Can D.R. Horton Defend Its Market Share as Competitors Expand?

D.R. Horton, Inc. (DHI), the nation’s largest homebuilder, posted a solid fiscal third-quarter 2025 performance with EPS of $3.36, beating the Zacks Consensus Estimate of $2.90 despite revenues dipping 7% year over year to $9.2 billion.

The results highlight the company’s ability to manage through affordability challenges and a competitive housing backdrop. However, with peers expanding footprints and sweetening incentives, the question arises: can Horton hold its commanding market share?

Management has leaned on operational scale and disciplined execution. The builder closed more than 23,000 homes in third-quarter fiscal 2025 with a 21.8% gross margin, outperforming guidance. Importantly, Horton’s community count grew 12% year over year, extending its reach across 126 markets in 36 states. This broader footprint positions the company to capture incremental demand, particularly in secondary markets where private builders dominate.

Still, competition is intensifying. Rivals are matching pace with elevated incentives, pressuring margins across the industry. Horton’s acknowledged incentives rose late in the quarter and are expected to weigh further on fourth-quarter fiscal 2025 profitability. While the scale enables better cost control and strong broker relationships, with more than 80% of sales tied to realtors, the pricing tug-of-war could narrow its advantage.

Horton’s capital strength remains a key defensive tool. With $5.5 billion in liquidity, low leverage and an aggressive buyback program reducing its share count by 9% year over year, the company has financial flexibility few rivals can match.

In a housing market marked by volatility and affordability constraints, D.R. Horton’s size and balance sheet provide resilience. But sustaining market share will depend on how effectively it manages incentives while fending off both public and private competitors.

Competitors Closing the Gap

While D.R. Horton maintains the industry’s largest footprint, rivals like Lennar Corporation (LEN) and PulteGroup, Inc. (PHM) are steadily pressing for market share. Lennar, the second-largest U.S. homebuilder, continues to emphasize digital platforms and streamlined construction practices to drive affordability. Its focus on margin preservation through land-light strategies and heavy use of incentives has allowed Lennar to compete aggressively in price-sensitive markets, putting pressure on Horton’s dominance.

PulteGroup, meanwhile, has built strength in the move-up and active adult segments, diversifying beyond entry-level homes where Horton remains most exposed. By tailoring product offerings to lifestyle-driven buyers and leveraging community development in high-growth regions, PulteGroup is capturing incremental demand.

Both competitors’ ability to scale operations and deploy incentives strategically adds to the competitive landscape. For Horton, defending market share requires balancing pace and pricing while leveraging its scale advantage across a broader geographic footprint.

DHI Stock’s Price Performance & Valuation Trend

Shares of this Texas-based homebuilder have soared 47% in the past three months, significantly outperforming the Zacks Building Products-Home Builders industry, the broader Zacks Construction sector and the S&P 500 index.

Price Performance

DHI stock is currently trading at a premium compared with the industry peers, with a forward 12-month price-to-earnings (P/E) ratio of 15.04, as evidenced by the chart below.

P/E (F12M)

The Zacks Consensus Estimate for fiscal 2025 and 2026 earnings per share has increased in the past 60 days.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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