D.R. Horton Inc., the top U.S. homebuilder, posted a first-quarter profit that beat market expectations, helped by a surge in orders indicating a stabilizing housing market, and said it was looking at spring selling season with “cautious optimism.”
The meltdown in the U.S. housing market triggered the 2007-09 recession, but home building has seen growth in the last few quarters and building permits jumped to a 1-1/2 year high in November.
Horton, which focuses on lower-end homes for first-time homebuyers, had been hurt as a massive overhang of used and foreclosed homes have resulted in lower pricing power for builders of new houses.
Evidence is mounting that a recovery is building, though the improvement has been erratic.
Earlier in the day, Canadian wood panels maker Norbord Inc. said the U.S. housing sector is at an inflection point and is now in the early phase of a more gradual rebound.
Horton, which competes with Lennar Corp and PulteGroup, said net sales orders rose 17 per cent to $705.6-million (U.S.). Orders are a leading indicator for builders, which do not recognize revenue until they close on a home.
Lennar, which also posted a sharp jump in quarterly orders, said high rental rates were driving customers to buy new homes, and low home prices and low interest rates were helping.
Horton’s October-December net income was $27.7-million, or 9 cents a share, compared with a net loss of $20.4-million, or 6 cents a share, a year ago. Revenue rose 15 per cent to $885.6-million.
Analysts, on average, were expecting earnings of 4 cents a share, on revenue of $896.9-million, according to Thomson Reuters I/B/E/S.
Shares of the company closed at $14.12 on Thursday on the New York Stock Exchange.