What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-07-23 compared with 2025-04-23 · 248 added, 227 removed, 664 unchanged (42% of the section changed)

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We construct and sell homes through our operating divisions in 126 markets across 36 states.

Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange under the ticker symbol “DHI.” Unless the context otherwise requires, the terms “D.R.

Our common stock is included in the S&P 500 Index and listed on the New York Stock Exchange and NYSE Texas under the ticker symbol “DHI.” Our listing on NYSE Texas became effective in June 2025.

Unless the context otherwise requires, the terms “D.R.

Horton,” the “Company,” “we” and “our” used herein refer to D.R.

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Our business operations consist of homebuilding, rental, a majority-owned residential lot development company, financial services and other activities.

Our homebuilding operations are our core business and primarily include the construction and sale of single-family homes with sales prices generally ranging from $250,000 to more than $1,000,000, with an average closing price of $373,700 during the six months ended March 31, 2025.

Approximately 84% of our home sales revenue in the six months ended March 31, 2025 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes, duplexes and triplexes.

Approximately 84% of our home sales revenue in the nine months ended June 30, 2025 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 1.2 million homes during our 46-year history, and we have been the largest volume homebuilder in the United States every year since 2002.

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The multi-family rental operations develop, construct, lease and sell residential rental properties, the majority of which are apartment communities.

At March 31, 2025, 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 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 to control a large portion of our land and lot position through land purchase contracts.

At June 30, 2025, 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 to control a large portion of our land and lot position through land purchase contracts.

Our financial services operations provide mortgage financing and title agency services to homebuyers in many of our homebuilding markets.

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The results of these operations are immaterial for separate reporting and therefore are grouped together and presented as other.

During the six months ended March 31, 2025, our number of homes closed and our home sales revenues decreased 8% and 9%, respectively, compared to the prior year period, and our consolidated revenues decreased 9% to $15.3 billion compared to $16.8 billion.

Our pre-tax income was $2.2 billion in the six months ended March 31, 2025 compared to $2.8 billion in the prior year period, and our pre-tax operating margin was 14.2% compared to 16.5%.

Net income was $1.7 billion in the six months ended March 31, 2025 compared to $2.1 billion in the prior year period, and our diluted earnings per share were $5.19 compared to $6.34.

In the trailing twelve months ended March 31, 2025, our return on equity (ROE) was 17.4% compared to 22.2% in the prior year period, and our return on assets (ROA) was 12.2% compared to 15.1%.

During the nine months ended June 30, 2025, our number of homes closed and our home sales revenues decreased 7% and 8%, respectively, compared to the prior year period, and our consolidated revenues decreased 8% to $24.6 billion compared to $26.8 billion.

Our pre-tax income was $3.5 billion in the nine months ended June 30, 2025 compared to $4.6 billion in the prior year period, and our pre-tax operating margin was 14.4% compared to 17.1%.

Net income was $2.7 billion in the nine months ended June 30, 2025 compared to $3.5 billion in the prior year period, and our diluted earnings per share were $8.53 compared to $10.43.

In the trailing twelve months ended June 30, 2025, our return on equity (ROE) was 16.1% compared to 21.5% in the prior year period, and our return on assets (ROA) was 11.1% compared to 14.8%.

ROE is calculated as net income attributable to D.R.

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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.

The 2025 spring selling season has begun, and new home demand has been slower than expected due to uncertainty among potential homebuyers caused by continued affordability constraints and declining consumer confidence.

As a result, our net sales orders and homebuilding revenues in the second quarter decreased 15% from the prior year period, and our home sales gross margin decreased to 21.8% as we increased sales incentives such as buydowns of mortgage rates for our homebuyers.

We strive to remain well-positioned with affordable product offerings and a flexible lot supply, and we will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of new home demand in each of our local markets.

We expect our incentive levels to stay elevated and increase further, depending on market conditions and changes in mortgage interest rates.

During the third quarter, new home demand continued to be impacted by uncertainty among potential homebuyers due to ongoing affordability constraints and cautious consumer sentiment.

As a result, the value of our net sales orders and homebuilding revenues in the third quarter decreased 3% and 7%, respectively, from the prior year quarter, and our home sales gross margin decreased to 21.8% as we increased sales incentives such as buydowns of mortgage rates for our homebuyers.

We strive to remain well-positioned with affordable product offerings and a flexible lot supply and will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of new home demand in each of our local markets.

We expect to maintain an elevated level of incentives to support demand and may increase them further, depending on market conditions and changes in mortgage interest rates.

We remain focused on our relationships with land developers across the country in order to maximize returns and capital efficiency .

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represent 75% of the lots owned and controlled at March 31, 2025 compared to 76% at September 30, 2024 and 77% at March 31, 2024.

We are prioritizing the purchase of finished lots from Forestar and other land developers when possible.

During the six months ended March 31, 2025, 65% of the homes we closed were on lots developed by either Forestar or a third party.

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 76% of the lots owned and controlled at June 30, 2025, September 30, 2024 and June 30, 2024.

We continue to prioritize the purchase of finished lots from Forestar and other land developers when possible.

During the nine months ended June 30, 2025, 65% of the homes we closed were on lots developed by either Forestar or a third party.

We believe our strong balance sheet and liquidity provide us with the flexibility to operate effectively through changing economic conditions.

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• Ensuring that our financial services business provides high quality mortgage and title services to homebuyers efficiently and effectively.

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

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

• Opportunistically evaluating potential acquisitions to enhance our operating platform.

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However, we cannot provide any assurances 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.

Key financial results as of and for the three months ended March 31, 2025, as compared to the same period of 2024 unless otherwise indicated, were as follows:

Key financial results as of and for the three months ended June 30, 2025, as compared to the same period of 2024 unless otherwise indicated, were as follows:

Consolidated Results:

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• Net income attributable to D.R.

Horton decreased 31% to $810.4 million compared to $1.2 billion.

Horton decreased 24% to $1.0 billion compared to $1.4 billion.

• Diluted net income per common share attributable to D.R.

Horton decreased 18% to $3.36 compared to $4.10.

• Stockholders’ equity was $24.3 billion compared to $25.3 billion and $23.8 billion at September 30, 2024 and March 31, 2024, respectively.

• Book value per common share increased to $78.82 compared to $78.12 and $72.13 at September 30, 2024 and March 31, 2024, respectively.

• Debt to total capital was 21.1% compared to 18.9% and 20.0% at September 30, 2024 and March 31, 2024, respectively.

Net debt to total capital was 14.3% compared to 5.2% and 10.8% at September 30, 2024 and March 31, 2024, respectively.

• Stockholders’ equity was $24.1 billion compared to $25.3 billion and $24.7 billion at September 30, 2024 and June 30, 2024, respectively.

• Book value per common share increased to $80.46 compared to $78.12 and $75.32 at September 30, 2024 and June 30, 2024, respectively.

• Debt to total capital was 23.2% compared to 18.9% and 18.8% at September 30, 2024 and June 30, 2024, respectively.

Net debt to total capital was 16.2% compared to 5.2% and 9.9% at September 30, 2024 and June 30, 2024, respectively.

Homebuilding:

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• Homes closed decreased 4% to 23,160 homes, and the average closing price of those homes decreased 3% to $369,600.

• Net sales orders decreased 15% to 22,437 homes, and the value of net sales orders decreased 17% to $8.4 billion.

• Net sales orders of 23,071 homes were essentially flat, and the value of net sales orders decreased 3% to $8.4 billion.

• Sales order backlog decreased 16% to 14,075 homes, and the value of sales order backlog decreased 19% to $5.3 billion.

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• Homebuilding SG&A expense was 7.8% of homebuilding revenues compared to 7.1%.

• Homebuilding pre-tax income decreased 31% to $935.0 million compared to $1.4 billion.

• Homebuilding pre-tax income decreased 25% to $1.2 billion compared to $1.6 billion.

• Homebuilding pre-tax income was 13.8% of homebuilding revenues compared to 17.0%.

• Homebuilding pre-tax return on inventory was 24.3% compared to 29.9%.

• Homebuilding cash and cash equivalents totaled $1.9 billion compared to $3.6 billion and $2.2 billion at September 30, 2024 and March 31, 2024, respectively.

• Homebuilding inventories totaled $20.9 billion compared to $20.0 billion and $19.9 billion at September 30, 2024 and March 31, 2024, respectively.

• Homes in inventory totaled 36,900 compared to 37,400 and 45,000 at September 30, 2024 and March 31, 2024, respectively.

• Owned lots totaled 150,600 compared to 152,500 and 143,900 at September 30, 2024 and March 31, 2024, respectively.

Lots controlled through purchase contracts totaled 462,500 compared to 480,400 and 473,300 at September 30, 2024 and March 31, 2024, respectively.

• Homebuilding debt was $3.1 billion compared to $2.9 billion and $2.4 billion at September 30, 2024 and March 31, 2024, respectively.

