstances, a court could void the guarantees, subordinate amounts owing under the guarantees or order other relief detrimental to the holders of our guaranteed obligations. The indenture governing our homebuilding senior notes contains a “savings clause,” which limits the liability of each Guarantor on its guarantee to the maximum amount that such Guarantor can incur without risk that its guarantee will be subject to avoidance as a fraudulent transfer. This provision may not be effective to protect such guarantees from fraudulent transfer challenges or, if it does, it may reduce such Guarantor’s obligation such that the remaining amount due and collectible under the guarantees would not suffice, if necessary, to pay the notes in full when due.

The following tables present summarized financial information for D.R. Horton, Inc. and the Guarantor Subsidiaries on a combined basis after intercompany transactions and balances have been eliminated among D.R. Horton, Inc. and the Guarantor Subsidiaries, as well as their investment in, and equity in earnings from the Non-Guarantor Subsidiaries.


D.R. Horton, Inc. and Guarantor Subsidiaries

Summarized Balance Sheet Data	March 31, 2025		September 30, 2024
	(In millions)
Assets
Cash	$	1,838.1	$	3,542.4
Inventories	20,943.3		20,152.9
Amount due from Non-Guarantor Subsidiaries	1,449.2		1,393.2
Total assets	28,002.0		28,865.7
Liabilities & Stockholders’ Equity
Notes payable	$	3,148.5	$	2,926.8
Total liabilities	6,728.8		6,455.0
Stockholders’ equity	21,273.2		22,410.7

Summarized Statement of Operations Data	Six Months Ended March 31, 2025		Year Ended September 30, 2024
	(In millions)
Revenues	$	14,253.8	$	33,756.1
Cost of sales	11,099.5		25,896.3
Selling, general and administrative expense	1,248.4		2,497.2
Income before income taxes	1,938.4		5,423.0
Net income	1,488.2		4,148.9

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2024, our most critical accounting policies relate to revenue recognition, inventories and cost of sales, warranty and legal claims and insurance. Since September 30, 2024, there have been no significant changes to those critical accounting policies.

As disclosed in our critical accounting policies in our Form 10-K for the fiscal year ended September 30, 2024, our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims. At March 31, 2025 and September 30, 2024, we had reserves for approximately 970 and 825 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the six months ended March 31, 2025, we were notified of approximately 330 new construction defect claims and resolved 185 construction defect claims for a total cost of $17.4 million. At March 31, 2024 and September 30, 2023, we had reserves for approximately 595 and 600 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements. During the six months ended March 31, 2024, we were notified of approximately 185 new construction defect claims and resolved 190 construction defect claims for a total cost of $44.8 million.

SEASONALITY

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year. The seasonal nature of our business can also cause significant variations in the working capital requirements for our homebuilding, rental, lot development and financial services operations. As a result of seasonal activity, our quarterly results of operations and financial position at the end of a particular fiscal quarter are not necessarily representative of the balance of our fiscal year.

Forward-Looking Statements

Some of the statements contained in this report, as well as in other materials we have filed or will file with the SEC, statements made by us in periodic press releases and oral statements we make to analysts, stockholders and the press in the course of presentations about us, may be construed as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s beliefs as well as assumptions made by, and information currently available to, management. These forward-looking statements typically include the words “anticipate,” “believe,” “consider,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “likely,” “may,” “outlook,” “plan,” “possible,” “potential,” “predict,” “projection,” “seek,” “should,” “strategy,” “target,” “will,” “would” or other words of similar meaning. Any or all of the forward-looking statements included in this report and in any other of our reports or public statements may not approximate actual experience, and the expectations derived from them may not be realized, due to risks, uncertainties and other factors. As a result, actual results may differ materially from the expectations or results we discuss in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to:

the cyclical nature of the homebuilding, rental and lot development industries and changes in economic, real estate or other conditions;
adverse developments affecting the capital markets and financial institutions, which could limit our ability to access capital, increase our cost of capital and impact our liquidity and capital resources;
reductions in the availability of mortgage financing provided by government agencies, changes in government financing programs, a decrease in our ability to sell mortgage loans on attractive terms or an increase in mortgage interest rates;
the risks associated with our land, lot and rental inventory;
our ability to effect our growth strategies, acquisitions, investments or other strategic initiatives successfully;
the impact of an inflationary, deflationary or higher interest rate environment;
risks of acquiring land, building materials and skilled labor and challenges obtaining regulatory approvals;
the effects of public health issues such as a major epidemic or pandemic on the economy and our businesses;
the effects of weather conditions and natural disasters on our business and financial results;
home warranty and construction defect claims;
the effects of health and safety incidents;
reductions in the availability of performance bonds;
increases in the costs of owning a home;
the effects of information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations;
the effects of governmental regulations and environmental matters on our land development and housing operations;
the effects of governmental regulations on our financial services operations;
the effects of competitive conditions within the industries in which we operate;
our ability to manage and service our debt and comply with related debt covenants, restrictions and limitations;
the effects of negative publicity;
the effects of the loss of key personnel; and
the effects of actions by activist stockholders.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. Additional information about issues that could lead to material changes in performance and risk factors that have the potential to affect us is contained in our annual report on Form 10-K for the fiscal year ended September 30, 2024, including the section entitled “Risk Factors,” which is filed with the SEC.

Previous: Item 1. FINANCIAL STATEMENTS · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK