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Homebuilder Confidence Falls, But D.R. Horton Shares Bounce Back

Strategic Insights

— 2 min read

Homebuilder confidence plummeted in May to 54, according to data released by the National Association of Home Builders/Wells Fargo, down from 56 in April. Despite this decline, shares of D.R. Horton Inc. (DHI) managed to rise by 0.36% to $26.40 in early afternoon trading on Monday. Economists polled by Thomson Reuters had anticipated a confidence boost to 57. The drop in homebuilder confidence was attributed to weakening views on current sales of single-family homes. However, builders remain optimistic, citing low mortgage rates and affordable house prices as factors spurring pent-up demand.

Key Takeaways:

  • Homebuilder confidence dropped to 54 in May from 56 in April, as reported by the National Association of Home Builders/Wells Fargo.
  • D.R. Horton Inc. (DHI) shares increased by 0.36% to $26.40 in early afternoon trading on Monday, despite the decline in homebuilder confidence.
  • Economists polled by Thomson Reuters had predicted a confidence boost to 57.
  • Builders remain optimistic due to low mortgage rates and affordable house prices, as stated by David Crowe, NAHB's chief economist.
  • D.R. Horton Inc. (DHI) has demonstrated robust revenue growth, with revenues rising by 38.2% since the same quarter one year prior.
  • The company's revenue growth exceeds the industry average of 5.9%.
  • The debt-to-equity ratio is somewhat low at 0.73, lower than the industry average.
  • The stock has shown solid stock price performance, with improvements in earnings per share and a pattern of positive earnings growth over the past year.
  • The National Association of Home Builders/Wells Fargo reported a 2-point drop in homebuilder confidence for May.
  • David Crowe, NAHB's chief economist, stated that "mortgage rates remain low, and house prices are affordable. These factors should spur the release of pent-up demand moving forward."
  • The home builders' confidence reading suggests that the economy may be struggling to rebound strongly enough for the Fed to raise interest rates before September, according to Reuters.

Statistics:

  • Homebuilder confidence fell to 54 in May from 56 in April (NAHB/Wells Fargo).
  • D.R. Horton Inc. (DHI) shares increased by 0.36% to $26.40 in early afternoon trading on Monday.
  • Revenues rose by 38.2% since the same quarter one year prior (TheStreet Ratings).
  • Debt-to-equity ratio is 0.73, lower than the industry average (TheStreet Ratings).
  • Earnings per share increased by 5.3% in the most recent quarter compared to the same quarter a year ago (TheStreet Ratings).

Sources:

  • TheStreet (http://www.thestreet.com)
  • National Association of Home Builders/Wells Fargo
  • Thomson Reuters
  • TheStreet Ratings (http://secure2.thestreet.com/cap/prm.do?OID=023499&ticker=DHI)

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