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Item 2. Management’s Discussion and Analysis

2026-01-22 compared with 2025-07-23 · 256 added, 386 removed, 526 unchanged (55% 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 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.

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.” 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 $372,200 during the nine months ended June 30, 2025.

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.

Homebuilding is our core business and primarily includes 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 $365,500 during the three months ended December 31, 2025.

Approximately 84% of our home sales revenue in the three months ended December 31, 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 47-year history, and we have been the largest volume homebuilder in the United States every year since 2002.

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Our rental segment consists of single-family and multi-family rental operations.

The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes.

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

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.

Single-family rental operations construct homes within single-family rental (build-to-rent) communities, and then either sell homes to an investor as they are completed or lease the homes and market the entire community for a bulk sale.

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

At December 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 and NYSE Texas under the ticker symbol “FOR.” Forestar operates across many of our homebuilding operating markets and is a key part of our homebuilding strategy to maintain relationships with land developers and control a large portion of our land and lot position through land purchase contracts.

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

DHI Mortgage, our wholly owned subsidiary, provides mortgage financing services primarily to our homebuyers and sells substantially all of the mortgages it originates and the related servicing rights to third-party purchasers after origination.

Our wholly owned subsidiary title companies serve as title insurance agents by providing title insurance policies, examination, underwriting and closing services primarily to our homebuilding customers.

Our wholly owned subsidiary title companies issue title insurance policies and provide examination, underwriting and closing services primarily to our homebuilding customers.

In addition to our homebuilding, rental, Forestar and financial services operations, we engage in other business activities through our subsidiaries.

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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 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%.

During the three months ended December 31, 2025, our number of homes closed and our home sales revenues decreased 7% and 9%, respectively, compared to the prior year period, and our consolidated revenues decreased 10% to $6.9 billion compared to $7.6 billion.

Our pre-tax income was $798.1 million in the three months ended December 31, 2025 compared to $1.1 billion in the prior year period, and our pre-tax operating margin was 11.6% compared to 14.6%.

Net income was $601.4 million in the three months ended December 31, 2025 compared to $851.9 million in the prior year period, and our diluted earnings per share were $2.03 compared to $2.61.

In the trailing twelve months ended December 31, 2025, our return on equity (ROE) was 13.7% compared to 19.1% in the prior year period, and our return on assets (ROA) was 9.4% compared to 13.4%.

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.

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 represented 76% of the lots owned and controlled at June 30, 2025, September 30, 2024 and June 30, 2024.

During the first quarter, new home demand continued to be impacted by ongoing affordability constraints and cautious consumer sentiment.

Compared to the prior year quarter, our net sales orders were up 3%, the value of net sales orders was essentially flat, and home sales revenues decreased by 9%.

Home sales gross margin decreased to 20.4% in the first quarter from the prior year quarter 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 demand in each of our local markets.

We expect to maintain an elevated level of sales 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 to maximize returns and capital efficiency .

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 75% of the lots owned and controlled at both December 31, 2025 and September 30, 2025 and 76% at December 31, 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.

During the three months ended December 31, 2025, 67% of the homes we closed were on lots developed by either Forestar or a third party compared to 65% in the prior year period.

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

We plan to generate strong cash flows from our operations and manage our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions.

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We believe our operating strategy, which has produced positive results in recent years, will allow us to successfully operate through changing economic conditions and maintain our strong financial performance and competitive position.

However, we cannot provide any 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 June 30, 2025, as compared to the same period of 2024 unless otherwise indicated, were as follows:

However, we cannot provide any assurance 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 December 31, 2025, as compared to the same period of 2024 unless otherwise indicated, were as follows:

Consolidated Results:

• Consolidated revenues decreased 10% to $6.9 billion compared to $7.6 billion.

• Consolidated pre-tax income decreased 25% to $1.4 billion compared to $1.8 billion.

• Consolidated pre-tax income decreased 28% to $798.1 million compared to $1.1 billion.

• Consolidated pre-tax income was 11.6% of consolidated revenues compared to 14.6%.

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• Net income attributable to D.R.

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 $24.1 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.

Horton decreased 30% to $594.8 million compared to $844.9 million.

• Net income attributable to D.R.

Horton per diluted share decreased 22% to $2.03 compared to $2.61.

• Stockholders’ equity was $24.0 billion compared to $24.2 billion and $24.9 billion at September 30, 2025 and December 31, 2024, respectively.

• Book value per share increased to $82.60 compared to $82.15 and $78.53 at September 30, 2025 and December 31, 2024, respectively.

• Debt to total capital was 18.8% compared to 19.8% and 17.0% at September 30, 2025 and December 31, 2024, respectively.

Net debt to total capital was 11.2% compared to 11.0% and 7.6% at September 30, 2025 and December 31, 2024, respectively.

Homebuilding:

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• Homes closed decreased 7% to 17,818 homes, and the average closing price of those homes decreased 3% to $365,500.

• 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.

• Net sales orders increased 3% to 18,300 homes, and the value of net sales orders was $6.7 billion in both periods.

• Sales order backlog increased 3% to 11,376 homes, and the value of sales order backlog was $4.3 billion in both periods.

• Home sales gross margin was 20.4% compared to 22.7%.

• Homebuilding SG&A expense was 9.7% of homebuilding revenues compared to 8.9%.