• Homebuilding cash and cash equivalents totaled $2.0 billion compared to $3.6 billion and $2.2 billion at September 30, 2024 and June 30, 2024, respectively.

• Homebuilding inventories totaled $21.1 billion compared to $20.0 billion and $20.5 billion at September 30, 2024 and June 30, 2024, respectively.

• Homes in inventory totaled 38,400 compared to 37,400 and 42,600 at September 30, 2024 and June 30, 2024, respectively.

• Owned lots totaled 145,900 compared to 152,500 and 150,900 at September 30, 2024 and June 30, 2024, respectively.

Lots controlled through purchase contracts totaled 455,500 compared to 480,400 and 479,300 at September 30, 2024 and June 30, 2024, respectively.

• Homebuilding debt was $3.7 billion compared to $2.9 billion and $2.3 billion at September 30, 2024 and June 30, 2024, respectively.

• Rental revenues were $380.7 million compared to $413.7 million.

• Rental pre-tax income was $54.8 million compared to $64.2 million.

• Rental inventory totaled $3.1 billion compared to $2.9 billion and $3.1 billion at September 30, 2024 and March 31, 2024, respectively.

• Rental inventory totaled $3.1 billion compared to $2.9 billion and $3.1 billion at September 30, 2024 and June 30, 2024, respectively.

• Single-family rental homes closed totaled 1,065 compared to 790.

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• Forestar’s pre-tax income was 11.2% of revenues compared to 16.2%.

• Forestar’s cash and cash equivalents totaled $174.3 million compared to $481.2 million and $416.2 million at September 30, 2024 and March 31, 2024, respectively.

• Forestar’s inventories totaled $2.8 billion compared to $2.3 billion and $2.1 billion at September 30, 2024 and March 31, 2024, respectively.

• Forestar’s owned and controlled lots totaled 105,900 compared to 95,100 and 96,100 at September 30, 2024 and March 31, 2024, respectively.

• Forestar’s cash and cash equivalents totaled $189.2 million compared to $481.2 million and $359.2 million at September 30, 2024 and June 30, 2024, respectively.

• Forestar’s inventories totaled $2.8 billion compared to $2.3 billion and $2.2 billion at September 30, 2024 and June 30, 2024, respectively.

• Forestar’s owned and controlled lots totaled 102,300 compared to 95,100 and 102,100 at September 30, 2024 and June 30, 2024, respectively.

Of these lots, 42,700 were under contract to sell to or subject to a right of first offer with D.R.

Horton compared to 37,700 and 34,300 at September 30, 2024 and March 31, 2024, respectively.

• Forestar’s debt was $872.5 million compared to $706.4 million and $705.7 million at September 30, 2024 and March 31, 2024, respectively.

Horton compared to 37,700 and 36,200 at September 30, 2024 and June 30, 2024, respectively.

• Forestar’s debt was $872.8 million compared to $706.4 million and $706.1 million at September 30, 2024 and June 30, 2024, respectively.

Financial Services:

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• Financial services pre-tax income was 35.7% of financial services revenues compared to 37.7%.

Key financial results for the six months ended March 31, 2025, as compared to the same period of 2024, were as follows:

Key financial results for the nine months ended June 30, 2025, as compared to the same period of 2024, were as follows:

Consolidated Results:

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• Consolidated pre-tax income was 14.4% of consolidated revenues compared to 17.1%.

• Income tax expense was $506.0 million compared to $636.6 million, and our effective tax rate was 23.2% compared to 22.9%.

• Income tax expense was $831.0 million compared to $1.1 billion, and our effective tax rate was 23.5% compared to 23.4%.

• Net income attributable to D.R.

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Horton decreased 18% to $8.53 compared to $10.43.

• Net cash provided by operations was $210.5 million compared to net cash used in operations of $470.1 million.

• Net cash provided by operations was $949.1 million compared to $228.2 million.

Homebuilding:

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• Homebuilding pre-tax income was 13.7% of homebuilding revenues compared to 16.1%.

• Net cash provided by homebuilding operations was $876.0 million compared to $408.3 million.

• Net cash provided by homebuilding operations was $1.7 billion compared to $971.9 million.

• Rental revenues were $835.0 million compared to $980.2 million.

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• Multi-family rental units closed totaled 1,132 compared to 1,334.

• Forestar’s revenues decreased 6% to $601.3 million compared to $639.7 million.

• Forestar’s revenues increased 4% to $991.9 million compared to $958.0 million.

Revenues in the current and prior year periods included $810.0 million and $851.3 million, respectively, of revenue from land and lot sales to our homebuilding segment.

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Portland/Salem Florida Fort Myers/Naples Iowa Des Moines

Utah Salt Lake City Gainesville Iowa City/Cedar Rapids

Utah Salt Lake City/Provo/Ogden Gainesville Iowa City/Cedar Rapids

George Jacksonville Kansas/Missouri Kansas City

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New Braunfels/San Marcos

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 six months ended March 31, 2025 and 2024.

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 nine months ended June 30, 2025 and 2024.

Net Sales Orders (1)

Three Months Ended March 31,

Three Months Ended June 30,

Net Homes Sold Value (In millions) Average Selling Price

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23,071 23,001 — % $ 8,422.3 $ 8,715.7 (3) % $ 365,100 $ 378,900 (4) %

Six Months Ended March 31,

Nine Months Ended June 30,

Net Homes Sold Value (In millions) Average Selling Price

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Sales Order Cancellations

Three Months Ended March 31,

Three Months Ended June 30,

Cancelled Sales Orders Value (In millions) Cancellation Rate (2)

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4,837 5,023 $ 1,819.7 $ 1,905.7 17 % 18 %

Six Months Ended March 31,

Nine Months Ended June 30,

Cancelled Sales Orders Value (In millions) Cancellation Rate (2)

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Net Sales Orders

The value of net sales orders was $8.4 billion (22,437 homes) and $15.0 billion (40,274 homes) for the three and six months ended March 31, 2025, respectively, compared to $10.1 billion (26,456 homes) and $16.9 billion (44,525 homes) in the prior year periods.

The decrease in value in both periods was primarily attributable to a decrease in the number of sales orders, along with a 2% decrease in the average selling price.

The number of net sales orders decreased 15% and 10% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods.

The markets contributing most to the decrease in sales order volume in both periods were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, most of the Texas markets in the South Central and the Florida markets (particularly Tampa) in the Southeast.

New home demand has been slower than expected this spring due to uncertainty among potential homebuyers caused by continued affordability constraints and declining consumer confidence.

The value of net sales orders was $8.4 billion (23,071 homes) and $23.4 billion (63,345 homes) for the three and nine months ended June 30, 2025, respectively, compared to $8.7 billion (23,001 homes) and $25.6 billion (67,526 homes) in the prior year periods.

The decrease in value in the three month period was attributable to a 4% decrease in the average selling price, while sales order volume increased slightly.

The decrease in value in the nine month period was primarily attributable to a 6% decrease in sales order volume, along with a 2% decrease in the average selling price.

In regions where sales order volume decreased, the markets contributing most to the decrease in the three month period were the Salt Lake City market in the Northwest, the Phoenix market in the Southwest and the Florida markets in the Southeast.

In regions where sales order volume increased, the markets contributing most to the increase were the Houston market in the South Central, the North Carolina markets in the East and the New Jersey and Chicago markets in the North.

In regions where sales order volume decreased, the markets contributing most to the decrease in the nine month period were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, the Dallas and Fort Worth markets in the South Central and the Florida markets (particularly Tampa and Jacksonville) in the Southeast.

In regions where sales order volume increased, the markets contributing most to the increase were the North Carolina markets in the East and the New Jersey and Chicago markets in the North.

During the third quarter, new home demand continued to be impacted by uncertainty among potential homebuyers due to ongoing affordability constraints and cautious consumer sentiment.

We remain well-positioned with affordable product offerings and a flexible lot supply and will continue to manage our home pricing, sales incentives and number of homes in inventory based on the level of new home demand in each of our local markets.

Sales Order Backlog

As of March 31,

As of June 30,

Homes in Backlog Value (In millions) Average Selling Price

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Homes Closed and Home Sales Revenue

Three Months Ended March 31,

Three Months Ended June 30,

Homes Closed Value (In millions) Average Selling Price

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23,160 24,155 (4) % $ 8,561.0 $ 9,231.2 (7) % $ 369,600 $ 382,200 (3) %

Six Months Ended March 31,

Nine Months Ended June 30,

Homes Closed Value (In millions) Average Selling Price

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Home Sales Revenue

Revenues from home sales were $7.2 billion (19,276 homes closed) and $14.3 billion (38,335 homes closed) for the three and six months ended March 31, 2025, respectively, compared to $8.5 billion (22,548 homes closed) and $15.7 billion (41,888 homes closed) in the prior year periods.

The decrease in revenues in both periods was primarily attributable to a decrease in the number of homes closed, along with a 1% decrease in the average selling price.

The number of homes closed decreased 15% and 8% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods.

The markets contributing most to the decrease in home closings volume in both periods were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, most of the Texas markets in the South Central and the Florida markets in the Southeast.

The markets contributing most to the increase in closings volume in the North were the suburban Washington, D.C., New Jersey and Chicago markets.

Revenues from home sales were $8.6 billion (23,160 homes closed) and $22.9 billion (61,495 homes closed) for the three and nine months ended June 30, 2025, respectively, compared to $9.2 billion (24,155 homes closed) and $25.0 billion (66,043 homes closed) in the prior year periods.

The decrease in revenues in both periods was primarily attributable to a decrease in the number of homes closed and a decrease in the average selling price.

The number of homes closed decreased 4% and 7% in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods.

In regions where home closings volume decreased, the markets contributing most were the Salt Lake City market in the Northwest, the Phoenix and California markets in the Southwest, the Dallas, Fort Worth and Austin markets in the South Central and the Florida markets (particularly Tampa and Jacksonville) in the Southeast.

The markets contributing most to the increase in closings volume in the North were the suburban Washington, D.C., Chicago and New Jersey markets.

Homebuilding Operating Margin Analysis

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

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Home Sales Gross Profit

Gross profit from home sales decreased to $1.6 billion in the three months ended March 31, 2025 from $2.0 billion in the prior year period and decreased 140 basis points to 21.8% as a percentage of home sales revenues.

The 140 basis point decrease was due to the average cost of our homes closed increasing while the average selling price of those homes decreased slightly.

Gross profit from home sales decreased to $3.2 billion in the six months ended March 31, 2025 from $3.6 billion in the prior year period and decreased 80 basis points to 22.3% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 80 basis points due to the average cost of our homes closed increasing along with a slight decrease in the average selling price of those homes.

Gross profit from home sales decreased to $1.9 billion in the three months ended June 30, 2025 from $2.2 billion in the prior year period and decreased 220 basis points to 21.8% as a percentage of home sales revenues.

The 220 basis point decrease was primarily due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes.

Gross profit from home sales decreased to $5.1 billion in the nine months ended June 30, 2025 from $5.8 billion in the prior year period and decreased 130 basis points to 22.1% as a percentage of home sales revenues.

The 130 basis point decrease was primarily due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes.

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.

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Land/Lot Sales and Other Revenues

Land/lot sales and other revenues from our homebuilding operations were $22.0 million and $43.2 million in the three and six months ended March 31, 2025, respectively, and $6.9 million and $27.2 million in the prior year periods.

Land/lot sales and other revenues from our homebuilding operations were $19.8 million and $63.1 million in the three and nine months ended June 30, 2025, respectively, and $10.3 million and $37.6 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.

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We may also sell residential lots or land parcels to manage our supply or for other strategic reasons.

As of March 31, 2025, our homebuilding operations had $11.9 million of land held for sale that we expect to sell in the next twelve months.

As of June 30, 2025, our homebuilding operations had $29.8 million of land held for sale that we expect to sell in the next twelve months.

Inventory and Land Option Charges

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 $5.4 million and $7.4 million of impairment charges recorded in our homebuilding segment during the three and six months ended March 31, 2025, respectively, compared to $5.6 million in the three and six months ended March 31, 2024.

As a result of this review, there were $15.9 million and $23.3 million of impairment charges recorded in our homebuilding segment during the three and nine months ended June 30, 2025, respectively.

There were no impairment charges recorded in the prior year quarter and $5.6 million of impairment charges recorded in the nine months ended June 30, 2024.

As we manage our inventory investments across our operating markets to optimize returns and cash flows, we may modify our pricing and incentives, construction and development plans or land sale strategies in individual active communities and land held for development, which could result in the affected communities being evaluated for potential impairment.

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These evaluations could result in impairment charges, which could be significant.

During the three and six months ended March 31, 2025, 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 $24.0 million and $33.9 million, respectively, compared to $7.5 million and $13.0 million in the prior year periods.

During the three and nine months ended June 30, 2025, 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 $36.0 million and $69.9 million, respectively, compared to $12.6 million and $25.6 million in the prior year periods.

Selling, General and Administrative (SG&A) Expense

SG&A expense from homebuilding activities increased 4% to $637.8 million and 5% to $1.3 billion in the three and six months ended March 31, 2025, respectively, from $614.1 million and $1.2 billion in the prior year periods.

SG&A expense as a percentage of homebuilding revenues was 8.9% in both the three and six months ended March 31, 2025 compared to 7.2% and 7.7%, respectively, in the prior year periods.

Employee compensation and related costs were $500.9 million and $994.0 million in the three and six months ended March 31, 2025, respectively, compared to $512.2 million and $999.4 million in the prior year periods.

Employee compensation and related costs represented 79% and 78% of SG&A costs in the three and six months ended March 31, 2025, respectively, compared to 83% and 82% in the prior year periods.

Our homebuilding operations employed 10,199 and 9,717 people at March 31, 2025 and 2024, respectively.

SG&A expense from homebuilding activities increased 2% to $670.0 million and 4% to $1.94 billion in the three and nine months ended June 30, 2025, respectively, from $656.5 million and $1.87 billion in the prior year periods.

SG&A expense as a percentage of homebuilding revenues was 7.8% and 8.5% in the three and nine months ended June 30, 2025, respectively, compared to 7.1% and 7.5% in the prior year periods.

Employee compensation and related costs were $532.3 million and $1.5 billion in the three and nine months ended June 30, 2025, respectively, compared to $538.6 million and $1.5 billion in the prior year periods.

Employee compensation and related costs represented 79% and 78% of SG&A costs in the three and nine months ended June 30, 2025, respectively, compared to 82% in the prior year periods.

Our homebuilding operations employed 10,190 and 10,099 people at June 30, 2025 and 2024, respectively.

We attempt to control our homebuilding SG&A costs while ensuring that our infrastructure adequately supports our operations;

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Capitalized interest is charged to cost of sales as the related inventory is delivered to the buyer.

Interest incurred by our homebuilding operations increased 84% to $20.8 million and 71% to $38.8 million in the three and six months ended March 31, 2025, respectively, compared to $11.3 million and $22.7 million in the prior year periods.

The increase was primarily due to an increase in the weighted average interest rate of the homebuilding debt outstanding during the periods, as well as an 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 all four periods.

Other income, net of other expenses, included in our homebuilding operations was $17.0 million and $46.9 million in the three and six months ended March 31, 2025, respectively, compared to $21.0 million and $50.4 million in the prior year periods.

Interest incurred by our homebuilding operations increased 170% to $31.0 million and 104% to $69.8 million in the three and nine months ended June 30, 2025, respectively, compared to $11.5 million and $34.2 million in the prior year periods.

The increase was primarily due to increases of 54% and 30% in the average amount of homebuilding debt outstanding in the three and nine months ended June 30, 2025, respectively, as well as increases in the weighted average interest rate 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 the three and nine months ended June 30, 2025 compared to 0.3% and 0.4% in the prior year periods.

Other income, net of other expenses, included in our homebuilding operations was $36.0 million and $83.0 million in the three and nine months ended June 30, 2025, respectively, compared to $22.7 million and $73.2 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.

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Homebuilding Results by Reporting Region

Three Months Ended March 31,

Three Months Ended June 30,

Revenues Homebuilding

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$ 8,580.8 $ 1,186.3 13.8 % $ 9,241.5 $ 1,572.2 17.0 %

Six Months Ended March 31,

Nine Months Ended June 30,

Revenues Homebuilding

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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.

Northwest Region — Homebuilding revenues decreased 11% and 10% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods due to decreases in the number of homes closed, particularly in our Salt Lake City market.

The region generated pre-tax income of $93.7 million and $169.9 million in the three and six months ended March 31, 2025, respectively, compared to $109.3 million and $178.8 million in the prior year periods.

Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) increased by 140 and 240 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 150 and 160 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 17% and 6% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Phoenix market.

The region generated pre-tax income of $123.3 million and $291.7 million in the three and six months ended March 31, 2025, respectively, compared to $171.0 million and $305.9 million in the prior year periods.

Home sales gross profit percentage was flat in the three month period, while it increased by 110 basis points in the six months ended March 31, 2025 compared to the prior year period, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 170 and 90 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 22% and 17% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed in most of the region’s markets.

The region generated pre-tax income of $208.4 million and $429.7 million in the three and six months ended March 31, 2025, respectively, compared to $346.6 million and $618.2 million in the prior year periods.

Home sales gross profit percentage decreased by 230 and 150 basis points in the three and six months ended March 31, 2025, 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 increased by 150 and 120 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southeast Region — Homebuilding revenues decreased 26% and 20% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Florida markets.

