DHI 10-K & 10-Q changes, risk factors and insider trading

Discussion of our business and operations included in this annual report on Form 10-K should be read together with the risk factors set forth below. They describe various risks and uncertainties we are or may become subject to, many of which are difficult to predict orand beyond our control. Although the risks are organized and described separately, many of the risks are interrelated. These risks and uncertainties, together with other factors described elsewhere in this report, have the potential to affect our business, financial condition, results of operations, cash flows, strategies or prospects in a material and adverse manner.

Risks Related to our Business Operationsand our Industry

Our homebuilding, rental and land development operations are cyclical and significantly affected by changes in economic, real estate or other conditions that could adversely affect our business and financial results.

The federal government’s fiscal policies and the Federal Reserve’s monetary policies may negatively impact the financial markets and consumer confidence and could hurt the U.S. economy and the housing and rental markets and in turn, could adversely affect the operating results of our businesses. In responsean effort to increasedlower the rate of inflation, the Federal Reserve has raised interest rates significantlysignificantly, in recent years, which, notwithstanding the recent reduction,which has resulted in higher mortgage interest rates. The increase in mortgage interest rates has reduced the affordability of our homes and has required us to use pricing adjustments and incentives to adapt to current market conditions. Prolonged periods of elevated mortgage interest rates or further increases in mortgage interest rates could have an adverse impact on our business and financial results.

Our homebuilding operations utilize a $2.19$2.305 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $3.0 billion, subject to certain conditions and availability of additional bank commitments. Our homebuilding revolving credit facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments. The maturityfacility dateincludes bank commitments of the$2.04 facilitybillion ismaturing on December 18, 2029 and $265 million maturing on October 28, 2027. Our homebuilding revolving credit facility and our homebuilding senior unsecured notes are guaranteed by D.R. Horton, Inc.’s significant wholly-ownedwholly owned homebuilding subsidiaries.

As of September 30, 2025, Forestar hashad a $410$640 million senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $600$1.0 million,billion, subject to certain conditions and availability of additional bank commitments. In October 2025, Forestar utilized the accordion feature and increased the size of its revolving credit facility to $665 million through an additional commitment. The facility includes bank commitments of $600 million maturing on December 18, 2029 and $65 million maturing on October 28, 2026. The Forestar revolving credit facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. TheBorrowings maturityunder datethe revolving credit facility are subject to a borrowing base calculation based on the book value of theForestar’s facilityreal isestate Octoberassets 28,and 2026.unrestricted cash. The Forestar revolving credit facility is guaranteed by Forestar’s wholly-ownedwholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. The Forestar revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, rental or financial services operations.

Our rental subsidiary, DRH Rental, has a $1.05 billion senior unsecured revolving credit facility with an uncommitted accordion feature that could increase the size of the facility to $2.0 billion, subject to certain conditions and availability of additional bank commitments. Availability under the rental revolving credit facility is subject to a borrowing base calculation based on the book value of DRH Rental’s real estate assets and unrestricted cash. The rental revolving credit facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments. The maturity date of the facility is October 10, 2027. The rental revolving credit facility is guaranteed by DRH Rental’s wholly-ownedwholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries. The rental revolving credit facility is not guaranteed by D.R. Horton, Inc. or any of the subsidiaries that guarantee the debt of our homebuilding, Forestar or financial services operations.

We regularly assess our projected capital requirements to fund growth in our business, repay debt obligations, pay dividends, repurchase our common stock under our $4.0$5.0 billion stock repurchase authorization and support other general corporate and operational needs, and we regularly evaluate our opportunities to raise additional capital. D.R. Horton, Inc. has an automatically effective universal shelf registration statement filed with the SEC in July 2024, registering debt and equity securities that may be issued from time to time in amounts to be determined. Forestar also has an effective shelf registration statement filed with the SEC in September 2024, registering $750 million of equity securities.securities, of which $300 million is reserved for sales under its at-the-market equity offering program that was entered into in November 2024. As market conditions permit, we may issue new debt or equity securities through the capital markets or obtain additional bank financing to fund our projected capital requirements or provide additional liquidity. We believe that our existing cash resources, together with the homebuilding, rental and Forestar revolving credit facilities, mortgage repurchase facilities and ability to access the capital markets or obtain additional financing will provide sufficient liquidity to fund our near-term working capital needs and debt obligations. Adverse changes in economic, homebuilding or capital market conditions could negatively affect our business, liquidity and financial results, restrict our ability to obtain additional capital or increase our costs of capital.

DuringIn the lastrecent few years,past, we experienced multiple disruptions in our supply chain, which resulted in shortages of certain building materials and tightness in the labor market. This caused our construction cycle to lengthen and costs of building materials to increase. We began to see improvements in ourOur construction cycle time in fiscal 2023 and our cycle times have since improved and recently normalized; however, if shortages and cost increases in building materials and tightness in the labor market increase, our construction cycle time and profit margins could be adversely impacted.

In addition, newly imposed or increased tariffs, duties and/or trade restrictionsrestrictions, such as those imposed orby increasedthe current administration, on imported materials and goods that are used in connection with the construction and delivery of our homes, including steel, aluminum and lumber, may raise our costs for these items or for the products made with them. These factors may cause construction delays or cause us to incur more costs building our homes.

