The Zhitong Finance App learned that the fourth fiscal quarter results announced by Houghton Homes (DHI.US), the largest home builder in the US on Thursday fell short of market expectations, and warned that the new US housing market is facing more serious challenges as mortgage interest rates rise, housing affordability deteriorates, and consumers' willingness to buy homes becomes more cautious. The company anticipates that sales concessions will still need to be maintained at a higher than normal level in the new fiscal year to stimulate weak demand for home purchases.
According to earnings reports, Houghton Housing's earnings for the fourth fiscal quarter were $2.67 per share, lower than the average analyst estimate of $3.02 compiled by Bloomberg. At the same time, the company is cautious about the housing delivery prospects for FY2027. It is estimated that the annual delivery volume may be as low as 79,000 units, lower than the level of about 84,000 units in FY2026. At the lower limit of this forecast, delivery volume would drop by about 6% year over year.
David Auld, executive chairman of Houghton Homes, said in a statement: “The housing market environment became more severe in the fourth fiscal quarter. Rising mortgage interest rates, housing affordability restrictions, and consumer prudence continue to put pressure on demand for new homes.”
As demand for home buyers weakens, US homebuilders are increasingly relying on price discounts and other sales incentives to attract buyers. These preferential measures usually include providing below-market mortgage interest rates, covering part of loan settlement costs, and other home purchase subsidies. Although relevant measures can help boost home sales, they can also increase costs for builders and erode profit margins.
According to data from the National Association of Home Builders (NAHB), in October, more than half of home builders said they were using sales incentives, reflecting the current pressure of insufficient demand in the US new home market.
Houghton Housing said it is expected that after entering the 2027 fiscal year, the company will still need to maintain a higher than normal level of sales concessions. This means that even if housing transactions are promoted through price cuts and subsidies, the company's profitability may continue to be under pressure.
As the largest home builder in the US, Horton Housing's performance and sales outlook are regarded as important indicators for observing demand in the US housing market. Earnings fell short of expectations, and the company anticipated a possible decline in housing deliveries in the new fiscal year, further underscoring the continuing impact of high mortgage interest rates and housing affordability issues on the US real estate market.
Affected by performance and outlook, Houghton Housing's stock price fell about 3% before the market on Thursday, but the decline was erased after opening. As of press release, the stock had risen 1.6% to 145.295 US dollars.