The region generated pre-tax income of $211.3 million and $434.1 million in the three and six months ended March 31, 2025, respectively, compared to $361.5 million and $690.9 million in the prior year periods.

Home sales gross profit percentage decreased by 220 and 240 basis points in the three and six months ended March 31, 2025, 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 increased by 180 and 130 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues decreased 6% and 1% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods.

The region generated pre-tax income of $171.8 million and $366.2 million in the three and six months ended March 31, 2025, respectively, compared to $254.5 million and $459.1 million in the prior year periods.

Home sales gross profit percentage decreased by 320 and 200 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased slightly.

As a percentage of homebuilding revenues, SG&A expenses increased by 130 and 100 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to an increase in employee compensation costs.

North Region — Homebuilding revenues increased 13% and 21% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our suburban Washington, D.C., Chicago and New Jersey markets.

The region generated pre-tax income of $126.5 million and $256.3 million in the three and six months ended March 31, 2025, respectively, compared to $114.7 million and $200.8 million in the prior year periods.

Home sales gross profit percentage increased by 100 and 120 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 150 and 50 basis points in the three and six months ended March 31, 2025, respectively, compared to the prior year periods, primarily due to an increase in employee compensation costs.

Northwest Region — Homebuilding revenues decreased 4% and 7% in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods due to decreases in the number of homes closed, particularly in our Salt Lake City market.

The region generated pre-tax income of $116.4 million and $286.3 million in the three and nine months ended June 30, 2025, respectively, compared to $121.2 million and $300.0 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 10 basis points and increased by 160 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods.

The increase in the nine month period was primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 40 and 110 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 10% and 7% in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Phoenix and California markets.

The region generated pre-tax income of $152.7 million and $444.4 million in the three and nine months ended June 30, 2025, respectively, compared to $209.4 million and $515.3 million in the prior year periods.

Home sales gross profit percentage decreased by 170 basis points and increased by 10 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods.

The decrease in the three month period was primarily due to the average selling price of homes closed decreasing while the average cost of those homes increased slightly.

As a percentage of homebuilding revenues, SG&A expenses increased by 90 basis points in both the three and nine months ended June 30, 2025 compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 4% and 12% in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed in our Dallas, Fort Worth and Austin markets.

The region generated pre-tax income of $290.2 million and $719.9 million in the three and nine months ended June 30, 2025, respectively, compared to $368.7 million and $986.9 million in the prior year periods.

Home sales gross profit percentage decreased by 260 and 190 basis points in the three and nine months ended June 30, 2025, 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 increased by 50 and 100 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southeast Region — Homebuilding revenues decreased 20% in both the three and nine months ended June 30, 2025 compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Florida markets.

The region generated pre-tax income of $224.6 million and $658.7 million in the three and nine months ended June 30, 2025, respectively, compared to $404.1 million and $1.1 billion in the prior year periods.

Home sales gross profit percentage decreased by 300 and 260 basis points in the three and nine months ended June 30, 2025, 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 increased by 110 and 130 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues decreased 2% in both the three and nine months ended June 30, 2025 compared to the prior year periods.

The region generated pre-tax income of $230.4 million and $596.6 million in the three and nine months ended June 30, 2025, respectively, compared to $314.9 million and $774.0 million in the prior year periods.

Home sales gross profit percentage decreased by 390 and 280 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing while the average cost of those homes increased slightly.

As a percentage of homebuilding revenues, SG&A expenses increased by 50 and 80 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to an increase in employee compensation costs.

North Region — Homebuilding revenues increased 10% and 16% in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our suburban Washington, D.C., Chicago and New Jersey markets.

The region generated pre-tax income of $172.0 million and $428.3 million in the three and nine months ended June 30, 2025, respectively, compared to $153.9 million and $354.7 million in the prior year periods.

Home sales gross profit percentage increased by 60 and 90 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed increasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 40 and 50 basis points in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods, primarily due to an increase in employee compensation costs.

HOMEBUILDING INVENTORIES, LAND AND LOT POSITION AND HOMES IN INVENTORY

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We manage our inventory of owned land and lots and homes under construction relative to demand in each of our markets, including starting construction on unsold homes to capture new home demand and actively controlling the number of unsold, completed homes in inventory.

Our homebuilding segment’s inventories at March 31, 2025 and September 30, 2024 are summarized as follows:

March 31, 2025

Our homebuilding segment’s inventories at June 30, 2025 and September 30, 2024 are summarized as follows:

June 30, 2025

Construction in Progress and

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(1) Corporate and unallocated inventory consists primarily of capitalized interest and property taxes.

Our land and lot position and homes in inventory at March 31, 2025 and September 30, 2024 are summarized as follows:

March 31, 2025

Our land and lot position and homes in inventory at June 30, 2025 and September 30, 2024 are summarized as follows:

June 30, 2025

Owned (1) Lots Controlled

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___________________

(1) Land/lots owned included approximately 72,500 and 64,400 owned lots that are fully developed and ready for home construction at March 31, 2025 and September 30, 2024, respectively.

(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2025 and September 30, 2024 was $25.6 billion and $25.2 billion, respectively, secured by earnest money deposits of $2.26 billion and $2.15 billion, respectively.

The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2025 and September 30, 2024 included $2.2 billion and $1.9 billion, respectively, related to lot purchase contracts with Forestar, secured by $223.8 million and $193.3 million, respectively, of earnest money.

(3) Lots controlled at March 31, 2025 included approximately 43,900 lots owned by Forestar, 24,700 of which our homebuilding divisions had under contract to purchase and 19,200 of which our homebuilding divisions had a right of first offer to purchase.

(1) Land/lots owned included approximately 71,700 and 64,400 owned lots that are fully developed and ready for home construction at June 30, 2025 and September 30, 2024, respectively.

(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at June 30, 2025 and September 30, 2024 was $25.7 billion and $25.2 billion, respectively, secured by earnest money deposits of $2.3 billion and $2.2 billion, respectively.

The total remaining purchase price of lots controlled through land and lot purchase contracts at June 30, 2025 and September 30, 2024 included $2.2 billion and $1.9 billion, respectively, related to lot purchase contracts with Forestar, secured by $223.2 million and $193.3 million, respectively, of earnest money.

(3) Lots controlled at June 30, 2025 included approximately 42,700 lots owned by Forestar, 24,200 of which our homebuilding divisions had under contract to purchase and 18,500 of which our homebuilding divisions had a right of first offer to purchase.

Of these, approximately 10,500 lots were in our Southeast region, 10,200 lots were in our East region, 8,500 lots were in our South Central region, 6,800 lots were in our North region, 4,200 lots were in our Southwest region and 2,500 lots were in our Northwest region.

Lots controlled at September 30, 2024 included approximately 37,700 lots owned by Forestar, 20,500 of which our homebuilding divisions had under contract to purchase and 17,200 of which our homebuilding divisions had a right of first offer to purchase.

(4) Approximately 23,500 and 25,700 of our homes in inventory were unsold at March 31, 2025 and September 30, 2024, respectively.

At March 31, 2025, approximately 8,400 of our unsold homes were completed, of which approximately 1,200 homes had been completed for more than six months.

(4) Approximately 25,000 and 25,700 of our homes in inventory were unsold at June 30, 2025 and September 30, 2024, respectively.

At June 30, 2025, approximately 7,300 of our unsold homes were completed, of which approximately 800 homes had been completed for more than six months.

At September 30, 2024, approximately 10,300 of our unsold homes were completed, of which approximately 1,100 homes had been completed for more than six months.

Homes in inventory exclude approximately 2,600 and 2,400 model homes at March 31, 2025 and September 30, 2024, respectively.

Homes in inventory exclude approximately 2,700 and 2,400 model homes at June 30, 2025 and September 30, 2024, respectively.

RESULTS OF OPERATIONS - RENTAL

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Single-family and multi-family rental property sales are recognized as revenues, and rental income is recognized as other income.

The following tables provide further information regarding our rental operations as of and for the three and six months ended March 31, 2025 and 2024.

The following tables provide further information regarding our rental operations as of and for the three and nine months ended June 30, 2025 and 2024.

Rental Homes/Units Closed and Revenue

Three Months Ended March 31,

Three Months Ended June 30,

Homes/Units Closed Rental Revenue (In millions) Average Selling Price

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1,393 1,400 (1) % $ 379.6 $ 413.7 (8) % 272,500 295,500 (8) %

Six Months Ended March 31,

Nine Months Ended June 30,

Homes/Units Closed Rental Revenue (In millions) Average Selling Price

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

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Rental pre-tax income 14.4 % 15.5 % 10.7 % 13.1 %

Revenues from our rental operations decreased to $236.6 million and $454.3 million during the three and six months ended March 31, 2025, respectively, from $371.3 million and $566.5 million in the prior year periods.

Pre-tax income was $22.8 million and $34.7 million during the three and six months ended March 31, 2025, respectively, compared to $33.3 million and $64.6 million in the prior year periods.