The U.S. and other countries have experienced, and may experience in the future, outbreaks of contagious diseases that affect public health and public perception of health risk. In the event of a widespread, prolonged, actual or perceived outbreak of any contagious disease, such as COVID-19, our operations could be negatively impacted. Such events have had, and could in the future have, an effect on our operations, including a reduction in customer traffic, a disruption in our supply chain, tightness in the labor market or other factors, all of which could reduce demand for our homes. These or other repercussions of a public health crisis that affect the global economy could have an adverse impact on our results of operations and financial condition.

Physical risks, including weather conditions and natural disasters, such as hurricanes, tornadoes, earthquakes, volcanic activity, droughts, floods, hailstorms, heavy or prolonged precipitation, wildfires and others, can harm our business. Additionally, the physical impacts of climate change may cause these occurrences to increase in frequency, severity and duration. The climates and geology of many of the states in which we operate, including California, Florida, Texas and other coastal areas where we have some of our larger operations, present increased risks of adverse weather or natural disasters, such as wildfires and hurricanes. Any such events can temporarily delay our development work, home construction and home closings, unfavorably affect the cost or availability of materials or labor, damage homes under construction, lead to changing consumer preferences and/or negatively impact demand for new homes in affected areas. We have experienced temporary delays in production and short-term impacts on our sales and closings activity from weather events in recent years. There have been no material lasting impacts on our business from these events or material permanent operational challenges resulting from these events, but they could adversely affect our business in the future. The climates and geology of many of the states in which we operate, including California, Florida, Texas and other coastal areas where we have some of our larger operations and which have experienced recent natural disasters, present increased risks of adverse weather or natural disasters.

HomebuildingOur business is subject to home warranty and construction defect claims inand theother ordinary course of businesslitigation that can be significant.

Further, existing and prospective regulatory and societal initiatives intended to reduce potential climate change impacts may increaselead theto higher upfront costs of purchasing a home, costsincreased expenses to maintain the home and its systems,systems and greater ongoing energy and utility costscosts. andAdditionally, in certain regions, the cost to obtain homeowner and various hazard and flood insurance,insurance orhas limitrisen homeowners’significantly in recent years, reflecting the increasing frequency and severity of damage caused by severe weather and natural disasters. In some areas, these events have limited the ability of homeowners to obtain thesesecure insurance policies altogether.coverage. Although these itemsfactors have not had noa material effect on our business,business to date, they could adversely affectimpact our business in the future.

Information technology failures, datacybersecurity security breaches,incidents, and the failure to satisfy privacy and data protection laws and regulations could harm our business.

We use information technology and other computer resourcesresources, including artificial intelligence, to carry out important operational and marketing activities and to maintain our business records. These information technology systems are dependent upon global communications providers, web browsers, third-party software and data storage providers and other aspects of the Internet infrastructure that have experienced security breaches, cybercybersecurity incidents, ransomware attacks, significant systems failures and service outages in the past. Additionally, phishing attacks, whereby perpetrators attempt to fraudulently induce employees, customers, vendors or other users of a company’s systems to disclose sensitivepersonal information to gain access to its data, have increased significantly in recent years. With the use of artificial intelligence, these phishing attacks may contain highly convincing language making them difficult to distinguish from legitimate messages. The use of remote work environments and virtual platforms may increase our risk of cyber incidents orthat datacould securitycompromise breaches.our data. Further, geopolitical tensions or conflicts may create a heightened risk of cyberthese incidents or other data security breaches.incidents. Our normal business activities involve collecting and storing information specific to our homebuyers, renters, employees, vendors and suppliers and maintaining operational and financial information related to our business, both in an office setting and remote locations as needed. A material breach in the security of our information technology systems or other data security controls, or those of the third parties we work with, could include the theft or release of this information. The unintended or unauthorized disclosure of personal identifying and confidential information as a result of a securitycybersecurity breachincident by any means could lead to litigation or other proceedings against us by the affected individuals or business partners, or by regulators. The outcome of such proceedings, which could include penalties or fines, could have a significant negative impact on our business.

We may also be required to incur significant costs to protect against damages caused by information technology failures, securitycybersecurity breaches,incidents, and the failure to satisfy privacyprivacy, data protection, and dataartificial protectionintelligence laws and regulations in the future as legal requirements continue to increase. The European Union and other international regulators, as well as state governments, have enacted or enhanced privacy, data privacyprotection, and artificial intelligence regulations, such as the California Privacy Rights Act and the Colorado Privacy Act, and other governments are considering establishing similar or stronger protections. TheseAmong other things, these regulations impose certain obligations for handling specified personal information in our systems, including notifying individuals regarding information we have collected from them. We have incurred costs in an effort to comply with these requirements, but our costs may increase significantly if new requirements are enacted and based on how individuals exercise their rights. Any loss of sensitivepersonal information and failure to comply with these requirements or other applicable laws and regulations in this area could result in substantial penalties, reputational damage or litigation.

Although past cybersecurity incidents have not had a material effect on our business or operations to date, in the future, a data security breach, a significant and extended disruption in the functioning of our information technology systems or a breach of any of our data security controls could disrupt our business operations, damage our reputation and cause us to lose customers. Additionally, if a cybersecurity incident is determined to be material, we are subject to additional reporting requirements. We cannot provide assurances that a security breach, cyber incident, including data theft or other significant systems or security failures will not occur in the future, and such occurrences could have a material and adverse effect on our consolidated results of operations or financial position.

