AI Takeaway
D.R. Horton's Q3 FY2026 revenue was essentially flat year-over-year at $9.23B, but net income fell 11.7% to $904.9M and home sales gross margin compressed to 20.7% from 21.8% as elevated sales incentives and affordability constraints continued to pressure profitability.
Revenue
$9.23B
++0.02% YoY
EPS (Basic)
$3.21
-4.75% YoY
Filed · Source: SEC EDGAR 10-Q filing
Horton D R (DHI) reported Q3 FY2026 revenue of $9.23B, up 0.0% year over year. The company posted net income of $904.9M, down 11.7% from a year earlier, with diluted EPS of $3.20.
Home sales gross margin was 20.7% in Q3 FY2026 versus 21.8% in the prior year quarter, reflecting a decline in average sales price and higher sales incentives, including mortgage interest rate buydowns offered to support affordability. Management expects sales incentives to remain elevated through the remainder of fiscal 2026 and into fiscal 2027.
Source: 10-Q Item 2 MD&A
Homes closed increased 4% to 23,983 units in Q3 FY2026, while the average closing price fell 2% to $362,000; homebuilding revenue rose 1% to $8.7 billion. Net sales orders were 23,084 homes valued at $8.4 billion, essentially flat versus the prior year quarter, while cancellation rate rose to 20% from 17%.
Source: 10-Q Item 2 MD&A
Sales order backlog increased 14% to 15,983 homes and 16% in value to $6.2 billion at June 30, 2026, led by growth in the North and Southwest regions (North backlog value up 35%, Southwest up 41%).
Source: 10-Q Item 2 MD&A
Homebuilding pre-tax income fell 10% to $1.1 billion (12.3% of revenue vs 13.8% prior year) for Q3, with every reporting region (Northwest, Southwest, South Central, Southeast, East, North) showing lower pre-tax margin percentages year-over-year, e.g., Northwest fell to 10.5% from 16.7%.
Source: 10-Q Item 2 MD&A
Lots controlled through purchase contracts represented 78% of total lots owned and controlled at June 30, 2026, up from 75% at September 30, 2025, as the company continues to prioritize finished lot purchases from Forestar (62%-owned) and third parties; 67% of homes closed in the nine-month period were on lots developed externally, up from 65%.
Source: 10-Q Item 2 MD&A
Home sales gross margin declined 110 basis points year-over-year to 20.7% in Q3 FY2026 due to higher incentives, including mortgage rate buydowns, and management expects incentives to remain elevated into fiscal 2027, which could continue to pressure profitability if affordability constraints persist.
Source: 10-Q Item 2 MD&A
The sales order cancellation rate increased to 20% in Q3 FY2026 from 17% in the prior year quarter, with the South Central and East regions seeing cancellation rates around 21%, indicating buyer hesitancy tied to affordability and cautious consumer sentiment.
Source: 10-Q Item 2 MD&A
Cash and equivalents fell 20.5% year-over-year to $2.08B, while total liabilities grew 2.6% and debt to total capital rose to 23.0% from 19.8% at fiscal year-end September 2025, reducing the liquidity cushion relative to prior periods.
Source: 10-Q Balance Sheet (XBRL) / Item 2 MD&A
Every homebuilding reporting region experienced year-over-year pre-tax margin declines in Q3 FY2026, with the Northwest region falling from 16.7% to 10.5% pre-tax margin, driven by average home costs rising faster than selling prices, particularly in Seattle and Salt Lake City markets.
Source: 10-Q Item 2 MD&A
Net income fell 11.7% year-over-year to $904.9M in Q3, and trailing-twelve-month ROE dropped to 12.8% from 16.1% and ROA to 8.5% from 11.1%, signaling reduced capital efficiency in a softer housing demand environment.
Source: 10-Q Item 2 MD&A
Reported EPS of $3.20 versus the $3.07 analyst consensus — a +4.4% beat for Q3 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $9.23B | $9.23B | +0.02% |
Cost of Revenue | $7.08B | $7.02B | +0.92% |
Net Income | $904.9M | $1.02B | -11.68% |
EPS (Basic) | $3.21 | $3.37 | -4.75% |
EPS (Diluted) | $3.20 | $3.36 | -4.76% |
SG&A Expense | $991.2M | $944.3M | +4.97% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $36.51B | $36.4B | +0.32% |
Total Liabilities | $12.1B | $11.8B | +2.56% |
Stockholders' Equity | $23.82B | $24.05B | -0.97% |
Cash & Equivalents | $2.08B | $2.61B | -20.48% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash FlowYTD | $880.8M | $949.1M | -7.20% |
Investing Cash FlowYTD | $-213.5M | $-123.5M | -72.87% |
Financing Cash FlowYTD | $-1.57B | $-2.7B | +42.11% |
Share BuybacksYTD | $2.2B | $3.6B | -38.89% |
D&AYTD | $84.8M | $73.9M | +14.75% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Net Margin | 9.8% | — | — |
ROE | 3.8% | — | — |
ROA | 2.5% | — | — |
Debt to Equity | $0.508 | — | — |
Expected release date, analyst estimates & what to watch
D.R. Horton (DHI) reported a challenging Q2 FY2026 with revenue declining 2.3% YoY to $7.56B and net income falling 20.1% YoY to $647.9M, reflecting margin compression as cost of revenue held nearly flat while sales softened.
D.R. Horton (DHI) reported a challenging Q1 FY2026 with revenue declining 9.5% YoY to $6.9B and net income falling 29.6% to $594.8M, though operating cash flow improved 32.1% to $854M amid a softer housing market.
Other companies in Homebuilding
The filing does not disclose analyst consensus estimates, so a beat/miss cannot be confirmed from this data. However, net income of $904.9M and diluted EPS of $3.20 both declined year-over-year (down 12% and 5%, respectively), reflecting margin pressure rather than growth.
Home sales gross margin fell to 20.7% from 21.8% a year earlier, driven by a decline in average selling price and higher sales incentives, including mortgage interest rate buydowns used to support buyer affordability. Management expects incentives to remain elevated through the rest of fiscal 2026 and into fiscal 2027.
Cash and equivalents fell 20.5% year-over-year to $2.08B, while total assets were roughly flat at $36.5B and stockholders' equity was $23.8B. Debt to total capital rose to 23.0% from 19.8% at the start of the fiscal year, though the company describes its balance sheet as strong with continued flexibility.
Sales order backlog rose 14% to 15,983 homes and 16% in value to $6.2 billion at June 30, 2026, with the largest gains in the North region (backlog value up 35%) and Southwest region (up 41%), partly reflecting growth in markets like Pittsburgh and Ohio.
Key pressures include elevated sales incentives and affordability constraints compressing home sales gross margin to 20.7%, a rising cancellation rate of 20% (up from 17%), and declining profitability across all homebuilding reporting regions. The company also noted lower cash balances and increased debt to total capital versus fiscal year-end 2025.