The decline in pre-tax income was due to a decrease in revenues due to fewer overall home and unit closings compared to the prior year periods.

At March 31, 2025, our rental property inventory of $3.1 billion included $813.2 million of inventory related to our single-family rental operations and $2.3 billion of inventory related to our multi-family rental operations.

Revenues from our rental operations decreased to $380.7 million and $835.0 million during the three and nine months ended June 30, 2025, respectively, from $413.7 million and $980.2 million in the prior year periods.

Pre-tax income was $54.8 million and $89.4 million during the three and nine months ended June 30, 2025, respectively, compared to $64.2 million and $128.8 million in the prior year periods.

The decline in pre-tax income in both periods was primarily due to a decrease in revenues compared to the prior year periods.

In the three month period, the revenue decrease was due to fewer multi-family unit closings, combined with a lower average selling price.

In the nine month period, the decrease was primarily due to a reduction in overall home and multi-family unit closings.

At June 30, 2025, our rental property inventory of $3.1 billion included $667.8 million of inventory related to our single-family rental operations and $2.5 billion of inventory related to our multi-family rental operations.

At September 30, 2024, our rental property inventory of $2.9 billion included $800.3 million of inventory related to our single-family rental operations and $2.1 billion of inventory related to our multi-family rental operations.

Single-family rental homes and lots and multi-family rental units at March 31, 2025 and September 30, 2024 consisted of the following:

Single-family rental homes and lots and multi-family rental units at June 30, 2025 and September 30, 2024 consisted of the following:

Rental Inventory

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Multi-family rental units (3) 13,190 11,960

(1) Single-family rental homes at March 31, 2025 consist of 580 homes under construction and 2,820 completed homes compared to 340 homes under construction and 2,800 completed homes at September 30, 2024.

(2) Single-family rental lots at March 31, 2025 consist of 610 undeveloped lots and 590 finished lots compared to 910 undeveloped lots and 1,000 finished lots at September 30, 2024.

(3) Multi-family rental units at March 31, 2025 consist of 5,800 units under construction and 6,530 units that were substantially complete and in the lease-up phase compared to 7,900 units under construction and 4,060 units that were substantially complete at September 30, 2024.

(1) Single-family rental homes at June 30, 2025 consist of 470 homes under construction and 2,300 completed homes compared to 340 homes under construction and 2,800 completed homes at September 30, 2024.

(2) Single-family rental lots at June 30, 2025 consist of 435 undeveloped lots and 615 finished lots compared to 910 undeveloped lots and 1,000 finished lots at September 30, 2024.

(3) Multi-family rental units at June 30, 2025 consist of 5,560 units under construction and 7,630 units that were substantially complete and in the lease-up phase compared to 7,900 units under construction and 4,060 units that were substantially complete at September 30, 2024.

RESULTS OF OPERATIONS – FORESTAR

At March 31, 2025, we owned 62% of the outstanding shares of Forestar.

Forestar is a publicly traded residential lot development company with operations in 65 markets across 24 states as of March 31, 2025.

At June 30, 2025, we owned 62% of the outstanding shares of Forestar.

Forestar is a publicly traded residential lot development company with operations in 64 markets across 23 states as of June 30, 2025.

(See Note B to the accompanying financial statements for additional Forestar segment information.)

Results of operations for the Forestar segment for the three and six months ended March 31, 2025 and 2024 were as follows:

Results of operations for the Forestar segment for the three and nine months ended June 30, 2025 and 2024 were as follows:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

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Forestar’s revenues are primarily derived from sales of single-family residential lots to local, regional and national homebuilders and land bankers for homebuilders.

The following tables provide further information regarding Forestar’s revenues and lot position as of and for the three and six months ended March 31, 2025 and 2024:

Three Months Ended March 31,

The following tables provide further information regarding Forestar’s revenues and lot position as of and for the three and nine months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Lots Sold Value (In millions)

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Total lots sold 3,605 3,255 $ 383.0 $ 305.8

Six Months Ended March 31,

Tract acres sold to D.R.

Horton — 32 $ — $ 2.1

Nine Months Ended June 30,

Lots Sold Value (In millions)

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Total lots sold 9,349 9,694 $ 977.3 $ 935.9

Tract acres sold to D.R.

Horton — 32 $ — $ 2.1

2025 September 30,

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Owned lots fully developed 10,000 6,300

At March 31, 2025 and September 30, 2024, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.8 billion and $2.3 billion, respectively.

Forestar’s inventory and land option charges consisted of $0.9 million and $2.0 million of earnest money and pre-acquisition cost write-offs in the three and six months ended March 31, 2025, respectively, compared to $0.2 million and $0.4 million in the prior year periods.

At June 30, 2025 and September 30, 2024, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.8 billion and $2.3 billion, respectively.

Forestar’s inventory and land option charges consisted of $1.9 million and $3.9 million of earnest money and pre-acquisition cost write-offs in the three and nine months ended June 30, 2025, respectively, compared to $0.7 million and $1.0 million in the prior year periods.

There were no impairment charges recorded in the current or prior year periods.

SG&A expense for the three and six months ended March 31, 2025 included charges of $1.8 million and $3.6 million, respectively, related to the shared services agreement between Forestar and D.R.

SG&A expense for the three and nine months ended June 30, 2025 included charges of $1.8 million and $5.4 million, respectively, related to the shared services agreement between Forestar and D.R.

Horton whereby D.R.

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Shared services charges were $1.4 million and $4.1 million, respectively, in the prior year periods.

Other expense in the three and six months ended March 31, 2025 includes a loss on extinguishment of debt of $1.1 million due to Forestar’s repurchase of $329.4 million of its $400 million principal amount of 3.85% senior notes due 2026 in March 2025.

The decline in Forestar’s pre-tax income was primarily due to lower gross margins on lot sales and higher SG&A costs.

Other expense in the nine months ended June 30, 2025 includes a loss on extinguishment of debt of $1.1 million due to Forestar’s repurchase of $329.4 million of its $400 million principal amount of 3.85% senior notes due 2026 in March 2025.

The decline in Forestar’s pre-tax income was primarily due to lower gross margins on lot sales and higher SG&A costs as a percentage of revenues.

RESULTS OF OPERATIONS – FINANCIAL SERVICES

The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the three and six months ended March 31, 2025 and 2024.

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 % Change 2025 2024 % Change

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Horton homes financed by DHI Mortgage 81 % 78 % 80 % 79 %

Total number of loans originated or brokered by DHI Mortgage 18,978 18,922 — % 49,776 52,264 (5) %

Loans sold by DHI Mortgage to third parties 18,107 19,203 (6) % 48,842 52,159 (6) %

Three Months Ended March 31, Six Months Ended March 31,

Three Months Ended June 30, Nine Months Ended June 30,

2025 2024 % Change 2025 2024 % Change

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Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

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DHI Mortgage’s primary focus is to originate loans for our homebuilding operations, and those loan originations account for virtually all of its total loan volume.

In the three and six months ended March 31, 2025, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers decreased 14% and 8%, respectively, corresponding to the decreases of 15% and 8%, respectively, in the number of homes closed by our homebuilding operations.

The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 81% and 80% in the three and six months ended March 31, 2025, respectively, up from 80% and 79% in the prior year periods.

In the three and nine months ended June 30, 2025, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers was essentially flat in the three month period and decreased 5% in the nine month period, corresponding to the 7% decrease in the number of homes closed by our homebuilding operations.

The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 81% and 80% in the three and nine months ended June 30, 2025, respectively, up from 78% and 79% in the prior year periods.

These percentages reflect DHI Mortgage’s ongoing efforts to align their business with our homebuilding operations by offering competitive products and pricing.

The number of loans sold decreased 14% and 7% in the three and six months ended March 31, 2025, respectively, compared to the prior year periods.

Virtually all of the mortgage loans held for sale on March 31, 2025 were eligible for sale to Federal National Mortgage Association (Fannie Mae), Federal Home Loan Mortgage Corporation (Freddie Mac) or Government National Mortgage Association (Ginnie Mae).

During the six months ended March 31, 2025, approximately 69% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 29% were sold to one other major financial entity.

The number of loans sold decreased 6% in both the three and nine months ended June 30, 2025 compared to the respective prior year periods.

Virtually all of the mortgage loans held for sale on June 30, 2025 were eligible for sale to the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Government National Mortgage Association (Ginnie Mae).

During the nine months ended June 30, 2025, approximately 72% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 26% were sold to one other major financial entity.

Changes in market conditions could result in a greater concentration of our mortgage sales in future periods to fewer financial entities and directly to Fannie Mae, Freddie Mac or Ginnie Mae, and we may need to make other adjustments to our mortgage operations.