Additionally, actual or perceived ESG and other sustainability matters and our response to these matters could harm our business. Increasing governmental and societal attention to ESGsustainability matters, including expanding mandatory and voluntary reporting, diligence and disclosure on topics such as climate change, human capital, labor, cybersecurity and risk oversight, could expand the nature, scope,scope and complexity of matters that we are required to control, assess and report. In March 2024, the SEC adopted new rules regarding climate-related disclosures. Though theseThese rules arewere currently beingsubsequently challenged in legal proceedingsproceedings, and their effectiveness has beenwas stayed by the SEC,SEC thesepending rules,judicial review. In March 2025, the SEC terminated its defense of the rules; however, if they become effective, they would require public companies to make a wide range of climate-related disclosures. Similarly, the State of California has recently enacted its own legislation requiring extensive climate-related disclosures for companies deemed to be doing business in California, and other states are considering similar laws. Any of the above factors may alter the environment in which we do business and may increase the ongoing costs of compliance and adversely impact our results of operations and cash flows. If we are unable to adequately address such ESGsustainability matters or fail to comply with all laws, regulations, policies and related interpretations, it could negatively impact our reputation and our business results.

The subcontractors we rely on to perform the actual construction of our homes are also subject to a significant number of local, state and federal laws and regulations, including laws involving matters that are not within our control. If the subcontractors who construct our homes fail to comply with all applicable laws, we can suffer reputational damage,damage and may be exposed to possible liability.

As of September 30, 2024,2025, our consolidated debt was $5.9$6.0 billion, which consisted of $2.9$3.2 billion related to our homebuilding segment, $1.5$1.4 billion related to our financial services segment, $751$803 million related to our Forestar segment and $600 million related to our rental segment and $706 million related to our Forestar segment. The indenture governing our homebuilding senior notes does not restrict the incurrence of future unsecured debt by us or our homebuilding subsidiaries or the incurrence of secured or unsecured debt by our non-guarantor subsidiaries, and the agreement governing our homebuilding revolving credit facility allows us to incur a substantial amount of future unsecured debt. Also, the indenture governing our homebuilding senior notes and the agreement governing our homebuilding revolving credit facility impose restrictions on our ability and on that of the guarantors under our homebuilding senior notes and our homebuilding revolving credit facility to incur debt secured by certain assets, but still permit us and our homebuilding subsidiaries to incur significant amounts of additional secured debt. The rental revolving credit facility imposes restrictions on the ability of DRH Rental and its restricted subsidiaries to incur secured and unsecured debt, but still permits DRH Rental and its restricted subsidiaries to incur a substantial amount of future secured and unsecured debt, and does not restrict the incurrence of future secured and unsecured debt by DRH Rental’s unrestricted subsidiaries. The Forestar revolving credit facility and the indentures governing Forestar’s senior notes impose restrictions on the ability of Forestar and its restricted subsidiaries to incur secured and unsecured debt, but still permit Forestar and its restricted subsidiaries to incur a substantial amount of future secured and unsecured debt, and do not restrict the incurrence of future secured and unsecured debt by Forestar’s unrestricted subsidiaries. The mortgage repurchase facilities impose restrictions on the ability of DHI Mortgage and its restricted subsidiaries to incur secured and unsecured debt, but still permit DHI Mortgage and its restricted subsidiaries to incur a substantial amount of future secured and unsecured debt, and do not restrict the incurrence of future secured and unsecured debt by DHI Mortgage’s unrestricted subsidiaries.

In addition, although our financial services business is conducted through subsidiaries that are not restricted by the indentures governing our and Forestar’s senior unsecured notes or the agreements governing the homebuilding, rental and Forestar revolving credit facilities, the ability of our financial services subsidiaries to distribute funds to our homebuilding operations would be restricted in the event such distribution would cause an event of default under the mortgage repurchase facilities or if an event of default had occurred under these facilities. Moreover, our right to receive assets from our financial services subsidiaries upon their liquidation or recapitalization is subject to the prior claims of the creditors of these subsidiaries. Any claims we may have to funds from our financial services subsidiaries would be subordinate to subsidiary indebtedness to the extent of any security for such indebtedness and to any indebtedness otherwise recognized as senior to our claims.

Change of control purchase options under our homebuilding senior notes and change of control default under our homebuilding revolving credit facility. Upon the occurrence of both a change of control and a ratings downgrade event, each as defined in the indenture governing our homebuilding senior notes, we will be required to offer to repurchase such notes at 101% of their principal amount, together with all accrued and unpaid interest, if any. Moreover, a change of control (as defined in our homebuilding revolving credit facility) would constitute an event of default under our homebuilding revolving credit facility, which could result in the acceleration of the repayment of any borrowings outstanding under the facility, a requirement to cash collateralize all letters of credit outstanding thereunder and the termination of the commitments thereunder. If repaymentany indebtedness of moreus thanor any guarantor together having an aggregate principal amount outstanding of $50 million outstandingor undermore, or in the case of our homebuilding5.5% revolvingsenior creditnotes facilitydue 2035 and 4.85% senior notes due 2030, $150 million or more, were accelerated and such acceleration were not rescinded or such indebtedness were not satisfied, in either case within 30 days, an event of default would result under the indenture governing our homebuilding senior notes, entitling the trustee for the notes or holders of at least 25% in principal amount of the relevant series of notes then outstanding to declare all such notes to be due and payable immediately. If purchase offers were required under the indenture for our homebuilding senior notes, repayment of the borrowings under our homebuilding revolving credit facility were required, or if the senior notes were accelerated, we can give no assurance that we would have sufficient funds to pay the required amounts.