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

• Homebuilding pre-tax income decreased 30% to $708.1 million compared to $1.0 billion.

• Homebuilding pre-tax income was 10.8% of homebuilding revenues compared to 14.1%.

• 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.

• Homebuilding cash and cash equivalents totaled $1.9 billion compared to $2.2 billion and $2.5 billion at September 30, 2025 and December 31, 2024, respectively.

• Homebuilding inventories totaled $20.2 billion compared to $20.3 billion and $20.7 billion at September 30, 2025 and December 31, 2024, respectively.

• Homes in inventory totaled 30,400 compared to 29,600 and 36,200 at September 30, 2025 and December 31, 2024, respectively.

• Owned lots totaled 145,500 compared to 147,000 and 154,400 at September 30, 2025 and December 31, 2024, respectively.

Lots controlled through purchase contracts totaled 445,000 compared to 444,900 and 485,400 at September 30, 2025 and December 31, 2024, respectively.

• Homebuilding debt was $3.2 billion at both December 31, 2025 and September 30, 2025 compared to $2.4 billion at December 31, 2024.

• Rental revenues were $109.5 million compared to $217.8 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 June 30, 2024, respectively.

• Single-family rental homes closed totaled 397 compared to 311.

• Multi-family rental units closed totaled 328 compared to 610.

• There were no multi-family rental units closed compared to 504.

• Rental pre-tax income was $0.2 million compared to $11.9 million.

• Rental inventory totaled $2.9 billion compared to $2.7 billion and $3.0 billion at September 30, 2025 and December 31, 2024, respectively.

• Forestar’s revenues increased 9% to $273.0 million compared to $250.4 million.

Revenues in the current and prior year quarters included $183.7 million and $218.6 million, respectively, of revenue from land and lot sales to our homebuilding segment.

• Forestar’s lots sold increased 11% to 3,605 compared to 3,255.

• Forestar’s lots sold decreased 17% to 1,944 compared to 2,333.

Lots sold to D.R.

Horton totaled 1,627 compared to 2,112.

• Forestar’s revenue from tract acres sold was $29.3 million compared to no tract acres sold in the prior year quarter.

• Forestar’s pre-tax income was $20.8 million compared to $21.9 million.

• Forestar’s pre-tax income was 7.6% of revenues compared to 8.7%.

• 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.

• Forestar’s cash and cash equivalents totaled $211.7 million compared to $379.2 million and $132.0 million at September 30, 2025 and December 31, 2024, respectively.

• Forestar’s inventories totaled $2.9 billion compared to $2.6 billion and $2.7 billion at September 30, 2025 and December 31, 2024, respectively.

• Forestar’s owned and controlled lots totaled 101,000 compared to 99,800 and 106,000 at September 30, 2025 and December 31, 2024, respectively.

Of these lots, 40,700 were under contract to sell to or subject to a right of first offer with D.R.

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.

Horton compared to 40,400 and 43,800 at September 30, 2025 and December 31, 2024, respectively.

• Forestar’s debt was $793.2 million compared to $802.8 million and $806.8 million at September 30, 2025 and December 31, 2024, respectively.

• Forestar’s debt to total capital was 30.8% compared to 31.2% and 33.3% at September 30, 2025 and December 31, 2024, respectively.

Forestar’s net debt to total capital was 24.6% compared to 19.3% and 29.5% at September 30, 2025 and December 31, 2024, respectively.

Financial Services:

• Financial services revenues decreased 6% to $227.8 million compared to $242.3 million.

• Financial services revenues increased 1% to $184.6 million compared to $182.3 million.

• Financial services pre-tax income was $58.0 million compared to $48.6 million.

• Financial services pre-tax income was 31.4% of financial services revenues compared to 26.7%.

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

Consolidated Results:

• Consolidated revenues decreased 8% to $24.6 billion compared to $26.8 billion.

• Consolidated pre-tax income decreased 23% to $3.5 billion compared to $4.6 billion.

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

• 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.

Horton decreased 23% to $2.7 billion compared to $3.5 billion.

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

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

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

Homebuilding:

• Homebuilding revenues decreased 8% to $23.0 billion compared to $25.0 billion.

• Homes closed decreased 7% to 61,495 homes, and the average closing price of those homes decreased 2% to $372,200.

• Net sales orders decreased 6% to 63,345 homes, and the value of net sales orders decreased 8% to $23.4 billion.

• Home sales gross margin was 22.1% compared to 23.4%.

• Homebuilding SG&A expense was 8.5% of homebuilding revenues compared to 7.5%.

• Homebuilding pre-tax income decreased 22% to $3.1 billion compared to $4.0 billion.

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

• 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.

• Rental pre-tax income was $89.4 million compared to $128.8 million.

• Single-family rental homes closed totaled 1,895 compared to 2,278.

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

• 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.

• Forestar’s lots sold decreased 4% to 9,349 compared to 9,694.

Lots sold to D.R.

Horton totaled 7,688 compared to 8,842.

• Forestar’s pre-tax income decreased 34% to $106.2 million compared to $161.6 million.

• Forestar’s pre-tax income was 10.7% of revenues compared to 16.9%.

Financial Services:

• Financial services revenues decreased 6% to $623.0 million compared to $660.5 million.

• Financial services pre-tax income decreased 14% to $203.0 million compared to $235.3 million.