Financial Services Revenues and Expenses

Total loan origination volume decreased 14% and 8% in the three and six months ended March 31, 2025, respectively, and revenues from our mortgage operations decreased 2% to $171.2 million and 4% to $310.9 million in the three and six months ended March 31, 2025, respectively, from $175.1 million and $323.1 million in the prior year periods.

Revenues from our title operations decreased 17% to $41.7 million and 11% to $84.3 million in the three and six months ended March 31, 2025, respectively, from $50.5 million and $95.1 million in the prior year periods, due to a decrease in transactions closed through our title operations.

General and administrative (G&A) expense related to our financial services operations decreased 6% to $160.3 million and 3% to $314.5 million in the three and six months ended March 31, 2025, respectively, from $171.2 million and $322.7 million in the prior year periods.

As a percentage of financial services revenues, G&A expense was 75.3% and 79.6% in the three and six months ended March 31, 2025, respectively, compared to 75.9% and 77.2% in the prior year periods.

Total loan origination volume was essentially flat and decreased 5% in the three and nine months ended June 30, 2025, respectively, compared to the prior year periods.

Revenues from our mortgage operations decreased 6% to $177.2 million and 5% to $488.1 million in the three and nine months ended June 30, 2025, respectively, from $189.3 million and $512.4 million in the prior year periods.

Revenues from our title operations decreased 5% to $50.6 million and 9% to $134.9 million in the three and nine months ended June 30, 2025, respectively, from $53.0 million and $148.1 million in the prior year periods, due to a decrease in transactions closed through our title operations.

General and administrative (G&A) expense related to our financial services operations decreased 4% to $171.0 million and 3% to $485.4 million in the three and nine months ended June 30, 2025, respectively, from $178.0 million and $500.6 million in the prior year periods.

As a percentage of financial services revenues, G&A expense was 75.1% and 77.9% in the three and nine months ended June 30, 2025, respectively, compared to 73.5% and 75.8% in the prior year periods.

Fluctuations in financial services G&A expense as a percentage of revenues can occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned.

Our financial services operations employed 3,121 and 3,016 people at March 31, 2025 and 2024, respectively.

Our financial services operations employed 2,989 and 3,112 people at June 30, 2025 and 2024, respectively.

Other income, net of other expense, included in our financial services operations consists primarily of the interest income of our mortgage subsidiary.

Other income decreased 14% to $20.4 million and 16% to $40.9 million in the three and six months ended March 31, 2025, respectively, from $23.6 million and $48.5 million in the prior year periods, primarily due to a decrease in interest income on our loan origination volume.

Other income decreased 9% to $24.5 million and 13% to $65.4 million in the three and nine months ended June 30, 2025, respectively, from $27.0 million and $75.4 million in the prior year periods, primarily due to a decrease in interest income on our loan origination volume.

RESULTS OF OPERATIONS - OTHER BUSINESSES

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We conduct insurance-related operations, own water rights and other water-related assets and own non-residential real estate including ranch land and improvements.

The pre-tax income of all of our subsidiaries engaged in other business activities was $11.2 million and $22.7 million in the three and six months ended March 31, 2025, respectively, compared to $9.2 million and $19.1 million in the prior year periods.

The pre-tax income of all of our subsidiaries engaged in other business activities was $5.9 million and $28.6 million in the three and nine months ended June 30, 2025, respectively, compared to $13.7 million and $32.8 million in the prior year periods.

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

Pre-tax income for the three and six months ended March 31, 2025 was $1.1 billion and $2.2 billion, respectively, compared to $1.5 billion and $2.8 billion in the prior year periods.

Pre-tax income for the three and nine months ended June 30, 2025 was $1.4 billion and $3.5 billion, respectively, compared to $1.8 billion and $4.6 billion in the prior year periods.

The decreases were primarily due to a decrease in the pre-tax income of our homebuilding operations.

Our income tax expense for the three and six months ended March 31, 2025 was $248.0 million and $506.0 million, respectively, compared to $344.8 million and $636.6 million in the prior year periods.

Our effective tax rate was 23.2% for both the three and six months ended March 31, 2025 compared to 22.6% and 22.9% in the prior year periods.

The effective tax rates for all periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient homes tax credits.

Our deferred tax assets, net of deferred tax liabilities, were $89.5 million at March 31, 2025 compared to $182.4 million at September 30, 2024.

We have a valuation allowance of $14.9 million at March 31, 2025 and September 30, 2024 related to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized.

Our income tax expense for the three and nine months ended June 30, 2025 was $325.0 million and $831.0 million, respectively, compared to $432.2 million and $1.1 billion in the prior year periods.

Our effective tax rate was 23.9% and 23.5% for the three and nine months ended June 30, 2025, respectively, compared to 24.0% and 23.4% in the prior year periods.

The effective tax rates for all periods include an expense for state income taxes and tax benefits related to stock-based compensation and federal energy efficient home tax credits.

Our deferred tax assets, net of deferred tax liabilities, were $81.3 million at June 30, 2025 compared to $182.4 million at September 30, 2024.

We have a valuation allowance of $14.8 million and $14.9 million at June 30, 2025 and September 30, 2024, respectively, related to deferred tax assets for state net operating loss (NOL) and tax credit carryforwards that are expected to expire before being realized.

We will continue to evaluate both the positive and negative evidence in determining the need for a valuation allowance with respect to our remaining state NOL and tax credit carryforwards.

Any reversal of the valuation allowance in future periods will impact our effective tax rate.

On July 4, 2025, the One Big Beautiful Bill Act was signed into law (the new law).

The new law terminates the energy efficient home tax credit for homes closing after June 30, 2026 and enacts certain other tax provisions that will impact our financial statements.

The termination of the energy efficient home tax credit will result in a reduced tax benefit beginning in fiscal 2026.

We recognized a tax benefit related to the energy efficient home tax credit of $70.4 million in fiscal 2024 and $30.8 million in the nine months ended June 30, 2025.

We are evaluating the impact of other tax provisions within the new law;

however, none of the other tax provisions are expected to have a significant impact on our financial statements.

CAPITAL RESOURCES AND LIQUIDITY

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Our current levels of cash, borrowing capacity and balance sheet leverage provide us with the operational flexibility to adjust to changes in economic and market conditions.

We are making investments in our homebuilding and rental inventories to expand our operations and consolidate market share.

We are also returning capital to our shareholders through repurchases of our common stock and dividend payments.

We are maintaining significant homebuilding cash balances and liquidity to support the increased scale and level of activity in our business and to provide flexibility to adjust to changing market conditions and opportunities.

At March 31, 2025, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $6.6 billion.

$2.1 billion was payable within 12 months, including $1.4 billion which is outstanding under our mortgage repurchase facilities and $500 million principal amount of 2.6% homebuilding senior notes maturing in October 2025.

At March 31, 2025, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 21.1% compared to 18.9% at September 30, 2024 and 20.0% at March 31, 2024.

Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 14.3% at March 31, 2025 compared to 5.2% at September 30, 2024 and 10.8% at March 31, 2024.

We continue to invest in our homebuilding and rental inventories to expand our operations and consolidate market share.

We are also returning capital to shareholders through repurchases of our common stock and dividend payments.

We are maintaining significant homebuilding cash balances and liquidity to support the scale and level of activity in our business and to provide flexibility to adjust to changing market conditions and opportunities.

At June 30, 2025, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $7.3 billion.

$2.4 billion was payable within 12 months, including $1.7 billion which is outstanding under our mortgage repurchase facilities, $500 million principal amount of 2.6% homebuilding senior notes maturing in October 2025 and $70.6 million principal amount of 3.85% Forestar senior notes maturing in May 2026.

At June 30, 2025, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 23.2% compared to 18.9% at September 30, 2024 and 18.8% at June 30, 2024.

Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 16.2% at June 30, 2025 compared to 5.2% at September 30, 2024 and 9.9% at June 30, 2024.

Over the long term, we intend to maintain our ratio of debt to total capital around 20%.

At March 31, 2025, we had outstanding letters of credit of $234.2 million and surety bonds of $3.4 billion issued by third parties to secure performance under various contracts.

At June 30, 2025, we had outstanding letters of credit of $281.5 million and surety bonds of $3.4 billion issued by third parties to secure performance under various contracts.

We expect that our performance obligations secured by these letters of credit and bonds will generally be completed in the ordinary course of business and in accordance with the applicable contractual terms.

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Capital Resources - Homebuilding

Cash and Cash Equivalents — At March 31, 2025, cash and cash equivalents of our homebuilding segment totaled $1.9 billion.

Cash and Cash Equivalents — At June 30, 2025, cash and cash equivalents of our homebuilding segment totaled $2.0 billion.

Bank Credit Facility — We have a senior unsecured homebuilding revolving credit facility that was amended in December 2024 to increase its capacity from $2.19 billion to $2.23 billion.

The amendment also extended the maturity date of the facility.

The facility includes bank commitments of $1.965 billion maturing on December 18, 2029 and $265 million maturing on October 28, 2027.