Change of control purchase option under Forestar’s notes and change of control default under the Forestar revolving credit facility. Upon the occurrence of a change of control triggering event (as defined in the indentures governing Forestar’s notes), Forestar will be required to offer to repurchase Forestar’s notes at 101% of their principal amount, together with all accrued and unpaid interest, if any. A change of control (as defined in the Forestar revolving credit facility) with respect to Forestar would constitute an event of default under the Forestar revolving credit facility, which could result in the acceleration of the repayment of any borrowings outstanding under the Forestar revolving credit facility, a requirement to cash collateralize all letters of credit outstanding thereunder and the termination of the commitments thereunder. If the maturity of the Forestar revolving credit facility and/or otherany indebtedness of Forestar andor any of its restricted subsidiaries together having an aggregate principal amount outstanding of $40 million or moremore, isin accelerated,the case of the indenture governing Forestar’s 5.0% senior notes due 2028 (2028 notes), or $75 million or more, in the case of Forestar’s 6.5% senior notes due 2033 (2033 notes), were accelerated and such acceleration were not rescinded or such indebtedness were not satisfied, in either case within 30 days, an event of default would result under the indentures governing the Forestar notes, entitling the trustee for the Forestar notes or holders of at least 25%25%, in the case of the 2028 notes, or 30%, in the case of the 2033 notes, in aggregate principal amount of the thenapplicable outstandingseries of Forestar notes to declare all such Forestar notes to be due and payable immediately. If purchase offers were required under the indentures for Forestar’s notes, repayment of the borrowings under Forestar’s revolving credit facility were required, or if Forestar’s notes were accelerated, we can give no assurance that Forestar would have sufficient funds to pay the required amounts.

We may be subject to actions or proposals from activist stockholders or others that may not align with our business strategies or the interests of our other stockholders. Responding to such actions could be costly and time-consuming, disrupt our business and operations and/or divert the attention of our Board and senior management from the pursuit of our business strategies. Activist stockholders may create perceived uncertainties as to the future direction of our business or strategy, including with respect to our ESGsustainability efforts, which may be exploited by our competitors and may make it more difficult to attract and retain qualified personnel, potential homebuyers and business partners and may affect our relationships with current homebuyers, subcontractors, investors and other third parties. In addition, actions of activist stockholders may cause periods of fluctuation in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

In fiscal 2024,2025, our number of homes closed and our home sales revenues increaseddecreased 8%5% and 7%, respectively, compared to the prior year, and our consolidated revenues increaseddecreased 4%7% to $36.8$34.3 billion compared to $35.5$36.8 billion in the prior year.billion. Our pre-tax income was $4.7 billion in fiscal 2025 compared to $6.3 billion in both fiscal 2024 and 2023,2024, and our pre-tax operating margin was 17.1%13.8% compared to 17.8%.17.1%. Net income was $3.6 billion in fiscal 2025 compared to $4.8 billion in bothfiscal years,2024, and our diluted earnings per share waswere $14.34$11.57 compared to $13.82.$14.34.

Consolidated net cash provided by operating activities was $3.4 billion in fiscal 2025 and $2.2 billion in fiscal 2024 and $4.3 billion in fiscal 2023,2024, and cash provided by our homebuilding operations was $3.4 billion in fiscal 2025 compared to $2.2 billion in fiscal 2024 compared to $3.1 billion in fiscal 2023.2024. In fiscal 2024,2025, our return on equity (ROE) was 19.9%14.6% compared to 22.7%19.9% in fiscal 2023, our homebuilding pre-tax return on inventory (ROI) was 27.8% compared to 29.7%,2024, and our return on assets (ROA) was 13.9%10.0% compared to 15.1%.13.9%. ROE is calculated as net income attributable to D.R. Horton for the year divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances for the trailing five quarters divided by five. Homebuilding ROI is calculated as homebuilding pre-tax income for the year divided by average inventory, where average inventory is the sum of ending homebuilding inventory balances for the trailing five quarters divided by five. ROA is calculated as net income attributable to D.R. Horton for the year divided by average consolidated assets, where average consolidated assets is the sum of total asset balances for the trailing five quarters divided by five.

We remain focused on our relationships with land developers across the country in order to maximize our returns and capital efficiency. Within our homebuilding land and lot portfolio, our lots controlled through purchase contracts representrepresented 76%75% of the lots owned and controlled at September 30, 20242025 compared to 75%76% at September 30, 2023.2024. We arecontinue prioritizingto prioritize the purchase of finished lots from Forestar and other land developers when possible. During fiscal 2024,2025, 63%65% of the homes we closed were on lots developed by either Forestar or a third party.party compared to 63% in fiscal 2024.

We believe our strong balance sheet and liquidity provide us with the flexibility to operate effectively through changing economic conditions. We plan to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.

Our operating strategy focuses on consistently enhancing long-term value to our shareholders by leveraging our financial and competitive positionpositions to maximize the returns on our inventory investments and generate consistent,strong sustainable profitabilityprofits and cash flows,flows from operations, while managing risk and maintaining financial flexibility to navigate changing economic conditions. Our strategy includes the following initiatives:

•Investing in the construction and leasing of single-family and multi-familyour rental propertiesoperations to meet rental demand in high growth suburban markets and selling these properties profitably.

We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position. However, we cannot provide any assurancesassurance that the initiatives listed above will continue to be successful, and we may need to adjust parts of our strategy to meet future market conditions.

•Consolidated revenues increaseddecreased 4%7% to $36.8$34.3 billion compared to $35.5$36.8 billion.

•NetConsolidated pre-tax income attributabledecreased 25% to D.R. Horton was $4.8$4.7 billion compared to $4.7$6.3 billion.

