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Coming into Thursday, D.R. Horton shares were up about 33% year to date.

Daniel Acker/Bloomberg

Housing giant

D.R. Horton

reported better-than-expected fiscal third-quarter numbers Thursday morning. While the results and company outlook were positive, investors reacted with caution.

Horton (ticker: DHI) earned $3.06 a share on $7.3 billion in sales. Wall Street was looking for $2.80 in per-share earnings on $7.2 billion in sales. It’s the company’s 10th consecutive quarterly earnings beat.

“The D.R. Horton team delivered outstanding results in the third fiscal quarter of 2021, highlighted by EPS increasing 78%,” said
Donald Horton,
chairman of the board, in a statement. “These results reflect our experienced teams and production capabilities, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.”

Shares, however, were down almost 3% in early Thursday trading, at $88.91.

Coming into Thursday, Horton shares were up about 33% year to date, better than the comparable 16% and 14% respective gains of the

S&P 500


Dow Jones Industrial Average.

The company’s strong first-half results were driven by an improving economy. Housing starts in June, for instance, rose about 6% compared with May and almost 30% year over year. The June starts figure also exceeded economist projections.

The company sounds upbeat about coming months, too. “Housing market conditions remain very robust, with home buyer demand exceeding our current capacity to deliver homes across all of our markets,” the chairman said. “As our top priority is to consistently fulfill our commitments to our homebuyers, we have slowed our home sales pace to more closely align to our current production levels, while building out the infrastructure needed to support a higher level of home starts.”

The slowing home sale pace might be one reason investors are reacting cautiously. June existing-home sales, reported Thursday morning, grew 1.4% compared with May and 23% compared with June 2020. Still, the annualized selling rate of 5.86 million homes missed expectations by a hair.

But there doesn’t appear to be any fundamental slowdown in the housing market. D.R. Horton also reported Thursday current-home inventory of about 47,000, up 55% from a year ago.

With that inventory, the company now expects to generate about $27.9 billion in sales for its full fiscal year, an increase of about $700 million from guidance given in April. With one quarter left in the company’s fiscal year, the guidance implies more than $8 billion in fourth-quarter sales, better than the Street’s current projection of $7.7 billion.

The Thursday-morning stock weakness can probably be best described as a bull-market indicator. When things are good, the investor playbook advises to “sell the news and buy the dips.”

Write to Al Root at allen.root@dowjones.com

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