• Financial services pre-tax income was 32.6% of financial services revenues compared to 35.6%.

RESULTS OF OPERATIONS - HOMEBUILDING

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Medford Tuscaloosa Northwest Indiana

Portland/Salem Florida Fort Myers/Naples Iowa Des Moines

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

George Jacksonville Kansas/Missouri Kansas City

Washington Bremerton Lakeland Kentucky Louisville

Central Washington Melbourne/Vero Beach Maryland Baltimore

Portland/Salem Florida Cape Coral/Fort Myers Iowa Des Moines

Utah Salt Lake City/Provo/Ogden Deltona/Daytona Beach Iowa City/Cedar Rapids

George Gainesville Kansas/Missouri Kansas City

Washington Bremerton Jacksonville Kentucky Louisville/Lexington

Central Washington Lakeland Maryland Baltimore

Kennewick/Pasco/Richland Miami/Fort Lauderdale Eastern Maryland

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Spokane Orlando Western Maryland

Vancouver Panama City Minnesota Minneapolis/St.

Pensacola Nebraska Omaha

Southwest Region Port St.

Lucie New Jersey Northern New Jersey

Arizona Phoenix Tallahassee Southern New Jersey

Tucson Tampa/Sarasota Ohio Cincinnati/Dayton

California Bakersfield Volusia County Columbus

Vancouver Palm Bay/Melbourne Minnesota Minneapolis/St.

Panama City Nebraska Omaha

Southwest Region Pensacola New Jersey Northern New Jersey

Arizona Phoenix Port St.

Lucie Southern New Jersey

Tucson Tallahassee Ohio Cincinnati/Dayton

California Bakersfield Tampa/Sarasota/Punta Gorda Columbus

Bay Area West Palm Beach Pennsylvania Central Pennsylvania

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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 nine months ended June 30, 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 months ended December 31, 2025 and 2024.

Net Sales Orders (1)

Three Months Ended June 30,

Net Homes Sold Value (In millions) Average Selling Price

Change 2025 2024 %

Northwest 1,294 1,458 (11) % $ 683.6 $ 729.5 (6) % $ 528,300 $ 500,300 6 %

Southwest 2,396 2,488 (4) % 1,129.3 1,215.3 (7) % 471,300 488,500 (4) %

South Central 6,131 5,880 4 % 1,868.0 1,917.8 (3) % 304,700 326,200 (7) %

Southeast 5,475 6,089 (10) % 1,830.1 2,165.1 (15) % 334,300 355,600 (6) %

East 4,887 4,546 8 % 1,696.5 1,614.6 5 % 347,100 355,200 (2) %

North 2,888 2,540 14 % 1,214.8 1,073.4 13 % 420,600 422,600 — %

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

Nine Months Ended June 30,

Three Months Ended December 31,

Net Homes Sold Value (In millions) Average Selling Price

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Sales Order Cancellations

Three Months Ended June 30,

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

2025 2024 2025 2024 2025 2024

Northwest 220 223 $ 127.0 $ 122.0 15 % 13 %

Southwest 435 449 216.5 214.6 15 % 15 %

South Central 1,206 1,188 399.0 399.7 16 % 17 %

Southeast 1,307 1,530 450.7 554.9 19 % 20 %

East 1,051 1,010 367.4 358.0 18 % 18 %

North 618 623 259.1 256.5 18 % 20 %

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

Nine Months Ended June 30,

Three Months Ended December 31,

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 (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.

The value of net sales orders was $6.66 billion (18,300 homes) for the three months ended December 31, 2025 compared to $6.65 billion (17,837 homes) in the prior year period.

The slight increase in value was attributable to a 3% increase in sales order volume, offset by a 2% decrease in the average selling price.

In regions where sales order volume increased, the markets contributing most to the increase were the Fort Worth and Houston markets in the South Central, the Myrtle Beach market in the East and the Pittsburgh and Richmond markets in the North.

In regions where sales order volume decreased, the markets contributing most to the decrease were the Seattle and Salt Lake City markets in the Northwest, the Las Vegas market in the Southwest and the Florida markets (particularly Jacksonville) in the Southeast.

During the first quarter, new home demand continued to be impacted by 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 June 30,

As of December 31,

Homes in Backlog Value (In millions) Average Selling Price

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Homes Closed and Home Sales Revenue

Three Months Ended June 30,

Homes Closed Value (In millions) Average Selling Price

Change 2025 2024 %

Northwest 1,270 1,427 (11) % $ 698.8 $ 720.7 (3) % $ 550,200 $ 505,000 9 %

Southwest 2,396 2,673 (10) % 1,166.2 1,313.7 (11) % 486,700 491,500 (1) %

South Central 6,239 6,104 2 % 1,938.2 2,009.0 (4) % 310,700 329,100 (6) %

Southeast 5,682 6,669 (15) % 1,923.2 2,415.9 (20) % 338,500 362,300 (7) %

East 4,835 4,748 2 % 1,668.3 1,709.0 (2) % 345,000 359,900 (4) %

North 2,738 2,534 8 % 1,166.3 1,062.9 10 % 426,000 419,500 2 %

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

Nine Months Ended June 30,

Three Months Ended December 31,

Homes Closed Value (In millions) Average Selling Price

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Home Sales Revenue

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.