•NetIncome cashtax provided by operationsexpense was $2.2$1.1 billion compared to $4.3$1.5 billion.billion, and our effective tax rate was 23.6% compared to 23.5%.

•Stockholders’Net equityincome attributable to D.R. Horton was $25.3$3.6 billion compared to $22.7$4.8 billion.

•BookNet valueincome attributable to D.R. Horton per commondiluted share increaseddecreased 19% to $78.12$11.57 compared to $67.78.$14.34.

•Homebuilding revenues increaseddecreased 7% to $34.0$31.5 billion compared to $31.7$34.0 billion.

•Homes closed increaseddecreased 8%5% to 89,69084,863 homes, whileand the average closing price of those homes decreased 1%2% to $378,000.$370,400.

•Net sales orders increaseddecreased 10%4% to 86,56183,423 homes, and the value of net sales orders increaseddecreased 11%6% to $32.7$30.8 billion.

•Home sales gross margin was 23.5%21.5% incompared bothto years.23.5%.

•Forestar’s lots sold increaseddecreased 7%5% to 15,06814,240 compared to 14,040.15,068. Lots sold to D.R. Horton totaled 13,26711,751 compared to 12,249.13,267.

•Financial services revenues increaseddecreased 10%5% to $882.5$841.2 million compared to $801.5$882.5 million.

•Financial services pre-tax income increasedwas 10% to $311.2$278.7 million compared to $283.3$311.2 million.

•Financial services pre-tax income was 35.3%33.1% of financial services revenues incompared bothto years.35.3%.

Gross profit from home sales increased to $8.0 billion in 2024 from $7.4 billion in 2023 and was 23.5% of home sales revenues in both years. We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. To adjust to changes in market conditions during fiscalrecent 2023 and 2024,years, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers. We expect our incentive levels to remainstay elevated,elevated assumingduring similarfiscal 2026, the extent to which will depend on market conditions and no significant changes in mortgage interest rates.

SG&A expense from homebuilding activities increased 14%3% to $2.6$2.62 billion in fiscal 20242025 from $2.2$2.55 billion in fiscal 2023.2024. SG&A expense asAs a percentage of homebuilding revenuesrevenues, SG&A expense was 7.5%8.3% and 7.1%7.5% in fiscal 20242025 and 2023,2024, respectively.respectively, with the increase primarily due to the decrease in homebuilding revenues.

Employee compensation and related costs were $2.1$2.06 billion and $1.9$2.09 billion in fiscal 20242025 and 2023,2024, respectively, representing 82%79% and 85%82% of SG&A costs in those years. These costs increased 10% in fiscal 2024 from the prior year. Our homebuilding operations employed 10,0719,972 and 9,19010,071 people at September 30, 20242025 and 2023,2024, respectively.

We capitalize interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. Interest incurred by our homebuilding operations decreasedincreased 27%104% to $103.1 million in fiscal 2025 from $50.5 million in fiscal 2024 from $68.8 million in fiscal 2023,2024, primarily due to an 11% decreaseincrease in ourthe weighted average interest rate of homebuilding debt outstanding as well as a 33% increase in the average amount of that debt. Interest charged to cost of sales was 0.4% of homebuilding cost of sales (excluding inventory and land option charges) in both years.

Other income, net of other expenses, included in our homebuilding operations increasedwas $101.7 million in fiscal 2025 compared to $107.6 million in fiscal 2024 compared to $78.8 million in fiscal 2023, primarily due to an increase in interest income.2024. Other income also consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income are not significant, either individually or in the aggregate.

________ (1)Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office. The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.

SouthwestNorthwest Region — Homebuilding revenues increaseddecreased 15%3% in fiscal 20242025 compared to fiscal 2023, primarily2024, due to increasesa decrease in the number of homes closed, particularly in our CaliforniaSalt andLake NevadaCity markets.market. The region generated pre-tax income of $703.5$395.7 million in 2024fiscal 2025 compared to $489.3$420.8 million in 2023.fiscal Home2024. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increasedwas byessentially 270 basis pointsflat in 2024fiscal 2025 compared to 2023,fiscal primarily due to the average selling price of homes closed increasing while the average cost of those homes decreased.2024. As a percentage of homebuilding revenues, SG&A expenses decreasedincreased by 2050 basis points in 2024fiscal 2025 compared to 2023,fiscal 2024, primarily due to thean increase in homebuildingemployee revenues.compensation costs.

EastSouthwest Region — Homebuilding revenues increaseddecreased 14%6% in fiscal 20242025 compared to fiscal 2023,2024, primarily due to increasesa decrease in the number of homes closed, particularly in our NorthPhoenix Carolina markets.market. The region generated pre-tax income of $1.1$517.1 billionmillion in 2024fiscal 2025 compared to $935.7$703.5 million in 2023.fiscal 2024. Home sales gross profit percentage increaseddecreased by 30220 basis points in 2024fiscal 2025 compared to 2023,fiscal 2024, primarily due to an increase in construction defect costs in our Phoenix and Hawaii markets and the average costselling price of homes closed decreasing by more than the average selling pricecost of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 5070 basis points in 2024fiscal 2025 compared to 2023,fiscal 2024, primarily due to anthe increasedecrease in SG&Ahomebuilding expenses.revenues.

NorthSouth Central Region — Homebuilding revenues increaseddecreased 16%10% in fiscal 20242025 compared to fiscal 2023,2024, due to increasesa decrease in the number of homes closed, particularly in our suburbanFort Washington,Worth D.C.and market.Dallas markets, as well as a decrease in the average selling price of homes closed in most markets. The region generated pre-tax income of $498.4$964.6 million in 2024fiscal 2025 compared to $350.8$1.3 millionbillion in 2023.fiscal 2024. Home sales gross profit percentage increaseddecreased by 290220 basis points in 2024fiscal 2025 compared to 2023,fiscal 2024, primarily due to the average costselling price of homes closed decreasing whileby more than the average selling pricecost of those homes increased.homes. As a percentage of homebuilding revenues, SG&A expenses increased by 1080 basis points in 2024fiscal 2025 compared to 2023.fiscal 2024, primarily due to the decrease in homebuilding revenues.

Our business operations consist of homebuilding, rental, a majority-owned residential lot development company, financial services and other activities. Homebuilding is our core business and primarily includes the construction and sale of single-family homes with sales prices generally ranging from $200,000 to more than $1,000,000, with an average closing price of $363,500$362,900 during the sixnine months ended MarchJune 31,30, 2026. Approximately 85% of our home sales revenue in the sixnine months ended MarchJune 31,30, 2026 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes and duplexes.

We have closed more than 1.21.3 million homes during our 47-year history, and we have been the largest volume homebuilder in the United States every year since 2002. Our product offerings include a broad range of homes for entry-level, move-up, active adult and luxury buyers.

At MarchJune 31,30, 2026, we owned 62% of the outstanding shares of Forestar Group Inc. (Forestar), a publicly traded residential lot development company listed on the New York Stock Exchange and NYSE Texas under the ticker symbol “FOR.” Forestar operates across many of our homebuilding operating markets and is a key part of our homebuilding strategy to maintain relationships with land developers and control a large portion of our land and lot position through land purchase contracts.

During the sixnine months ended MarchJune 31,30, 2026, ourwe numberclosed of61,287 homes closedcompared andto 61,495 homes in the prior year period. Our home sales revenues decreased 3% and 5%,our respectively,consolidated revenues decreased 4% to $23.7 billion in the nine months ended June 30, 2026 compared to $24.6 billion in the prior year period, and consolidated revenues decreased 6% to $14.4 billion compared to $15.3 billion.period. Our pre-tax income was $1.7$2.9 billion in the sixnine months ended MarchJune 31,30, 2026 compared to $2.2$3.5 billion in the prior year period, and pre-tax operating margin was 11.5%12.2% compared to 14.2%.14.4%. Net income was $1.3$2.2 billion in the sixnine months ended MarchJune 31,30, 2026 compared to $1.7$2.7 billion in the prior year period, and diluted earnings per share were $4.27$7.45 compared to $5.19.$8.53.

In the trailing twelve months ended MarchJune 31,30, 2026, our return on equity (ROE) was 13.2%12.8% compared to 17.4%16.1% in the prior year period, and return on assets (ROA) was 8.9%8.5% compared to 12.2%.11.1%. ROE is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average stockholders’ equity, where average stockholders’ equity is the sum of ending stockholders’ equity balances for the trailing five quarters divided by five. ROA is calculated as net income attributable to D.R. Horton for the trailing twelve months divided by average consolidated assets, where average consolidated assets is the sum of total asset balances for the trailing five quarters divided by five.

During the secondthird quarter, new home demand continued to be impacted by affordability constraints and cautious consumer sentiment. Despite these conditions, ourOur net sales orders and the value of those orders increased 11%slightly compared to the prior year quarter, and the value of net sales orders increased 10%, reflecting the focus of our operations on disciplined execution across our markets.quarter. Home sales revenues decreasedincreased 2%1% compared to the prior year quarter. Home sales gross margin was 20.1%20.7% for the secondthird quarter, compared to 21.8% in the prior year quarter, reflecting the decline in our average sales price and higher sales incentives, including mortgage interest rate buydowns offered to support affordability for our homebuyers. We remain well positioned with our affordable product offerings and controlled lot supply, and we continue to manage home pricing, sales incentives and inventory levels based on demand within our local markets. We currently expect sales incentives to remain elevated during the remainder of fiscal 2026 and mayinto fiscal 2027, and we will continue to adjust incentive levels further dependingbased on changes in market conditions and mortgage interest rates.

We remain focused on our relationships with land developers across the country to maximize returns and capital efficiency. Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 77%78% of the lots owned and controlled at MarchJune 31,30, 2026 compared to 75% at both September 30, 2025 and March76% 31,at June 30, 2025. We continue to prioritize the purchase of finished lots from Forestar and other land developers when possible. During the sixnine months ended MarchJune 31,30, 2026, 67% of the homes we closed were on lots developed by either Forestar or a third party compared to 65% in the prior year period.

We believe ourOur strong balance sheet and liquidity provide us with flexibility to operate effectively through changing economic conditions. We plan to continue to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.

•Developing and retaining highly experienced and productive teams of personnel throughout our company that are aligned and focused on continuous improvement in our operational execution and financial performance.

•Investing in our rental operations to meet rental demand in high growth suburban markets and selling these properties profitably.

Key financial results as of and for the three months ended MarchJune 31,30, 2026, as compared to the same period of 2025 unless otherwise indicated, were as follows:

•Consolidated revenues decreasedwere 2%essentially tounchanged $7.6at billion compared to $7.7$9.2 billion.

•Consolidated pre-tax income decreased 19%10% to $867.4$1.2 millionbillion compared to $1.1$1.4 billion.

•Net income attributable to D.R. Horton decreased 20%12% to $647.9$904.9 million compared to $810.4$1.0 million.billion.

