We’ve said it before. When Доктор Хортон reports its quarterly earnings, what you’re watching isn’t just the scoreboard of America’s largest homebuilder.
You’re watching a business model operating at a different altitude — and with different oxygen — than almost every other homebuilding enterprise in the country. And when it performs, the implications go far beyond its own margins and growth trajectory.
Horton’s results reverberate through every market it touches, distorting the competitive landscape and squeezing the viability of less-capitalized operators—especially private builders.
In Q1 2026, that dominance was on full display. While mortgage rates remained elevated and affordability concerns persisted, Horton’s volume engine powered ahead with 18,500 starts —up 27% quarter-over-quarter. Net sales orders increased 3% YOY to more than 18,300 homes, and closings fell 7% to 17,818 homes. As Wolfe Research’s Trevor Allinson put it, “Horton is setting the stage for significant community count growth into 2027.”
But the real story isn’t the results. It’s the structural leverage — on land, labor, materials, and capital — that enabled those results. And that leverage is exactly what’s challenging every other homebuilder in America to keep up.
Incentives, margins and the shock absorber of scale
Horton executives were transparent about the tools they’re using to maintain pace in a high-rate environment: big incentives, aggressive mortgage buydowns, and operational cost pressure—all made possible by the company’s size.
“We increased our sales incentives during the first quarter,” said CEO Paul Romanowski, “and we expect incentives to remain elevated in fiscal 2026, with a level dependent on demand, changes in mortgage interest rates, and overall market conditions.”
These incentives are particularly acute in FHA borrower segments, where Horton leads in capturing first-time buyers priced out of the resale market. SVP Jessica Hansen acknowledged this plainly:
“We’re already doing more to address affordability than any other builder out there. […] We believe we’re the best positioned builder to take advantage if there is any sort of demand pickup, particularly for the first-time homebuyer.”
At most companies, higher incentives mean eroded margins. At Horton, incentives are a tool deployed with precision — and absorbed by scale as they squeeze the accordion of both fixed and variable costs to adapt to selling conditions community-by-community.
COO Michael Murray explained the playbook:
“The cost of the incentives that came through in the first quarter were largely a result of interest rate locks provided when rates were slightly higher. […] We accelerated the use of those incentives throughout the quarter.”
Despite these moves, Horton posted a 20.4% home sales gross margin, which would have been 20.0% excluding a one-time warranty benefit. Even with pressure expected in Q2, this performance shows Horton’s ability to flex its P&L to maintain volume without surrendering control of profitability.
Pressuring the sticks-and-bricks supply chain
One of Horton’s superpowers is its ability to translate national scale into local leverage—especially on cost of goods. From lumber and concrete to labor and land, Horton can often get better pricing, faster cycle times, and more responsive trade partners simply because of its volume.
This advantage is widening as many private builders struggle to secure capital and preserve margin. Horton, meanwhile, is actively compressing its cost base:
“For homes we closed in the first quarter, our median cycle time measured from home start to home close decreased 2 weeks from a year ago,” said Romanowski. “Our improved cycle times enable us to hold fewer homes in inventory and turn our housing inventory more efficiently.”
Wolfe’s Allinson added context to this efficiency: “Management’s tone was decidedly bullish on continued improvement in build times, which benefits spec turn and land underwriting.”
These faster turns allow Horton to reduce capital drag, increase absorptions, and—critically—apply pressure to its vendors to perform on tighter schedules and thinner margins. Private builders trying to match pace without that scale are increasingly getting left behind.
Land discipline and lot leverage
While other builders pull back on land due to high carrying costs or funding uncertainty, Horton is expanding its future platform through Forestar, its affiliated land development arm.
“Of the homes we closed this quarter, 67% were on a lot developed by either Forestar or a third party,” said COO Murray, “up from 65% in the prior year quarter.”
Controlling land supply allows Horton to better manage costs and risk—and to be aggressive in deploying capital where demand signals strength. The company’s strong balance sheet ($2.5B in cash and $24B in equity) gives it optionality to keep feeding its machine while competitors pause.
Wolfe’s analysis noted that this land position, plus improving cycle times and lower construction costs, “could help restore gross margins over the course of FY26” even as incentives persist.
D.R. Horton vs. the field: risk for private operators
The widening chasm between Horton and private competitors isn’t just theoretical. It’s showing up in the numbers.
“We started 18,500 homes in the December quarter,” said Romanowski. “And we expect our starts in the second quarter to be higher than the first quarter.”
More starts. More land. Faster builds. Deeper incentives. And lower costs.
It’s a virtuous cycle for Horton—and a vicious one for competitors in its markets, especially in the secondary and tertiary markets where it’s expanding.
“We continue to look at opportunities,” said Romanowski. “Our focus has been more on the tuck-in opportunities to either expand our capacity in a particular market and/or an entry into a market.”
Every one of those “tuck-ins” creates structural pain for the small and mid-sized local players already in those markets. With Horton’s market-leading sales volume, it becomes the price-setter—and that sets the terms for everyone else.
This is particularly critical in today’s land financing environment. Many private builders are facing personal guarantee requirements, higher cost of capital, and tighter credit standards. Horton, with its liquidity and ability to pay cash, wins more deals—and sets the comps that lenders use to underwrite other builders’ land loans.
The net result: Horton’s strategic model not only outperforms—it redefines the terms of competition, making it harder for others to operate profitably or grow sustainably.
“One in every seven new homes”
Since 2020, D.R. Horton has not just defended its market-leading position—it’s widened the gap. In the five years following COVID’s first shockwave, Horton entered more than 30 new U.S. markets. Today, it builds one out of every seven new single-family homes sold in America.
And that’s not just national scale — it’s local dominance: the company ranks among the top five builders in 92% of the markets where it operates and holds the No. 1 position in 60 of them. As of Q3 2025, Horton plans to continue expanding in by 12% in 2026.
Weekly absorptions per community are tracking at 3.2 homes, even amid affordability-driven buyer fatigue. Horton’s backlog value was flat year-over-year at $4.3 billion, even as average selling prices clocked in at $365.5K, flat sequentially and down 3% year-over-year on closings. In every measure that matters — land position, product mix, construction throughput, cycle time, margin flexibility, and market share—Horton has turned its sheer size into a sustainable strategic advantage.
Horton’s Q1 results and tone weren’t just strong — they were confident. Executives were clear-eyed about headwinds but undeterred in their pace. Incentives will remain high. Margins may dip slightly in Q2. But the machine rolls on—and is positioned for growth through FY26 and FY27.
For executives across the homebuilding industry — especially private builders in Horton’s path — the message is clear:
This isn’t just a strong homebuilding enterprise. It’s a dominant force, playing a different game, using a different system.
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