The facility has an uncommitted accordion feature that could increase its size to $3.0 billion, subject to certain conditions and availability of additional bank commitments.

The facility includes an uncommitted accordion feature that allows for an increase in its size to $3.0 billion, subject to certain conditions and availability of additional bank commitments.

In June 2025, we utilized this accordion feature, increasing the facility’s size to $2.305 billion through an additional commitment.

Of the total commitments, $2.04 billion mature on December 18, 2029, and $265 million mature on October 28, 2027.

The facility also provides for the issuance of letters of credit with a sublimit equal to 100% of the total revolving credit commitments.

Letters of credit issued under the facility reduce the available borrowing capacity.

At March 31, 2025, there were no borrowings outstanding and $211.9 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.02 billion.

At June 30, 2025, there were no borrowings outstanding and $244.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.06 billion.

Our homebuilding revolving credit facility imposes restrictions on our operations and activities, including requiring the maintenance of a maximum allowable leverage ratio and a borrowing base restriction if our leverage ratio exceeds a certain level.

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The credit agreement governing the facility imposes restrictions on the creation of secured debt and liens.

Public Unsecured Debt — At March 31, 2025, we had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2025 through October 2035.

Public Unsecured Debt — At June 30, 2025, we had $3.5 billion principal amount of homebuilding senior notes outstanding that mature from October 2025 through October 2035.

In October 2024, we repaid $500 million principal amount of our 2.5% senior notes at maturity.

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The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.6%.

In May 2025, we issued $500 million principal amount of 4.85% senior notes due October 15, 2030, with interest payable semi-annually.

The annual effective interest rate of these notes after giving effect to the amortization of the discount and financing costs is 5.1%.

The indenture governing our senior notes imposes restrictions on the creation of secured debt and liens.

At March 31, 2025, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility and public debt obligations.

At June 30, 2025, we were in compliance with all of the covenants, limitations and restrictions of our homebuilding revolving credit facility and public debt obligations.

Our homebuilding revolving credit facility and homebuilding senior notes are guaranteed by D.R.

Horton, Inc.’s significant wholly owned homebuilding subsidiaries.

Debt and Stock Repurchase Authorizations — In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities and up to $4.0 billion of our common stock, replacing the previous authorizations.

During the six months ended March 31, 2025, we repurchased 16.5 million shares at a total cost, including commissions and excise taxes, of $2.4 billion.

At March 31, 2025, the full amount of the debt repurchase authorization was remaining, and $1.2 billion of the stock repurchase authorization was remaining.

In April 2025, our Board of Directors authorized the repurchase of up to $5.0 billion of our common stock, replacing the previous authorization, which at that time had $1.1 billion remaining due to repurchases made subsequent to quarter end.

Debt and Stock Repurchase Authorizations — In July 2024, our Board of Directors authorized the repurchase of up to $500 million of our debt securities.

In April 2025, the Board authorized the repurchase of up to $5.0 billion of our common stock, replacing the previous authorization.

During the nine months ended June 30, 2025, we repurchased 26.2 million shares at a total cost, including commissions and excise taxes, of $3.6 billion, of which $2.6 billion was repurchased under the previous authorization.

At June 30, 2025, the full amount of the debt repurchase authorization was remaining, and $4.0 billion of the stock repurchase authorization was remaining.

The debt and stock repurchase authorizations have no expiration date.

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During the past few years, we have made significant investments in our rental operations.

The inventory in our rental segment totaled $3.1 billion at March 31, 2025 compared to $2.9 billion at September 30, 2024 and $3.1 billion at March 31, 2024.

Cash and Cash Equivalents — At March 31, 2025, cash and cash equivalents of our rental segment totaled $98.6 million.

The inventory in our rental segment totaled $3.1 billion at June 30, 2025 compared to $2.9 billion at September 30, 2024 and $3.1 billion at June 30, 2024.

Cash and Cash Equivalents — At June 30, 2025, cash and cash equivalents of our rental segment totaled $160.3 million.

Bank Credit Facility — 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.

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The maturity date of the facility is October 10, 2027.

Borrowings and repayments under the facility totaled $790 million and $485 million, respectively, during the six months ended March 31, 2025.

At March 31, 2025, there were $1.05 billion of borrowings outstanding at a 6.4% annual interest rate and no letters of credit issued under the facility, resulting in no available capacity.

At June 30, 2025, there were $1.02 billion of borrowings outstanding at a 6.4% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $30 million.

The rental revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

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A failure to comply with these financial covenants could allow the lending banks to terminate the availability of funds under the revolving credit facility or cause any outstanding borrowings to become due and payable prior to maturity.

At March 31, 2025, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

At June 30, 2025, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

The rental revolving credit facility is guaranteed by DRH Rental’s wholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

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As market conditions permit, Forestar may issue new debt or equity securities through the capital markets or obtain additional bank financing to provide capital for future growth and additional liquidity.

At March 31, 2025, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 34.7% compared to 30.7% at September 30, 2024 and 32.4% at March 31, 2024.

Forestar’s ratio of net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 29.8% compared to 12.4% at September 30, 2024 and 16.4% at March 31, 2024.

Cash and Cash Equivalents — At March 31, 2025, Forestar had cash and cash equivalents of $174.3 million.

At June 30, 2025, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 34.2% compared to 30.7% at September 30, 2024 and 31.8% at June 30, 2024.

Forestar’s ratio of net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 28.9% compared to 12.4% at September 30, 2024 and 18.7% at June 30, 2024.

Cash and Cash Equivalents — At June 30, 2025, Forestar had cash and cash equivalents of $189.2 million.

Bank Credit Facility — Forestar has a senior unsecured revolving credit facility that was amended in December 2024 to increase its capacity from $410 million to $640 million and to raise the uncommitted accordion feature that could increase the size of the facility to $1.0 billion, subject to certain conditions and availability of additional bank commitments.

The amendment also extended the maturity date of the facility.

The facility includes bank commitments of $575 million maturing on December 18, 2029 and $65 million maturing on October 28, 2026.

Of the total commitments, $575 million mature on December 18, 2029, and $65 million mature on October 28, 2026.

The 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.

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Letters of credit issued under the facility reduce the available borrowing capacity.

At March 31, 2025, there were no borrowings outstanding and $22.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $617.7 million.

At June 30, 2025, there were no borrowings outstanding and $37.2 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $602.8 million.

The Forestar revolving credit facility includes customary affirmative and negative covenants, events of default and financial covenants.

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Unsecured Debt — As of March 31, 2025, Forestar had $870.6 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which mature from May 2026 through March 2033 and represent unsecured obligations of Forestar.

Unsecured Debt — As of June 30, 2025, Forestar had $870.6 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, which mature from May 2026 through March 2033 and represent unsecured obligations of Forestar.

In March 2025, Forestar issued $500 million principal amount of 6.5% senior notes due March 15, 2033, with interest payable semi-annually.

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Forestar recognized a $1.1 million loss on extinguishment of debt upon repurchase of the notes.

At March 31, 2025, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.

At June 30, 2025, Forestar was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility and senior note obligations.

Forestar’s revolving credit facility and its senior notes are guaranteed by Forestar’s wholly owned subsidiaries that are not immaterial subsidiaries and have not been designated as unrestricted subsidiaries.

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Debt Repurchase Authorization — In April 2020, Forestar’s Board of Directors authorized the repurchase of up to $30 million of Forestar’s debt securities.

All of the $30 million authorization was remaining at March 31, 2025, and the authorization has no expiration date.

Issuance of Common Stock — During the six months ended March 31, 2025, there were no shares issued under Forestar’s ATM program.

At March 31, 2025, $750 million remained available for issuance under Forestar’s shelf registration statement, with $300 million reserved for sales under the ATM program.

All of the $30 million authorization was remaining at June 30, 2025, and the authorization has no expiration date.

Issuance of Common Stock — During the nine months ended June 30, 2025, there were no shares issued under Forestar’s ATM program.

At June 30, 2025, $750 million remained available for issuance under Forestar’s shelf registration statement, with $300 million reserved for sales under the ATM program.

Capital Resources - Financial Services

Cash and Cash Equivalents — At March 31, 2025, cash and cash equivalents of our financial services segment totaled $269.1 million.

Cash and Cash Equivalents — At June 30, 2025, cash and cash equivalents of our financial services segment totaled $268.0 million.

Mortgage Repurchase Facilities — Our mortgage subsidiary, DHI Mortgage, has two mortgage repurchase facilities, one of which is committed and the other of which is uncommitted, that provide financing and liquidity to DHI Mortgage by facilitating purchase transactions in which DHI Mortgage transfers eligible loans to counterparties upon receipt of funds from the counterparties.

DHI Mortgage then has the right and obligation to repurchase the purchased loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.

The committed mortgage repurchase facility has a total capacity of $1.6 billion and a maturity date of May 9, 2025.