•Stockholders’ equity was $23.6$23.8 billion compared to $24.2 billion and $24.3$24.1 billion at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Book value per share increased to $82.91$84.85 compared to $82.15 and $78.82$80.46 at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Debt to total capital was 21.7%23.0% compared to 19.8% and 21.1%23.2% at September 30, 2025 and MarchJune 31,30, 2025, respectively. Net debt to total capital was 16.4%17.4% compared to 11.0% and 14.3%16.2% at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Homebuilding revenues decreasedincreased 2%1% to $7.1$8.7 billion compared to $7.2$8.6 billion.

•Net sales orders increasedof 11%23,084 to 24,992 homes,homes and the value of net sales orders of $8.4 billion both increased 10%slightly tofrom $9.2the billion.prior year.

•Homebuilding pre-tax income decreased 19%10% to $757.9$1.1 millionbillion compared to $935.0$1.2 million.billion.

•Homebuilding cash and cash equivalents totaled $1.1$1.3 billion compared to $2.2 billion and $1.9$2.0 billion at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Homebuilding inventories totaled $21.0$21.3 billion compared to $20.3 billion and $20.9$21.1 billion at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Homes in inventory totaled 38,20038,000 compared to 29,600 and 36,90038,400 at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Owned lots totaled 134,100126,600 compared to 147,000 and 150,600145,900 at September 30, 2025 and MarchJune 31,30, 2025, respectively. Lots controlled through purchase contracts totaled 441,200441,900 compared to 444,900 and 462,500455,500 at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Homebuilding debt was $3.4$3.7 billion compared to $3.2 billion and $3.1$3.7 billion at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Rental inventory totaled $3.0$3.1 billion compared to $2.7 billion and $3.1 billion at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Forestar’s lots sold decreasedincreased 14%1% to 2,9383,659 compared to 3,411.3,605. Lots sold to D.R. Horton totaled 2,4503,370 compared to 2,501.3,075.

•Forestar’s revenue from tract acres sold was $35.6$8.3 million compared to no$3.6 tract acres soldmillion in the prior year quarter.

•Forestar’s cash and cash equivalents totaled $362.2$394.9 million compared to $379.2 million and $174.3$189.2 million at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Forestar’s inventories totaled $2.7 billion compared to $2.6 billion and $2.8 billion at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Forestar’s owned and controlled lots totaled 94,40091,700 compared to 99,800 and 105,900102,300 at September 30, 2025 and MarchJune 31,30, 2025, respectively. Of these lots, 41,000 were under contract to sell to or subject to a right of first offer with D.R. Horton compared to 40,400 and 43,90042,700 at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Forestar’s debt was $793.5$793.8 million compared to $802.8 million and $872.5$872.8 million at September 30, 2025 and MarchJune 31,30, 2025, respectively.

•Forestar’s debt to total capital was 30.4%30.0% compared to 31.2% and 34.7%34.2% at September 30, 2025 and MarchJune 31,30, 2025, respectively. Forestar’s net debt to total capital was 19.2%17.7% compared to 19.3% and 29.8%28.9% at September 30, 2025 and MarchJune 31,30, 2025, respectively.

Key financial results for the sixnine months ended MarchJune 31,30, 2026, as compared to the same period of 2025, were as follows:

•Homes closed decreased 3%from 61,495 to 37,30461,287 homes, and the average closing price of those homes decreased 3%2% to $363,500.$362,900.

•Net cash provided by homebuilding operations was $618.8$1.3 millionbillion compared to $876.0$1.7 million.billion.

•Forestar’s revenues increased 8%6% to $647.3$1.1 millionbillion compared to $601.3$991.9 million. Revenues in the current and prior year periods included $479.7$840.1 million and $486.4$811.3 million, respectively, of revenue from land and lot sales to our homebuilding segment.

•Forestar’s revenue from tract acres sold was $64.9$73.2 million compared to no$3.6 tract acres soldmillion in the prior year period.

The following tables and related discussion set forth key operating and financial data for our homebuilding operations by reporting segment as of and for the three and sixnine months ended MarchJune 31,30, 2026 and 2025.

The value of net sales orders was $9.2$8.4 billion (24,99223,084 homes) and $15.8$24.3 billion (43,29266,376 homes) for the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $8.4 billion (22,43723,071 homes) and $15.0$23.4 billion (40,27463,345 homes) in the prior year periods. The increase in value inComparing the three and six month periodsperiods, wasthe attributablenumber, to increases in sales order volume of 11%value and 7%, respectively, while the average selling price decreasedof 2%homes insold bothwere periods.essentially unchanged.

During the secondthird quarter, new home demand continued to be impacted by affordability constraints and cautious consumer sentiment. We remain well positioned with our affordable product offerings and controlled lot supply, and we continue to manage home pricing, sales incentives and inventory levels based on demand within our local markets.

Revenues from home sales were $7.0$8.7 billion (19,48623,983 homes closed) and $13.6$22.2 billion (37,30461,287 homes closed) for the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $7.2$8.6 billion (19,27623,160 homes closed) and $14.3$22.9 billion (38,33561,495 homes closed) in the prior year periods. The decrease in revenues in both periods was attributable to a 3% decrease in the average selling price, along with a 3% decrease in closings volume in the six month period.

Gross profit from home sales decreased to $1.4$1.8 billion in the three months ended MarchJune 31,30, 2026 from $1.6$1.9 billion in the prior year period and decreased 170110 basis points to 20.1%20.7% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 200110 basis points due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes and 10 basis points due to an increase in the amortization of capitalized interest. These decreases were partially offset by an increase of 4010 basis points due to a favorable litigation outcome and lower warranty and construction defect costs.