Revenues from home sales were $6.5 billion (17,818 homes closed) for the three months ended December 31, 2025 compared to $7.1 billion (19,059 homes closed) in the prior year period.

The decrease in revenues was attributable to a 7% decrease in closings volume, along with a 3% decrease in the average selling price.

In regions where homes closed decreased, the markets contributing most to the decrease were the Salt Lake City market in the Northwest, the Las Vegas and California markets in the Southwest, the Houston market in the South Central, the Florida markets (particularly Jacksonville and Tampa) in the Southeast and the Knoxville and Myrtle Beach markets in the East.

The Pittsburgh market contributed most to the increase in the North.

Homebuilding Operating Margin Analysis

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Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

Gross profit – home sales 20.4 % 22.7 %

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Home Sales Gross Profit

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.

Gross profit from home sales decreased to $1.3 billion in the three months ended December 31, 2025 from $1.6 billion in the prior year period and decreased 230 basis points to 20.4% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 280 basis points due to the average cost of our homes closed increasing along with a decrease in the average selling price of those homes and 10 basis points due to an increase in the amortization of capitalized interest.

These decreases were partially offset by an increase of 60 basis points due to the recovery of prior period warranty costs, as well as a decrease in warranty and construction defect costs incurred.

We remain focused on managing the pricing, incentives and sales pace in each of our communities to optimize the returns on our inventory investments and adjust to local market conditions and new home demand.

To adjust to changes in market conditions during recent years, we have used a higher level of incentives and reduced home prices and sizes of our home offerings where necessary to provide better affordability to homebuyers.

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

We expect our incentive levels to stay elevated during fiscal 2026, the extent to which will depend on market conditions and changes in mortgage interest rates.

Land/Lot Sales and Other Revenues

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.

Land/lot sales and other revenues from our homebuilding operations were $16.2 million and $21.2 million in the three months ended December 31, 2025 and 2024, respectively.

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 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.

As of December 31, 2025, our homebuilding operations had $26.4 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 $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 a result of this review, there were no impairments recorded in our homebuilding segment during the three months ended December 31, 2025 compared to $2.0 million in the prior year quarter.

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 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.

During the three months ended December 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 $10.2 million compared to $9.8 million in the prior year period.

Selling, General and Administrative (SG&A) Expense

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.

Homebuilding SG&A expense decreased 1% to $632.5 million in the three months ended December 31, 2025 from $636.6 million in the prior year period.

As a percentage of homebuilding revenues, SG&A expense increased to 9.7% in the three months ended December 31, 2025 from 8.9% in the prior year period, due to the decrease in homebuilding revenues.

Employee compensation and related costs were $474.8 million and $493.1 million in the three months ended December 31, 2025 and 2024, respectively, representing 75% and 77% of SG&A costs in those periods.

Our homebuilding operations employed 9,723 and 10,168 people at December 31, 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 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.

Interest incurred by our homebuilding operations increased 68% to $30.0 million in the three months ended December 31, 2025 compared to $17.9 million in the prior year period.

The increase was primarily due to an increase in the weighted average interest rate of homebuilding debt outstanding as well as a 26% increase in the average amount of that debt.

Interest charged to cost of sales was 0.5% of homebuilding cost of sales (excluding inventory and land option charges) in the three months ended December 31, 2025 compared to 0.4% in the prior year period.

Other income, net of other expenses, included in our homebuilding operations was $17.2 million in the three months ended December 31, 2025 compared to $29.9 million in the prior year period.

Other income consists of interest income and various other types of ancillary income, gains, expenses and losses not directly associated with sales of homes, land and lots.

The activities that result in this ancillary income are not significant, either individually or in the aggregate.

Business Acquisition

In October 2025, we acquired the homebuilding operations of SK Builders for approximately $80 million in cash.

SK Builders operates in and around Greenville, South Carolina.

The assets acquired included approximately 160 homes in inventory, 260 lots and a sales order backlog of 110 homes.

Through the acquisition, we also obtained control of approximately 1,320 additional lots through land purchase contracts.

Homebuilding Results by Reporting Region

Three Months Ended June 30,

Revenues Homebuilding

Income (1) % of

Revenues Homebuilding

Income (1) % of

(In millions)

Northwest $ 698.9 $ 116.4 16.7 % $ 725.0 $ 121.2 16.7 %

Southwest 1,182.4 152.7 12.9 % 1,313.7 209.4 15.9 %

South Central 1,940.8 290.2 15.0 % 2,013.0 368.7 18.3 %

Southeast 1,923.5 224.6 11.7 % 2,417.2 404.1 16.7 %

East 1,668.5 230.4 13.8 % 1,709.6 314.9 18.4 %

North 1,166.7 172.0 14.7 % 1,063.0 153.9 14.5 %

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

Nine Months Ended June 30,

Three Months Ended December 31,

Revenues Homebuilding

Income (1) % of

Income (1) Pre-tax Income as % of

Revenues Homebuilding

Income (1) % of

Income (1) Pre-tax Income as % of

(In millions)

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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 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.

Northwest Region — Homebuilding revenues increased 3% in the three months ended December 31, 2025 compared to the prior year period due to increases in the average selling price of homes closed in our Salt Lake City and Seattle markets.

The region generated pre-tax income of $59.3 million in the three months ended December 31, 2025 compared to $76.2 million in the prior year period.

Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) decreased by 350 basis points in the three months ended December 31, 2025 compared to the prior year period.

The decrease was primarily due to the average cost of homes closed increasing by more than the average selling price of those homes.

As a percentage of homebuilding revenues, SG&A expenses decreased by 30 basis points in the three months ended December 31, 2025 compared to the prior year period, primarily due to the increase in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 22% in the three months ended December 31, 2025 compared to the prior year period, primarily due to a decrease in the number of homes closed, particularly in our Las Vegas and California markets.

The region generated pre-tax income of $88.6 million in the three months ended December 31, 2025 compared to $168.4 million in the prior year period.

Home sales gross profit percentage decreased by 340 basis points in the three months ended December 31, 2025 compared to the prior year period.

The decrease 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 140 basis points in the three months ended December 31, 2025 compared to the prior year period, primarily due to the decrease in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 7% in the three months ended December 31, 2025 compared to the prior year period, primarily due to a decrease in the average selling price of homes closed in the majority of the region’s markets.

The region generated pre-tax income of $173.4 million in the three months ended December 31, 2025 compared to $221.3 million in the prior year period.

Home sales gross profit percentage decreased by 140 basis points in the three months ended December 31, 2025 compared to the prior year period, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes, partially offset by a recovery of prior period warranty costs in our San Antonio market.

As a percentage of homebuilding revenues, SG&A expenses increased by 70 basis points in the three months ended December 31, 2025 compared to the prior year period, primarily due to the decrease in homebuilding revenues.

Southeast Region — Homebuilding revenues decreased 17% in the three months ended December 31, 2025 compared to the prior year period, primarily due to a decrease in the number of homes closed, particularly in our Jacksonville and Tampa markets.

The region generated pre-tax income of $143.4 million in the three months ended December 31, 2025 compared to $222.8 million in the prior year period.

Home sales gross profit percentage decreased by 180 basis points in the three months ended December 31, 2025 compared to the prior year period, 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 basis points in the three months ended December 31, 2025 compared to the prior year period, primarily due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues decreased 5% in the three months ended December 31, 2025 compared to the prior year period, primarily due to a decrease in the number of homes closed, particularly in our Knoxville and Myrtle Beach markets.

The region generated pre-tax income of $123.5 million in the three months ended December 31, 2025 compared to $194.4 million in the prior year period.

Home sales gross profit percentage decreased by 360 basis points in the three months ended December 31, 2025 compared to the prior year period, 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 100 basis points in the three months ended December 31, 2025 compared to the prior year period, primarily due to the decrease in homebuilding revenues.

North Region — Homebuilding revenues increased 5% in the three months ended December 31, 2025 compared to the prior year period, primarily due to an increase in the number of homes closed, particularly in our Pittsburgh market.

The region generated pre-tax income of $119.9 million in the three months ended December 31, 2025 compared to $129.8 million in the prior year period.

Home sales gross profit percentage decreased by 130 basis points in the three months ended December 31, 2025 compared to the prior year period, 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 10 basis points in the three months ended December 31, 2025 compared to the prior year period.

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 June 30, 2025 and September 30, 2024 are summarized as follows:

June 30, 2025

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

December 31, 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 June 30, 2025 and September 30, 2024 are summarized as follows:

June 30, 2025

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

December 31, 2025

Owned (1) Lots Controlled

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___________________

(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.

(1) Land/lots owned included approximately 81,200 and 78,400 owned lots that are fully developed and ready for home construction at December 31, 2025 and September 30, 2025, respectively.

(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at December 31, 2025 and September 30, 2025 was $26.7 billion and $26.0 billion, respectively, secured by earnest money deposits of $2.4 billion and $2.3 billion, respectively.

The total remaining purchase price of lots controlled through land and lot purchase contracts at both December 31, 2025 and September 30, 2025 included $2.0 billion related to lot purchase contracts with Forestar, secured by $203.8 million and $200.2 million, respectively, of earnest money.

(3) Lots controlled at December 31, 2025 included approximately 40,700 lots owned by Forestar, 22,600 of which our homebuilding divisions had under contract to purchase and 18,100 of which our homebuilding divisions had a right of first offer to purchase.

Of these, approximately 10,400 lots were in our East region, 9,300 lots were in our Southeast region, 9,000 lots were in our South Central region, 6,800 lots were in our North region, 3,400 lots were in our Southwest region and 1,800 lots were in our Northwest region.

Lots controlled at September 30, 2025 included approximately 40,400 lots owned by Forestar, 22,800 of which our homebuilding divisions had under contract to purchase and 17,600 of which our homebuilding divisions had a right of first offer to purchase.

(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.

(4) Approximately 20,000 and 19,600 of our homes in inventory were unsold at December 31, 2025 and September 30, 2025, respectively.

At December 31, 2025, approximately 7,300 of our unsold homes were completed, of which approximately 900 homes had been completed for more than six months.

At September 30, 2025, approximately 9,300 of our unsold homes were completed, of which approximately 800 homes had been completed for more than six months.

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

Homes in inventory exclude approximately 2,700 model homes at both December 31, 2025 and September 30, 2025.

RESULTS OF OPERATIONS - RENTAL

Our rental segment consists of single-family and multi-family rental operations.

The single-family rental operations construct and lease single-family homes within a community and then generally market each community for a bulk sale of rental homes.

The multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style apartment communities in high growth suburban markets.

Multi-family rental operations develop, construct, lease and sell residential rental properties, with a primary focus on constructing garden style apartment communities in high growth suburban markets.

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 nine months ended June 30, 2025 and 2024.

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

Rental Homes/Units Closed and Revenue

Three Months Ended June 30,

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

Change 2025 2024 %

Single-family 1,065 790 35 % $ 313.5 $ 258.5 21 % 294,400 327,200 (10) %

Multi-family 328 610 (46) % 66.1 155.2 (57) % 201,500 254,400 (21) %

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

Nine Months Ended June 30,

Three Months Ended December 31,

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

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Single-family 397 311 28 % $ 109.5 $ 88.1 24 % 275,800 283,300 (3) %

Multi-family 1,132 1,334 (15) % 280.1 304.3 (8) % 247,400 228,100 8 %

Multi-family — 504 N/A — 129.7 N/A — 257,300 N/A

397 815 (51) % $ 109.5 $ 217.8 (50) % 275,800 267,200 3 %

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

(In millions)

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Rental Operating Margin Analysis

Percentages of Related Revenues

Percentages of Rental Revenues

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

Gross profit — rental 15.2 % 16.0 %

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Rental pre-tax income 0.2 % 5.5 %

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 June 30, 2025 and September 30, 2024 consisted of the following:

Revenues from our rental operations decreased to $109.5 million during the three months ended December 31, 2025 from $217.8 million in the prior year period, and pre-tax income decreased to $0.2 million from $11.9 million.

The decline in pre-tax income was due to a decrease in multi-family revenues in the current quarter due to no units closed.

At December 31, 2025, our rental property inventory of $2.9 billion included $355.8 million of single-family rental inventory and $2.5 billion of multi-family rental inventory.

At September 30, 2025, our rental property inventory of $2.7 billion included $378.3 million of single-family rental inventory and $2.3 billion of multi-family rental inventory.

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

Rental Inventory

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Multi-family rental units (3) 12,480 12,480

(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.

(1) Single-family rental homes at December 31, 2025 consist of 380 homes under construction and 950 completed homes compared to 370 homes under construction and 1,050 completed homes at September 30, 2025.

(2) Single-family rental lots at December 31, 2025 consist of 440 undeveloped lots and 860 finished lots compared to 440 undeveloped lots and 710 finished lots at September 30, 2025.

(3) Multi-family rental units at December 31, 2025 consist of 3,530 units under construction and 8,950 units that were substantially complete and in the lease-up phase compared to 4,910 units under construction and 7,570 units that were substantially complete at September 30, 2025.

RESULTS OF OPERATIONS – FORESTAR

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.

At December 31, 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 December 31, 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 nine months ended June 30, 2025 and 2024 were as follows:

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

Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

(In millions)

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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 nine months ended June 30, 2025 and 2024:

Three Months Ended June 30,

Lots Sold Value (In millions)

2025 2024 2025 2024

Residential single-family lots sold

Lots sold to D.R.

Horton 3,075 2,903 $ 323.7 $ 265.3

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

Tract acres sold to D.R.

Horton — 32 $ — $ 2.1

Nine Months Ended June 30,

The following tables provide further information regarding Forestar’s revenues for the three months ended December 31, 2025 and 2024 and lot position as of December 31, 2025 and September 30, 2025:

Three Months Ended December 31,

Lots Sold Value (In millions)

2025 2024 2025 2024

Residential single-family lots sold

Residential lots sold

Lots sold to D.R.

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Total lots sold 1,944 2,333 $ 235.2 $ 247.4

Tract acres sold

Tract acres sold to D.R.

Horton — — $ — $ —

Total tract acres sold 193 — $ 29.3 $ —

2025 September 30,

Residential single-family lots in inventory and under contract

Residential lots in inventory and under contract

Lots owned 65,600 65,100

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Owned lots fully developed 10,400 8,900

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 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.

At December 31, 2025 and September 30, 2025, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.9 billion and $2.6 billion, respectively.

Forestar’s inventory and land option charges consisted of $0.8 million and $1.2 million of earnest money and pre-acquisition cost write-offs in the three months ended December 31, 2025 and 2024, respectively.

No impairment charges were recorded in either period.

SG&A expense for both the three months ended December 31, 2025 and 2024 included charges of $1.8 million related to the shared services agreement between Forestar and D.R.

Horton whereby D.R.

Horton provides Forestar with certain administrative, compliance, operational and procurement services.

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

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 nine months ended June 30, 2025 and 2024.

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

2025 2024 % Change 2025 2024 % Change

Three Months Ended December 31,

2025 2024 % Change

Number of first-lien loans originated or brokered by DHI Mortgage for D.R.

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Loans sold by DHI Mortgage to third parties 15,964 16,896 (6) %

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

2025 2024 % Change 2025 2024 % Change

Three Months Ended December 31,

2025 2024 % Change

(In millions)

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Three Months Ended

June 30, Nine Months Ended

2025 2024 2025 2024

General and administrative expense 78.5 % 84.6 %

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Mortgage Loan Activity

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 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 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.

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

In the three months ended December 31, 2025, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers decreased 7%, due 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 79% in the three months ended December 31, 2025 and 2024.

