D.R. Horton, the U.S.'s largest home builder posted better-than-expected third-quarter results Tuesday, suggesting that the worst may be over for the industry.

Shares slipped 0.4% to $144.25 ahead of the opening bell. Futures tracking the S&P 500 were up 0.5% as the AI trade roared back to life.

D.R. Horton reported net income of $3.20 a share on revenue of $9.2 billion for its fiscal third quarter. Analysts were forecasting earnings of $2.97 a share on revenue of $9.1 billion, according to a FactSet poll.

The builder's margin also topped expectations. D.R. Horton posted a home sales gross margin of 20.7%, topping the 19.9% figure that Wall Street was looking for.

This is breaking news. Read a preview of D.R. Horton's earnings below and check back for more analysis soon.

Earnings from the nation's largest home builder on Tuesday will set the tone for the industry. Investors are watching D.R. Horton's margins for signs the worst is over for builders.

D.R. Horton is expected to report third-quarter earnings of $2.97 a share on roughly $9.1 billion in revenue, according to FactSet analyst estimates. That's down from $3.36 a share on $9.2 billion in revenue one year prior. The builder, the largest in the U.S. by market capitalization, will report results on Tuesday before the market opens.

As sales remain constrained by relatively high prices and mortgage rates, investors will watch for signs that profit margins are finished compressing. Those polled by FactSet foresee D.R. Horton reporting a home sales gross margin of 19.9%, down from 21.8% one year prior.

D.R. Horton stock is up 3.7% this year -- better than the broad iShares U.S. Home Construction exchange-traded fund, but trailing small and medium-size builders. The roughly $900 million Beazer Homes USA, a takeover target, is up more than 60% this year. LGI Homes and Hovnanian Enterprises, builders with market capitalizations of roughly $1.4 billion and $744 million, respectively, are up 36% and 35% this year, according to FactSet.

Smaller builders have outperformed larger ones in the wake of Berkshire Hathaway's deal for the midsize Taylor Morrison as investor eye potential acquisitions of cheaply valued smaller builders.

"We suggest investors look to overweight the value names across home builders, such as Century Communities and LGI Homes that are trading below the peer group average of 1.2x, and below their respective book value," Texas Capital Securities analyst Alex Rygiel wrote in a Monday note. Rygiel has Buy ratings on both stocks.

But earnings and guidance from D.R. Horton, along with the large builder PulteGroup, later this week, will give investors a read of how builders will fare in the second half of the year. Recent strength in existing-home pricing could be a good sign for builders' profit margins, notes BTIG analyst Ryan Gilbert. The analyst rates D.R. Horton Buy with a $188 price target.

"If the demand improvement that we're seeing in the resale market, and some of the pricing improvement that we're seeing in the resale market, carried through into the new market, that would be a potential benefit for gross margin," he says.

Write to Shaina Mishkin at shaina.mishkin@dowjones.com

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July 21, 2026 07:20 ET (11:20 GMT)

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