Gross profit from home sales decreased to $2.7$4.5 billion in the sixnine months ended MarchJune 31,30, 2026 from $3.2$5.1 billion in the prior year period and decreased 200170 basis points to 20.3%20.4% as a percentage of home sales revenues. The percentage decrease resulted from a decrease of 240190 basis points due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes and 10 basis points due to an increase in the amortization of capitalized interest. These decreases were partially offset by an increase of 5030 basis points due to a favorable litigation outcome and lower warranty costs.

We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand. To adjust to changes in market conditions during recent years, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers. We currently expect oursales incentives to remain elevated during the remainder of fiscal 2026 and into fiscal 2027, and we will continue to adjust incentive levels to stay elevated during fiscal 2026, the extent to which will dependbased on changes in market conditions and changes in mortgage interest rates.

Land/lot sales and other revenues from our homebuilding operations were $17.7$4.3 million and $33.9$38.2 million in the three and sixnine months ended MarchJune 31,30, 2026, respectively, and $22.0$19.8 million and $43.2$63.1 million in the prior year periods.

We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets. We generally purchase land and lots with the intent to build and sell homes on them. However, some of the land that we purchase includes commercially zoned parcels that we may sell to commercial developers. We may also sell residential lots or land parcels to manage our supply or for other strategic reasons. As of MarchJune 31,30, 2026, our homebuilding operations had $39.1$31.7 million of land held for sale that we expect to sell in the next twelve months.

At the end of each quarter, we review the performance and outlook for all of our communities and land inventories for indicators of potential impairment and perform detailed impairment evaluations and analyses when necessary. As a result of this review, there were $3.0$3.7 million and $6.7 million of impairment charges recorded in our homebuilding segment during the three and sixnine months ended MarchJune 31,30, 20262026, respectively, compared to $5.4$15.9 million and $7.4$23.3 million in the respective prior year periods.

During the three and sixnine months ended MarchJune 31,30, 2026, earnest money and pre-acquisition cost write-offs related to our homebuilding segment’s land purchase contracts that we have terminated or expect to terminate were $22.5$17.3 million and $32.7$50.0 million, respectively, compared to $24.0$36.0 million and $33.9$69.9 million in the prior year periods.

Homebuilding SG&A expense was $648.9$720.6 million and $1.28$2.0 billion in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $637.8$670.0 million and $1.27$1.9 billion in the prior year periods. As a percentage of homebuilding revenues, SG&A expense increasedwas to 9.2%8.3% and 9.4%9.0% in the three and sixnine months ended MarchJune 31,30, 2026, respectively, fromcompared 8.9%to 7.8% and 8.5% in boththe prior year periods, due to the decrease in homebuilding revenues.periods.

Employee compensation and related costs were $492.9$560.6 million and $967.6$1.5 millionbillion in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $500.9$532.3 million and $994.0$1.5 millionbillion in the prior year periods. These costs represented 78% and 76% of SG&A costs in both the three and sixnine months ended MarchJune 31,30, 20262026, respectively, compared to 79% and 78% in the prior year periods. Our homebuilding operations employed 9,8099,997 and 10,19910,190 people at MarchJune 31,30, 2026 and 2025, respectively.

We capitalize interest costs incurred to inventory during active development and construction (active inventory). Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer. Interest incurred by our homebuilding operations increased 59%40% to $33.1$43.3 million and 63%52% to $63.2$106.4 million in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $20.8$31.0 million and $38.8$69.8 million in the prior year periods. The increases were primarily due to increases in the weighted average interest rate of homebuilding debt outstanding in the three and sixnine months ended MarchJune 31,30, 2026, as well as an increase of 27%26% in the average amount of that debt in both periods. Interest charged to cost of sales was 0.5% of homebuilding cost of sales (excluding inventory and land option charges) in both the three and sixnine months ended MarchJune 31,30, 2026 compared to 0.4% in both prior year periods.

Other income, net of other expenses, included in our homebuilding operations was $11.1$9.6 million and $28.3$37.9 million in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $17.0$36.0 million and $46.9$83.0 million in the prior year periods. Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots. The activities that result in this ancillary income are not significant, either individually or in the aggregate.

Northwest Region — Homebuilding revenues decreased 18%7% and 9%8% in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Seattle and Salt Lake City markets. The region generated pre-tax income of $54.6$68.3 million and $113.9$182.3 million in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $93.7$116.4 million and $169.9$286.3 million in the prior year periods. Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) decreased by 310440 and 320370 basis points in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing by more than the average selling price of those homes. As a percentage of homebuilding revenues, SG&A expenses increased by 130160 and 60100 basis points in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 3%1% and 12%8% in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to the prior year periods,periods. The decrease in the nine month period was primarily due to decreases in the number of homes closed, particularlyclosed in our Las Vegas and Southern California markets. The region generated pre-tax income of $114.2$136.0 million and $202.8$338.8 million in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to $123.3$152.7 million and $291.7$444.4 million in the prior year periods. Home sales gross profit percentage decreased by 80120 and 210180 basis points in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes. As a percentage of homebuilding revenues, SG&A expenses decreased by 20 basis points and increased by 6030 and 50 basis points in the three and sixnine months ended MarchJune 31,30, 2026, respectively, compared to the prior year periods. The increase in the sixnine month period was primarily due to the decrease in homebuilding revenues.revenues, while the increase in the three month period was primarily due to a slight increase in SG&A costs.