This reflects 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 6% in the three months ended December 31, 2025 compared to the prior year period.

Substantially all mortgage loans held for sale on December 31, 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 three months ended December 31, 2025, approximately 68% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 22% 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 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.

Total loan origination volume decreased 7% in the three months ended December 31, 2025, while revenues from our mortgage operations increased 3% to $143.7 million from $139.7 million in the prior year period.

Revenues from our title operations decreased 4% to $40.9 million in the three months ended December 31, 2025 from $42.6 million in the prior year period, primarily 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 $145.0 million in the three months ended December 31, 2025 from $154.2 million in the prior year period.

As a percentage of financial services revenues, G&A expense was 78.5% in the three months ended December 31, 2025 compared to 84.6% in the prior year period.

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 2,989 and 3,112 people at June 30, 2025 and 2024, respectively.

Our financial services operations employed 2,894 and 3,114 people at December 31, 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 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.

Other income decreased 10% to $18.4 million in the three months ended December 31, 2025 from $20.5 million in the prior year period, 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 $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.

The pre-tax income of all of our subsidiaries engaged in other business activities was $8.2 million in the three months ended December 31, 2025 compared to $11.5 million in the prior year period.

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

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 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.

Pre-tax income for the three months ended December 31, 2025 was $798.1 million compared to $1.1 billion in the prior year period.

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

Our income tax expense for the three months ended December 31, 2025 and 2024 was $196.7 million and $258.0 million, respectively.

Our effective tax rate was 24.6% for the three months ended December 31, 2025 compared to 23.2% in the prior year period.

The effective tax rates for both periods include an expense for state income taxes and tax benefits related to federal energy efficient home tax credits.

The effective tax rate for the three months ended December 31, 2024 also includes a tax benefit related to stock-based compensation.

Our deferred tax assets, net of deferred tax liabilities, were $39.6 million at December 31, 2025 compared to $59.1 million at September 30, 2025.

We have a valuation allowance of $14.6 million at December 31, 2025 and September 30, 2025 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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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.

At December 31, 2025, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $5.6 billion.

$1.6 billion was payable within 12 months, which includes $829.0 million outstanding under our mortgage repurchase facilities and $600 million principal amount of 1.3% homebuilding senior notes maturing in October 2026.

At December 31, 2025, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 18.8% compared to 19.8% at September 30, 2025 and 17.0% at December 31, 2024.

Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 11.2% at December 31, 2025 compared to 11.0% at September 30, 2025 and 7.6% at December 31, 2024.

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

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.

At December 31, 2025, we had outstanding letters of credit of $281.8 million and surety bonds of $3.3 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 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 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.

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

Bank Credit Facility — We have a $2.305 billion senior unsecured homebuilding revolving credit facility with 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.

Of the total commitments, $2.04 billion matures on December 18, 2029, and $265 million matures 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 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.

At December 31, 2025, there were no borrowings outstanding and $224.4 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.08 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 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.

In February 2025, we issued $700 million principal amount of 5.5% senior notes due October 15, 2035, 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 5.6%.

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%.

Public Unsecured Debt — At December 31, 2025, we had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2026 through October 2035.

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

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.

Compliance and Guarantors — At December 31, 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.

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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.

During the three months ended December 31, 2025, we repurchased 4.4 million shares at a total cost including commissions and excise taxes of $669.7 million.

At December 31, 2025, the full amount of the debt repurchase authorization was remaining, and $2.6 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 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.

The inventory in our rental segment totaled $2.9 billion at December 31, 2025 compared to $2.7 billion at September 30, 2025 and $3.0 billion at December 31, 2024.

Cash and Cash Equivalents — At December 31, 2025, cash and cash equivalents of our rental segment totaled $123.1 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.

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.

At December 31, 2025, there were $760 million of borrowings outstanding at a 5.5% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $290 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 June 30, 2025, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

Compliance and Guarantors — At December 31, 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 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.

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

At December 31, 2025, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 30.8% compared to 31.2% at September 30, 2025 and 33.3% at December 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 24.6% compared to 19.3% at September 30, 2025 and 29.5% at December 31, 2024.

Cash and Cash Equivalents — At December 31, 2025, Forestar had cash and cash equivalents of $211.7 million.

Bank Credit Facility — Forestar has a $665 million senior unsecured revolving credit facility with an 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.

Of the total commitments, $600 million matures on December 18, 2029, and $65 million matures 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 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.

At December 31, 2025, there were no borrowings outstanding and $57.4 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $607.6 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 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.

The annual effective interest rate of these notes after giving effect to the amortization of financing costs is 6.7%.

The net proceeds from this issuance were primarily used to fund Forestar’s tender offer to purchase any and all of its outstanding $400 million principal amount of 3.85% senior notes due 2026 (of which $329.4 million aggregate principal amount was tendered).

The repurchase price of $333.4 million included accrued and unpaid interest of $4.2 million.

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

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.

Unsecured Debt — As of December 31, 2025, Forestar had $800 million principal amount of senior notes issued pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, that mature from March 2028 through March 2033 and represent unsecured obligations of Forestar.

Compliance and Guarantors — At December 31, 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 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.

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

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

At December 31, 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 June 30, 2025, cash and cash equivalents of our financial services segment totaled $268.0 million.

Cash and Cash Equivalents — At December 31, 2025, cash and cash equivalents of our financial services segment totaled $228.8 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 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 committed mortgage repurchase facility has a total capacity of $1.4 billion and a maturity date of May 6, 2026.

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

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 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.

or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.

At December 31, 2025, DHI Mortgage had an obligation of $768.1 million under the committed mortgage repurchase facility at a 5.4% annual interest rate.

At December 31, 2025, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $60.9 million at a 5.0% annual interest rate.

At December 31, 2025, $1.87 billion of mortgage loans held for sale with a collateral value of $1.83 billion were pledged under the committed mortgage repurchase facility, and $75.6 million of mortgage loans held for sale with a collateral value of $73.0 million were pledged under the uncommitted mortgage repurchase facility.

The mortgage repurchase 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.

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, utilize the uncommitted mortgage repurchase facility or obtain other additional financing in sufficient capacities.

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

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

or any of the subsidiaries that guarantee the debt of our homebuilding, rental or Forestar operations.

Operating Cash Flow Activities

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.

In the three months ended December 31, 2025, net cash provided by operating activities was $854.0 million compared to $646.7 million in the prior year period.

Cash provided by operating activities in the current year period primarily consisted of $731.5 million and $497.7 million of cash provided by our financial services and homebuilding segments, respectively, partially offset by $197.0 million and $157.0 million of cash used in our rental and Forestar segments, respectively.

Cash provided by a decrease in construction in progress and finished home inventory was $398.8 million in the current year period, primarily reflecting a decrease in our completed homes in inventory in the current period.

Cash used to increase residential land and lots was $489.1 million in the current year period compared to $1.2 billion in the prior year period.

Investing Cash Flow Activities

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.

In the three months ended December 31, 2025, net cash used in investing activities was $116.2 million compared to $57.1 million in the prior year period.

In the current year period, uses of cash included the payment of $82.1 million related to a business acquisition and purchases of property and equipment totaling $27.4 million.

In the prior year period, uses of cash included the payment of $51.0 million related to a business acquisition and purchases of property and equipment totaling $13.3 million.

Financing Cash Flow Activities

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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 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.

During the three months ended December 31, 2025, net cash used in financing activities was $1.2 billion, consisting primarily of cash used to repurchase shares of our common stock of $649.2 million, net payments on our mortgage repurchase facilities of $579.3 million and payment of cash dividends totaling $131.5 million.

These uses of cash were partially offset by net borrowings on our rental revolving credit facility of $160 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.

During the three months ended December 31, 2024, net cash used in financing activities was $2.1 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.1 billion, net payments on our mortgage repurchase facilities of $746.9 million, repayment of $500 million principal amount of our 2.5% homebuilding senior notes at maturity and payment of cash dividends totaling $128.5 million.

These uses of cash were partially offset by net borrowings on our rental revolving credit facility of $305 million and on Forestar’s revolving credit facility of $100 million.

During the three months ended December 31, 2025, our Board of Directors approved a quarterly cash dividend of $0.45 per share totaling $131.5 million, which was paid on November 20, 2025 to stockholders of record on November 13, 2025.

Cash dividends of $0.40 per share were approved and paid in each quarter of fiscal 2025.

In January 2026, our Board of Directors approved a quarterly cash dividend of $0.45 per share, payable on February 12, 2026 to stockholders of record on February 5, 2026.

The declaration of future cash dividends is at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, cash flows, capital requirements, financial condition and general business conditions.

SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

As of June 30, 2025, D.R.

As of December 31, 2025, D.R.

had $3.0 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 June 30,

2025 September 30,

Summarized Balance Sheet Data December 31, 2025 September 30, 2025

(In millions)

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20,671.0 20,911.8

Summarized Statement of Operations Data Nine Months Ended

June 30, 2025 Year Ended

Summarized Statement of Operations Data Three Months Ended

December 31, 2025 Year Ended

September 30, 2025

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

As disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2024, our most critical accounting policies relate to revenue recognition, inventories and cost of sales, warranty and legal claims and insurance.

As disclosed in our annual report on Form 10-K for the fiscal year ended September 30, 2025, our most critical accounting policies relate to revenue recognition, inventories and cost of sales, and legal claims and insurance.

Since September 30, 2025, there have been no significant changes to those critical accounting policies.

As disclosed in our critical accounting policies in our Form 10-K for the fiscal year ended September 30, 2025, our reserves for construction defect claims include the estimated costs of both known claims and anticipated future claims.

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.

At December 31, 2025 and September 30, 2025, we had reserves for approximately 855 and 875 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the three months ended December 31, 2025, we were notified of approximately 95 new construction defect claims and resolved 115 construction defect claims for a total cost of $40.9 million.

At December 31, 2024 and September 30, 2024, we had reserves for approximately 880 and 825 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the three months ended December 31, 2024, we were notified of approximately 120 new construction defect claims and resolved 65 construction defect claims for a total cost of $5.8 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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• increases in the costs of owning a home;

• the effects of information technology failures, data security breaches, and the failure to satisfy privacy and data protection laws and regulations;

• the effects of information technology failures, cybersecurity incidents, and the failure to satisfy privacy and data protection laws and regulations;

• the effects of governmental regulations and environmental matters on our land development and housing operations;

• the effects of changes in income tax and securities laws;

• the effects of governmental regulations on our financial services operations;

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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