D.R. Horton Orders Down 37%; Spring Starts Weak

D.R. Horton, the largest U.S. home builder, said orders for new homes tumbled 37% last quarter and that the spring selling season has begun more slowly than usual, suggesting a deepening of the U.S. housing downturn.

Chairman Donald Horton said conditions remain tough in most markets because of high inventories of unsold new and existing homes. He also said "the spring selling season has not gotten off to its usual strong start."

Net sales orders in the second fiscal quarter ended March 31 fell to 9,983 homes from 15,771 a year earlier, and the dollar value of the orders sank 41% to $2.6 billion from $4.4 billion, Fort Worth, Texas-based D.R. Horton said.

For the six months ended March 31, new sales orders fell 31% to 18,754 homes, and the value of the homes fell 35% to $4.9 billion.

Prospective buyers canceled at a 32% rate from January to March, down from 33% in the prior quarter, but above the usual 16% to 20% rate.

It has become more difficult for many buyers to obtain mortgages as lenders tighten their underwriting standards. The steeper decline in the dollar value of D.R. Horton's home orders, relative to the number of orders, suggests that some buyers are "downsizing" to buy homes they can actually afford.

Horton has contracted some operations to prepare for a slowing housing market, including a reduction in the number of lots it controls. The company operates in 27 U.S. states, and builds homes with sales prices ranging from $90,000 to more than $900,000.

Shares of D.R. Horton closed Monday at $22.04 on the New York Stock Exchange. They have fallen 17% this year, the same decline as in the Dow Jones U.S. Home Construction Index.