D.R. Horton, the largest U.S. homebuilder, saw a 30% jump in orders during the second quarter of its fiscal year, a gain that was overshadowed by its slowest growth in average selling prices in three years. In addition, the builder forecast a drop in gross margins for the third quarter.
The mixed report, issued by the Fort Worth, TX,-based builder this week, caused the publicly traded company’s stocks to plunge by 6%, Reuters reported.
The jump in orders came largely from the builder’s year-old Express Homes division, which builds mostly for first-time buyers. D.R. Horton sold 2,000 of the lower-priced homes in the first three months of 2015, accounting for 18% of total sales, according to The Wall Street Journal.
Sales of Express Homes have tripled since the division was introduced a year ago. The builder has attributed its drop in profits to its success with the Express brand: The more lower-priced homes it sells, the lower its gross margins, executives said during a conference call with Wall Street analysts.
Still, the spike in orders shows that the builder had a good start to the spring selling season. But more importantly, it might indicate that first-time homebuyers are finally returning to the market.