DHI Mortgage then has the right and obligation to repurchase the loans upon their sale to third-party purchasers in the secondary market or within specified time frames in accordance with the terms of the mortgage repurchase facilities.

In May 2025, the committed mortgage repurchase facility was amended to reduce its capacity to $1.4 billion and extend its maturity date to May 6, 2026.

The capacity of the facility can be increased to $2.0 billion subject to the availability of additional commitments.

At March 31, 2025, DHI Mortgage had an obligation of $1.4 billion under the committed mortgage repurchase facility at a 6.0% annual interest rate.

At March 31, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $82.5 million at a 5.6% annual interest rate.

At March 31, 2025, $2.35 billion of mortgage loans held for sale with a collateral value of $2.31 billion were pledged under the committed mortgage repurchase facility, and $90.5 million of mortgage loans held for sale with a collateral value of $85.8 million were pledged under the uncommitted mortgage repurchase facility.

At June 30, 2025, DHI Mortgage had an obligation of $1.3 billion under the committed mortgage repurchase facility at a 6.0% annual interest rate.

At June 30, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $451.7 million at a 5.6% annual interest rate.

At June 30, 2025, $2.22 billion of mortgage loans held for sale with a collateral value of $2.17 billion were pledged under the committed mortgage repurchase facility, and $535.9 million of mortgage loans held for sale with a collateral value of $501.1 million were pledged under the uncommitted mortgage repurchase facility.

The facilities contain financial covenants as to the mortgage subsidiary’s minimum required tangible net worth, its maximum allowable indebtedness to tangible net worth ratio and its minimum required liquidity.

At March 31, 2025, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

At June 30, 2025, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

These mortgage repurchase facilities are not guaranteed by D.R.

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In the past, DHI Mortgage has been able to renew or extend its committed mortgage repurchase facility at a sufficient capacity and on satisfactory terms prior to its maturity and obtain temporary additional commitments through amendments to the facility during periods of higher than normal volumes of mortgages held for sale.

The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility or to obtain other additional financing in sufficient capacities.

The liquidity of our financial services business depends upon its continued ability to renew and extend the committed mortgage repurchase facility, utilize the uncommitted mortgage repurchase facility or obtain other additional financing in sufficient capacities.

Operating Cash Flow Activities

In the six months ended March 31, 2025, net cash provided by operating activities was $210.5 million compared to $470.1 million of cash used in operating activities in the prior year period.

Cash provided by operating activities in the current year period primarily consisted of $876.0 million and $197.2 million of cash provided by our homebuilding and financial services segments, respectively, partially offset by $469.8 million and $381.6 million of cash used in our Forestar and rental segments, respectively.

Cash provided by a decrease in construction in progress and finished home inventory was $229.8 million in the current year period, reflecting a decrease in our completed unsold homes in the current period.

In the nine months ended June 30, 2025, net cash provided by operating activities was $949.1 million compared to $228.2 million in the prior year period.

Cash provided by operating activities in the current year period primarily consisted of $1.7 billion of cash provided by our homebuilding segment, partially offset by $453.9 million, $294.5 million and $20.1 million of cash used in our Forestar, rental and financial services segments, respectively.

Cash used to increase construction in progress and finished home inventory was $146.1 million in the current year period, reflecting an increase in our homes in inventory in the current period.

Cash used to increase residential land and lots was $1.5 billion in the current year period compared to $2.0 billion in the prior year period.

Investing Cash Flow Activities

In the six months ended March 31, 2025, net cash used in investing activities was $94.5 million compared to $66.0 million in the prior year period.

In the current year period, uses of cash included the payment of $53.1 million related to a business acquisition in our South Central region and purchases of property and equipment totaling $47.6 million.

In the nine months ended June 30, 2025, net cash used in investing activities was $123.5 million compared to $161.1 million in the prior year period.

In the current year period, uses of cash included purchases of property and equipment totaling $93.6 million and the payment of $53.1 million related to a business acquisition in our South Central region.

In the prior year period, uses of cash included purchases of property and equipment totaling $133.3 million.

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Long-term financing needs for our operations may be funded with the issuance of senior unsecured debt securities or equity securities through the capital markets.

During the six months ended March 31, 2025, net cash used in financing activities was $2.1 billion, consisting primarily of cash used to repurchase shares of our common stock of $2.4 billion, repayment of $500 million principal amount of our 2.5% homebuilding senior notes at maturity, early repurchase of $329.4 million of Forestar’s $400 million principal amount 3.85% senior notes, payment of cash dividends totaling $254.0 million and net payments on our mortgage repurchase facilities of $86.4 million,.

These uses of cash were partially offset by note proceeds from our issuance of $700 million principal amount of 5.5% homebuilding senior notes, note proceeds from Forestar’s issuance of $500 million principal amount of 6.5% senior notes and net borrowings on our rental revolving credit facility of $305 million.

During the six months ended March 31, 2024, net cash used in financing activities was $270.6 million, consisting primarily of cash used to repurchase shares of our common stock of $794.5 million and payment of cash dividends totaling $199.1 million.

These uses of cash were partially offset by net borrowings on our rental revolving credit facility and mortgage repurchase facilities of $585 million and $214.4 million, respectively.

During each of the first two quarters of fiscal 2025, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, the most recent of which was paid on February 14, 2025 to stockholders of record on February 7, 2025.

Cash dividends declared and paid in the three and six months ended March 31, 2025 totaled $125.5 million and $254.0 million, respectively.

In April 2025, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, payable on May 9, 2025 to stockholders of record on May 2, 2025.

During the nine months ended June 30, 2025, net cash used in financing activities was $2.7 billion, consisting primarily of cash used to repurchase shares of our common stock of $3.6 billion, repayment of $500 million principal amount of our 2.5% homebuilding senior notes at maturity, the early repurchase of $329.4 million of Forestar’s $400 million principal amount 3.85% senior notes and payment of cash dividends totaling $376.4 million.

These uses of cash were partially offset by note proceeds from our issuances of $700 million principal amount of 5.5% homebuilding senior notes and $500 million principal amount of 4.85% homebuilding senior notes, Forestar’s issuance of $500 million principal amount of 6.5% senior notes and net borrowings on our rental revolving credit facility and mortgage repurchase facilities of $275 million and $170.4 million, respectively.

During the nine months ended June 30, 2024, net cash used in financing activities was $947.2 million, consisting primarily of cash used to repurchase shares of our common stock of $1.2 billion and payment of cash dividends totaling $297.5 million.

These uses of cash were partially offset by net borrowings on our rental revolving credit facility of $630 million.

During each of the first three quarters of fiscal 2025, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, the most recent of which was paid on May 9, 2025 to stockholders of record on May 2, 2025.

Cash dividends declared and paid in the three and nine months ended June 30, 2025 totaled $122.4 million and $376.4 million, respectively.

In July 2025, our Board of Directors approved a quarterly cash dividend of $0.40 per common share, payable on August 14, 2025 to stockholders of record on August 7, 2025.

Cash dividends of $0.30 per common share were approved and paid in each quarter of fiscal 2024.

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SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

As of March 31, 2025, D.R.

As of June 30, 2025, D.R.

had $3.5 billion principal amount of homebuilding senior notes outstanding due through October 2035 and no amounts outstanding on its homebuilding revolving credit facility.

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and Guarantor Subsidiaries

Summarized Balance Sheet Data March 31,

Summarized Balance Sheet Data June 30,

2025 September 30,

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20,874.1 22,410.7

Summarized Statement of Operations Data Six Months Ended

March 31, 2025 Year Ended

Summarized Statement of Operations Data Nine Months Ended

June 30, 2025 Year Ended

September 30, 2024

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As disclosed in our critical accounting policies in our Form 10-K for the fiscal year ended September 30, 2024, our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims.

At March 31, 2025 and September 30, 2024, we had reserves for approximately 970 and 825 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the six months ended March 31, 2025, we were notified of approximately 330 new construction defect claims and resolved 185 construction defect claims for a total cost of $17.4 million.

At March 31, 2024 and September 30, 2023, we had reserves for approximately 595 and 600 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the six months ended March 31, 2024, we were notified of approximately 185 new construction defect claims and resolved 190 construction defect claims for a total cost of $44.8 million.

At June 30, 2025 and September 30, 2024, we had reserves for approximately 940 and 825 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the nine months ended June 30, 2025, we were notified of approximately 380 new construction defect claims and resolved 265 construction defect claims for a total cost of $25.1 million.

At June 30, 2024 and September 30, 2023, we had reserves for approximately 570 and 600 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the nine months ended June 30, 2024, we were notified of approximately 240 new construction defect claims and resolved 270 construction defect claims for a total cost of $49.6 million.

Although significant changes in market conditions have impacted our seasonal patterns in the past and could do so again in the future, we generally close more homes and generate greater revenues and pre-tax income in the third and fourth quarters of our fiscal year.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis