What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-23 compared with 2026-01-22 · 337 added, 211 removed, 571 unchanged (49% of the section changed)

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

Homebuilding is our core business and primarily includes the construction and sale of single-family homes with sales prices generally ranging from $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.

Homebuilding is our core business and primarily includes the construction and sale of single-family homes with sales prices generally ranging from $200,000 to more than $1,000,000, with an average closing price of $363,500 during the six months ended March 31, 2026.

Approximately 85% of our home sales revenue in the six months ended March 31, 2026 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes and duplexes.

We have closed more than 1.2 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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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.

At March 31, 2026, we owned 62% of the outstanding shares of Forestar Group Inc.

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

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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 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%.

During the six months ended March 31, 2026, our number of homes closed and home sales revenues decreased 3% and 5%, respectively, compared to the prior year period, and consolidated revenues decreased 6% to $14.4 billion compared to $15.3 billion.

Our pre-tax income was $1.7 billion in the six months ended March 31, 2026 compared to $2.2 billion in the prior year period, and pre-tax operating margin was 11.5% compared to 14.2%.

Net income was $1.3 billion in the six months ended March 31, 2026 compared to $1.7 billion in the prior year period, and diluted earnings per share were $4.27 compared to $5.19.

In the trailing twelve months ended March 31, 2026, our return on equity (ROE) was 13.2% compared to 17.4% in the prior year period, and return on assets (ROA) was 8.9% compared to 12.2%.

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 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.

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

Despite these conditions, our net sales orders increased 11% compared to the prior year quarter, and the value of net sales orders increased 10%, reflecting the focus of our operations on disciplined execution across our markets.

Home sales revenues decreased 2% compared to the prior year quarter.

Home sales gross margin was 20.1% for the second quarter, compared to 21.8% in the prior year quarter, reflecting the decline in our average sales price and higher sales incentives, including mortgage interest rate buydowns offered to support affordability for our homebuyers.

We remain well positioned with our affordable product offerings and controlled lot supply, and we continue to manage home pricing, sales incentives and inventory levels based on demand within our local markets.

We currently expect sales incentives to remain elevated and may adjust incentive levels further depending on changes in market conditions and mortgage interest rates.

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

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 75% of the lots owned and controlled at both December 31, 2025 and September 30, 2025 and 76% at December 31, 2024.

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 77% of the lots owned and controlled at March 31, 2026 compared to 75% at both September 30, 2025 and March 31, 2025.

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

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.

During the six months ended March 31, 2026, 67% of the homes we closed were on lots developed by either Forestar or a third party compared to 65% in the prior year period.

We believe 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.

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

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

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• Offering new home communities that appeal to a broad range of entry-level, move-up, active adult and luxury homebuyers based on consumer demand in each market.

• Executing sales and marketing strategies to drive traffic, generate demand and optimize sales pace across our communities.

• Modifying product offerings, sales pace, home prices and incentives as necessary in each of our markets to meet consumer demand and maintain affordability.

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• Controlling the cost of labor and goods provided by subcontractors and vendors.

• Improving the efficiency of our land development, construction, sales and other key operational activities.

• Improving the efficiency of our land development, construction and other key operational activities.

• Controlling our selling, general and administrative (SG&A) expense infrastructure to match production levels.

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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:

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

Consolidated Results:

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Horton decreased 20% to $647.9 million compared to $810.4 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.

• Net income per diluted share attributable to D.R.

Horton decreased 13% to $2.24 compared to $2.58.

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

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

• Debt to total capital was 21.7% compared to 19.8% and 21.1% at September 30, 2025 and March 31, 2025, respectively.

Net debt to total capital was 16.4% compared to 11.0% and 14.3% at September 30, 2025 and March 31, 2025, respectively.

Homebuilding:

• Homebuilding revenues decreased 2% to $7.1 billion compared to $7.2 billion.

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

• 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.

• Homes closed increased 1% to 19,486 homes, while the average closing price of those homes decreased 3% to $361,600.

• Net sales orders increased 11% to 24,992 homes, and the value of net sales orders increased 10% to $9.2 billion.

• Sales order backlog increased 19% to 16,882 homes, and the value of sales order backlog increased 17% to $6.4 billion.

• Home sales gross margin was 20.1% compared to 21.8%.

• Homebuilding SG&A expense was 9.2% of homebuilding revenues compared to 8.9%.

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

• Homebuilding pre-tax income decreased 19% to $757.9 million compared to $935.0 million.

• Homebuilding pre-tax income was 10.7% of homebuilding revenues compared to 13.0%.

• 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.

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

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

• Homes in inventory totaled 38,200 compared to 29,600 and 36,900 at September 30, 2025 and March 31, 2025, respectively.

• Owned lots totaled 134,100 compared to 147,000 and 150,600 at September 30, 2025 and March 31, 2025, respectively.

Lots controlled through purchase contracts totaled 441,200 compared to 444,900 and 462,500 at September 30, 2025 and March 31, 2025, respectively.

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

• Rental revenues were $211.8 million compared to $236.6 million.

• Single-family rental homes closed totaled 566 compared to 519.

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

• Multi-family rental units closed totaled 216 compared to 300.

• Rental pre-tax income was $12.3 million compared to $22.8 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.

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

• Forestar’s revenues increased 7% to $374.3 million compared to $351.0 million.

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• Forestar’s revenue from tract acres sold was $35.6 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 increased 8% to $43.9 million compared to $40.7 million.

• Forestar’s pre-tax income was 11.7% of revenues compared to 11.6%.

• 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.

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

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

• Forestar’s owned and controlled lots totaled 94,400 compared to 99,800 and 105,900 at September 30, 2025 and March 31, 2025, respectively.

Of these lots, 41,000 were under contract to sell to or subject to a right of first offer with D.R.

Horton compared to 40,400 and 43,800 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.

Horton compared to 40,400 and 43,900 at September 30, 2025 and March 31, 2025, respectively.

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

• Forestar’s debt to total capital was 30.4% compared to 31.2% and 34.7% at September 30, 2025 and March 31, 2025, respectively.

Forestar’s net debt to total capital was 19.2% compared to 19.3% and 29.8% at September 30, 2025 and March 31, 2025, respectively.

Financial Services:

• 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 revenues decreased 9% to $192.8 million compared to $212.9 million.

• Financial services pre-tax income decreased 29% to $51.7 million compared to $73.0 million.

• Financial services pre-tax income was 26.8% of financial services revenues compared to 34.3%.

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

Consolidated Results:

• Consolidated revenues decreased 6% to $14.4 billion compared to $15.3 billion.

• Consolidated pre-tax income decreased 24% to $1.7 billion compared to $2.2 billion.

• Consolidated pre-tax income was 11.5% of consolidated revenues compared to 14.2%.

• Income tax expense was $406.0 million compared to $506.0 million, and our effective tax rate was 24.4% compared to 23.2%.

• Net income attributable to D.R.

Horton decreased 25% to $1.2 billion compared to $1.7 billion.

• Net income per diluted share attributable to D.R.

Horton decreased 18% to $4.27 compared to $5.19.

• Net cash provided by operations was $441.5 million compared to $210.5 million.

Homebuilding:

• Homebuilding revenues decreased 5% to $13.6 billion compared to $14.4 billion.

• Homes closed decreased 3% to 37,304 homes, and the average closing price of those homes decreased 3% to $363,500.

• Net sales orders increased 7% to 43,292 homes, and the value of net sales orders increased 5% to $15.8 billion.

• Home sales gross margin was 20.3% compared to 22.3%.

• Homebuilding SG&A expense was 9.4% of homebuilding revenues compared to 8.9%.

• Homebuilding pre-tax income decreased 25% to $1.5 billion compared to $1.9 billion.

• Homebuilding pre-tax income was 10.8% of homebuilding revenues compared to 13.6%.

• Net cash provided by homebuilding operations was $618.8 million compared to $876.0 million.

• Rental revenues were $321.3 million compared to $454.3 million.

• Single-family rental homes closed totaled 963 compared to 830.

• Multi-family rental units closed totaled 216 compared to 804.

• Rental pre-tax income was $12.5 million compared to $34.7 million.

• Forestar’s revenues increased 8% to $647.3 million compared to $601.3 million.

Revenues in the current and prior year periods included $479.7 million and $486.4 million, respectively, of revenue from land and lot sales to our homebuilding segment.

• Forestar’s lots sold decreased 15% to 4,882 compared to 5,744.

Lots sold to D.R.

Horton totaled 4,077 compared to 4,613.

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

• Forestar’s pre-tax income increased 4% to $64.8 million compared to $62.6 million.

• Forestar’s pre-tax income was 10.0% of revenues compared to 10.4%.

Financial Services:

• Financial services revenues decreased 5% to $377.4 million compared to $395.2 million.

• Financial services pre-tax income decreased 10% to $109.7 million compared to $121.6 million.

• Financial services pre-tax income was 29.1% of financial services revenues compared to 30.8%.

RESULTS OF OPERATIONS - HOMEBUILDING

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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 months ended December 31, 2025 and 2024.

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

Net Sales Orders (1)

Three Months Ended December 31,

Three Months Ended March 31,

Net Homes Sold Value (In millions) Average Selling Price

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24,992 22,437 11 % $ 9,153.7 $ 8,358.6 10 % $ 366,300 $ 372,500 (2) %

Six Months Ended March 31,

Net Homes Sold Value (In millions) Average Selling Price

Change 2026 2025 %

Northwest 2,157 2,409 (10) % $ 1,159.6 $ 1,296.4 (11) % $ 537,600 $ 538,100 — %

Southwest 4,668 4,545 3 % 2,242.7 2,193.1 2 % 480,400 482,500 — %

South Central 11,752 10,517 12 % 3,517.6 3,284.2 7 % 299,300 312,300 (4) %

Southeast 9,971 9,602 4 % 3,361.9 3,264.1 3 % 337,200 339,900 (1) %

East 9,020 8,341 8 % 3,125.0 2,883.3 8 % 346,500 345,700 — %

North 5,724 4,860 18 % 2,408.7 2,091.0 15 % 420,800 430,200 (2) %

43,292 40,274 7 % $ 15,815.5 $ 15,012.1 5 % $ 365,300 $ 372,700 (2) %

Sales Order Cancellations

Three Months Ended December 31,

Three Months Ended March 31,

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

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4,862 4,255 $ 1,819.9 $ 1,622.1 16 % 16 %

Six Months Ended March 31,

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

2026 2025 2026 2025 2026 2025

Northwest 320 362 $ 185.9 $ 209.3 13 % 13 %

Southwest 974 777 482.4 395.4 17 % 15 %

South Central 2,251 2,021 714.0 658.4 16 % 16 %

Southeast 2,137 2,175 736.0 751.1 18 % 18 %

East 1,889 1,708 672.3 607.0 17 % 17 %

North 1,293 1,141 530.2 480.6 18 % 19 %

8,864 8,184 $ 3,320.8 $ 3,101.8 17 % 17 %

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(1) Net sales orders represent the number and dollar value of new sales contracts executed with customers (gross sales orders), net of cancelled sales orders.

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Net Sales Orders

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.

The value of net sales orders was $9.2 billion (24,992 homes) and $15.8 billion (43,292 homes) for the three and six months ended March 31, 2026, respectively, compared to $8.4 billion (22,437 homes) and $15.0 billion (40,274 homes) in the prior year periods.

The increase in value in the three and six month periods was attributable to increases in sales order volume of 11% and 7%, respectively, while the average selling price decreased 2% in both periods.

In regions where sales order volume increased, the markets contributing most to the increase were the Northern California and Phoenix markets in the Southwest, the Fort Worth, Houston and San Antonio markets in the South Central, the Tampa and Alabama markets in the Southeast, the Myrtle Beach and Atlanta markets in the East and the Pittsburgh and Ohio markets in the North.

In the Northwest, the Seattle and Salt Lake City markets contributed most to the decrease in sales order volume.

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

Sales Order Backlog

As of December 31,

As of March 31,

Homes in Backlog Value (In millions) Average Selling Price

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Homes Closed and Home Sales Revenue

Three Months Ended December 31,

Three Months Ended March 31,

Homes Closed Value (In millions) Average Selling Price

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19,486 19,276 1 % $ 7,045.5 $ 7,180.9 (2) % $ 361,600 $ 372,500 (3) %

Six Months Ended March 31,

Homes Closed Value (In millions) Average Selling Price

Change 2026 2025 %

Northwest 1,988 2,279 (13) % $ 1,086.0 $ 1,193.5 (9) % $ 546,300 $ 523,700 4 %

Southwest 4,060 4,541 (11) % 1,915.0 2,203.6 (13) % 471,700 485,300 (3) %

South Central 9,739 9,704 — % 2,900.7 3,016.5 (4) % 297,800 310,900 (4) %

Southeast 9,045 9,657 (6) % 3,004.6 3,332.2 (10) % 332,200 345,100 (4) %

East 7,653 7,672 — % 2,632.2 2,668.3 (1) % 343,900 347,800 (1) %

North 4,819 4,482 8 % 2,019.7 1,912.9 6 % 419,100 426,800 (2) %

37,304 38,335 (3) % $ 13,558.2 $ 14,327.0 (5) % $ 363,500 $ 373,700 (3) %

Home Sales Revenue

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.

Revenues from home sales were $7.0 billion (19,486 homes closed) and $13.6 billion (37,304 homes closed) for the three and six months ended March 31, 2026, respectively, compared to $7.2 billion (19,276 homes closed) and $14.3 billion (38,335 homes closed) in the prior year periods.

The decrease in revenues in both periods was attributable to a 3% decrease in the average selling price, along with a 3% decrease in closings volume in the six month period.

The number of homes closed increased 1% and decreased 3% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods.

In regions and periods where homes closed decreased, the markets contributing most to the decrease were the Seattle and Salt Lake City markets in the Northwest, the Las Vegas and Southern California markets in the Southwest and the Jacksonville and Tampa markets in the Southeast.

The Pittsburgh and Southern Virginia markets contributed most to the increase in the North.

Homebuilding Operating Margin Analysis

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Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

Gross profit – home sales 20.1 % 21.8 % 20.3 % 22.3 %

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Home Sales Gross Profit

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.

Gross profit from home sales decreased to $1.4 billion in the three months ended March 31, 2026 from $1.6 billion in the prior year period and decreased 170 basis points to 20.1% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 200 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.

These decreases were partially offset by an increase of 40 basis points due to a favorable litigation outcome and lower warranty costs.

Gross profit from home sales decreased to $2.7 billion in the six months ended March 31, 2026 from $3.2 billion in the prior year period and decreased 200 basis points to 20.3% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 240 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 50 basis points due to a favorable litigation outcome and lower warranty costs.

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

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Land/Lot Sales and Other Revenues

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.

Land/lot sales and other revenues from our homebuilding operations were $17.7 million and $33.9 million in the three and six months ended March 31, 2026, respectively, and $22.0 million and $43.2 million in the prior year periods.

We continually evaluate our land and lot supply, and fluctuations in revenues and profitability from land sales occur based on how we manage our inventory levels in various markets.

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

As of 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.

As of March 31, 2026, our homebuilding operations had $39.1 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 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 a result of this review, there were $3.0 million of impairment charges recorded in our homebuilding segment during the three and six months ended March 31, 2026 compared to $5.4 million and $7.4 million in the respective prior year periods.

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 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.

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

Selling, General and Administrative (SG&A) Expense

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.

Homebuilding SG&A expense was $648.9 million and $1.28 billion in the three and six months ended March 31, 2026, respectively, compared to $637.8 million and $1.27 billion in the prior year periods.

As a percentage of homebuilding revenues, SG&A expense increased to 9.2% and 9.4% in the three and six months ended March 31, 2026, respectively, from 8.9% in both prior year periods, due to the decrease in homebuilding revenues.

Employee compensation and related costs were $492.9 million and $967.6 million in the three and six months ended March 31, 2026, respectively, compared to $500.9 million and $994.0 million in the prior year periods.

These costs represented 76% of SG&A costs in both the three and six months ended March 31, 2026 compared to 79% and 78% in the prior year periods.

Our homebuilding operations employed 9,809 and 10,199 people at March 31, 2026 and 2025, 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 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.

Interest incurred by our homebuilding operations increased 59% to $33.1 million and 63% to $63.2 million in the three and six months ended March 31, 2026, respectively, compared to $20.8 million and $38.8 million in the prior year periods.

The increases were primarily due to increases in the weighted average interest rate of homebuilding debt outstanding in the three and six months ended March 31, 2026, as well as an increase of 27% in the average amount of that debt in both periods.

Interest charged to cost of sales was 0.5% of homebuilding cost of sales (excluding inventory and land option charges) in both the three and six months ended March 31, 2026 compared to 0.4% in both prior year periods.

Other income, net of other expenses, included in our homebuilding operations was $11.1 million and $28.3 million in the three and six months ended March 31, 2026, respectively, compared to $17.0 million and $46.9 million in the prior year periods.

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

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Homebuilding Results by Reporting Region

Three Months Ended December 31,

Three Months Ended March 31,

Revenues Homebuilding

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$ 7,063.2 $ 757.9 10.7 % $ 7,202.9 $ 935.0 13.0 %

Six Months Ended March 31,

Revenues Homebuilding

Income (1) % of

Revenues Homebuilding

Income (1) % of

(In millions)

Northwest $ 1,086.4 $ 113.9 10.5 % $ 1,193.6 $ 169.9 14.2 %

Southwest 1,929.9 202.8 10.5 % 2,203.8 291.7 13.2 %

South Central 2,901.2 339.7 11.7 % 3,017.6 429.7 14.2 %

Southeast 3,016.5 308.8 10.2 % 3,363.6 434.1 12.9 %

East 2,632.4 258.3 9.8 % 2,674.6 366.2 13.7 %

North 2,025.7 242.5 12.0 % 1,917.0 256.3 13.4 %

$ 13,592.1 $ 1,466.0 10.8 % $ 14,370.2 $ 1,947.9 13.6 %

____________________

(1) Expenses maintained at the corporate level consist primarily of interest and property taxes, which are capitalized and amortized to cost of sales or expensed directly, and the expenses related to operating our corporate office.

The amortization of capitalized interest and property taxes is allocated to each segment based on the segment’s cost of sales, while expenses associated with the corporate office are allocated to each segment based on the segment’s inventory balances.

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.

Northwest Region — Homebuilding revenues decreased 18% and 9% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Seattle and Salt Lake City markets.

The region generated pre-tax income of $54.6 million and $113.9 million in the three and six months ended March 31, 2026, respectively, compared to $93.7 million and $169.9 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 310 and 320 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing by more than the average selling price of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 130 and 60 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 3% and 12% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Las Vegas and Southern California markets.

The region generated pre-tax income of $114.2 million and $202.8 million in the three and six months ended March 31, 2026, respectively, compared to $123.3 million and $291.7 million in the prior year periods.

Home sales gross profit percentage decreased by 80 and 210 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses decreased by 20 basis points and increased by 60 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods.

The increase in the six month period was primarily due to the decrease in homebuilding revenues.

South Central Region — Homebuilding revenues decreased 1% and 4% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the average selling price of homes closed in the majority of the region’s markets.

The region generated pre-tax income of $166.3 million and $339.7 million in the three and six months ended March 31, 2026, respectively, compared to $208.4 million and $429.7 million in the prior year periods.

Home sales gross profit percentage decreased by 120 and 130 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 70 basis points in both the three and six months ended March 31, 2026 compared to the prior year periods, primarily due to an increase in SG&A costs.

Southeast Region — Homebuilding revenues decreased 3% and 10% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Jacksonville and Tampa markets.

The region generated pre-tax income of $165.4 million and $308.8 million in the three and six months ended March 31, 2026, respectively, compared to $211.3 million and $434.1 million in the prior year periods.

Home sales gross profit percentage decreased by 140 and 160 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 40 and 70 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues increased 2% and decreased 2% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods.

The increase in the three month period was primarily due to increases in the number of homes closed, particularly in our Atlanta and Greenville markets.

The decrease in the six month period was primarily due to decreases in the number of homes closed, particularly in our Knoxville and Charleston markets.

The region generated pre-tax income of $134.8 million and $258.3 million in the three and six months ended March 31, 2026, respectively, compared to $171.8 million and $366.2 million in the prior year periods.

Home sales gross profit percentage decreased by 300 and 330 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing while the average selling price of those homes decreased slightly.

As a percentage of homebuilding revenues, SG&A expenses increased by 30 and 60 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to an increase in SG&A costs.

North Region — Homebuilding revenues increased 6% in both the three and six months ended March 31, 2026 compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our Pittsburgh and Southern Virginia markets.

The region generated pre-tax income of $122.6 million and $242.5 million in the three and six months ended March 31, 2026, respectively, compared to $126.5 million and $256.3 million in the prior year periods.

Home sales gross profit percentage decreased by 140 basis points in both the three and six months ended March 31, 2026 compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses decreased by 30 and 10 basis points in the three and six months ended March 31, 2026, respectively, compared to the prior year periods, primarily due to the increase in homebuilding revenues.

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

December 31, 2025

Our homebuilding segment’s inventories at March 31, 2026 and September 30, 2025 are summarized as follows:

March 31, 2026

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

December 31, 2025

Our land and lot position and homes in inventory at March 31, 2026 and September 30, 2025 are summarized as follows:

March 31, 2026

Owned (1) Lots Controlled

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___________________

(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.

(1) Land/lots owned included approximately 74,800 and 78,400 owned lots that are fully developed and ready for home construction at March 31, 2026 and September 30, 2025, respectively.

(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2026 and September 30, 2025 was $26.7 billion and $26.0 billion, respectively, secured by earnest money deposits of $2.5 billion and $2.3 billion, respectively.

The total remaining purchase price of lots controlled through land and lot purchase contracts at March 31, 2026 and September 30, 2025 included $2.1 billion and $2.0 billion, respectively, related to lot purchase contracts with Forestar, secured by $211.9 million and $200.2 million, respectively, of earnest money.

(3) Lots controlled at March 31, 2026 included approximately 41,000 lots owned by Forestar, 22,900 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 9,800 lots were in our South Central region, 9,800 lots were in our East region, 9,600 lots were in our Southeast region, 6,600 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 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.

(4) Approximately 22,900 and 19,600 of our homes in inventory were unsold at March 31, 2026 and September 30, 2025, respectively.

At March 31, 2026, approximately 5,500 of our unsold homes were completed, of which approximately 800 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 model homes at both December 31, 2025 and September 30, 2025.

Homes in inventory exclude approximately 2,900 and 2,700 model homes at March 31, 2026 and September 30, 2025, respectively.

RESULTS OF OPERATIONS - RENTAL

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

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

The following tables provide further information regarding our rental operations as of and for the three and six months ended March 31, 2026 and 2025.

Rental Homes/Units Closed and Revenue

Three Months Ended December 31,

Three Months Ended March 31,

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

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Single-family 566 519 9 % $ 153.3 $ 144.2 6 % 270,800 277,800 (3) %

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

Multi-family 216 300 (28) % 58.5 84.4 (31) % 270,800 281,300 (4) %

782 819 (5) % $ 211.8 $ 228.6 (7) % 270,800 279,100 (3) %

Six Months Ended March 31,

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

Change 2026 2025 %

Single-family 963 830 16 % $ 262.8 $ 232.3 13 % 272,900 279,900 (3) %

Multi-family 216 804 (73) % 58.5 214.0 (73) % 270,800 266,200 2 %

1,179 1,634 (28) % $ 321.3 $ 446.3 (28) % 272,500 273,100 — %

Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

(In millions)

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Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

Gross profit — rental 13.5 % 22.6 % 14.1 % 19.4 %

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Rental pre-tax income 5.8 % 9.6 % 3.9 % 7.6 %

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.

Revenues from our rental operations decreased to $211.8 million and $321.3 million during the three and six months ended March 31, 2026, respectively, from $236.6 million and $454.3 million in the prior year periods.

Pre-tax income was $12.3 million and $12.5 million during the three and six months ended March 31, 2026, respectively, compared to $22.8 million and $34.7 million in the prior year periods.

The decline in pre-tax income for both periods was due to a decrease in multi-family revenues due to fewer units closed, as well as a decrease in the gross profit percentage on both single-family and multi-family closings.

At March 31, 2026, our rental property inventory of $3.0 billion included $347.2 million of single-family rental inventory and $2.7 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:

Single-family rental homes and lots and multi-family rental units at March 31, 2026 and September 30, 2025 consisted of the following:

Rental Inventory

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Multi-family rental units (3) 13,250 12,480

(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.

(1) Single-family rental homes at March 31, 2026 consist of 560 homes under construction and 690 completed homes compared to 370 homes under construction and 1,050 completed homes at September 30, 2025.

(2) Single-family rental lots at March 31, 2026 consist of 590 undeveloped lots and 890 finished lots compared to 440 undeveloped lots and 710 finished lots at September 30, 2025.

(3) Multi-family rental units at March 31, 2026 consist of 3,780 units under construction and 9,470 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 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.

At March 31, 2026, we owned 62% of the outstanding shares of Forestar.

Forestar is a publicly traded residential lot development company with operations in 64 markets across 24 states as of March 31, 2026.

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

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

Results of operations for the Forestar segment for the three and six months ended March 31, 2026 and 2025 were as follows:

Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

(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 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,

The following tables provide further information regarding Forestar’s revenues for the three and six months ended March 31, 2026 and 2025 and lot position as of March 31, 2026 and September 30, 2025:

Three Months Ended March 31,

Lots Sold Value (In millions)

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Total tract acres sold 388 — $ 35.6 $ —

Six Months Ended March 31,

Lots Sold Value (In millions)

2026 2025 2026 2025

Residential single-family lots sold

Lots sold to D.R.

Horton 4,077 4,613 $ 468.2 $ 486.4

Total lots sold 4,882 5,744 $ 566.6 $ 594.2

Tract acres sold

Tract acres sold to D.R.

Horton 56 — $ 11.5 $ —

Total tract acres sold 581 — $ 64.9 $ —

2026 September 30,

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Owned lots fully developed 9,300 8,900

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.

At March 31, 2026 and September 30, 2025, Forestar’s inventory, which includes land and lots developed, under development and held for development, totaled $2.7 billion and $2.6 billion, respectively.

Forestar’s inventory and land option charges consisted of $6.3 million and $7.1 million of earnest money and pre-acquisition cost write-offs in the three and six months ended March 31, 2026, respectively, compared to $0.9 million and $2.0 million in the prior year periods.

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

SG&A expense for the three and six months ended March 31, 2026 included charges of $1.9 million and $3.6 million, respectively, 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 $1.8 million and $3.6 million, respectively, in the prior year periods.

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

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 months ended December 31, 2025 and 2024.

Three Months Ended December 31,

2025 2024 % Change

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

2026 2025 % Change 2026 2025 % 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 13,476 13,839 (3) % 29,440 30,735 (4) %

Three Months Ended December 31,

2025 2024 % Change

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

2026 2025 % Change 2026 2025 % Change

(In millions)

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Three Months Ended

March 31, Six Months Ended

2026 2025 2026 2025

General and administrative expense 82.9 % 75.3 % 80.8 % 79.6 %

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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.

In the three and six months ended March 31, 2026, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 2% and decreased 2%, respectively, due to an increase of 1% and a decrease of 3% in the number of homes closed by our homebuilding operations in the respective periods.

The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 81% and 80% in the three and six months ended March 31, 2026, respectively, unchanged from the prior year periods.

The number of loans sold decreased 3% and 4% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods.

Substantially all mortgage loans held for sale on March 31, 2026 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 six months ended March 31, 2026, approximately 72% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 19% were sold to one other major financial entity.

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

Financial Services Revenues and Expenses

Total loan origination volume decreased 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.

Total loan origination volume increased 1% and decreased 2% in the three and six months ended March 31, 2026, respectively, compared to the prior year periods.

Revenues from our mortgage operations decreased 13% to $149.2 million and 6% to $292.9 million, respectively, from $171.2 million and $310.9 million in the prior year periods, primarily due to reduced profit margin on loans sold.

Revenues from our title operations were $43.6 million and $84.5 million in the three and six months ended March 31, 2026, respectively, compared to $41.7 million and $84.3 million in the prior year periods.

General and administrative (G&A) expense related to our financial services operations was $159.8 million and $304.8 million in the three and six months ended March 31, 2026, respectively, compared to $160.3 million and $314.5 million in the prior year periods.

As a percentage of financial services revenues, G&A expense was 82.9% and 80.8%, respectively, compared to 75.3% and 79.6% in the prior year periods.

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

Our financial services operations employed 2,894 and 3,114 people at December 31, 2025 and 2024, respectively.

Our financial services operations employed 2,872 and 3,121 people at March 31, 2026 and 2025, 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 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.

Other income decreased 8% to $18.7 million and 9% to $37.1 million in the three and six months ended March 31, 2026, respectively, from $20.4 million and $40.9 million in the prior year periods, primarily due to a decrease in interest income because of lower interest rates on our loan originations.

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 $8.2 million in the three months ended December 31, 2025 compared to $11.5 million in the prior year period.

The pre-tax income of all of our subsidiaries engaged in other business activities was $9.5 million and $17.7 million in the three and six months ended March 31, 2026, respectively, compared to $11.2 million and $22.7 million in the prior year periods.

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

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.

Pre-tax income for the three and six months ended March 31, 2026 was $867.4 million and $1.7 billion, respectively, compared to $1.1 billion and $2.2 billion in the prior year periods.

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

Our income tax expense for the three and six months ended March 31, 2026 was $209.4 million and $406.0 million, respectively, compared to $248.0 million and $506.0 million in the prior year periods.

Our effective tax rate was 24.1% and 24.4% for the three and six months ended March 31, 2026, respectively, compared to 23.2% in both 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.

At March 31, 2026, we had deferred tax liabilities, net of deferred tax assets, of $8.4 million, after consideration of a valuation allowance of $14.6 million recorded against certain deferred tax assets.

At September 30, 2025, we had deferred tax assets, net of deferred tax liabilities, of $44.5 million, after consideration of a valuation allowance of $14.6 million recorded against certain deferred tax assets.

The valuation allowance for both periods relates 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.

Reversal of any portion of the valuation allowance in future periods would impact our effective tax rate.

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 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.

At March 31, 2026, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $6.6 billion.

$2.3 billion was payable within 12 months, which includes $1.5 billion outstanding under our mortgage repurchase facilities and $600 million principal amount of 1.3% homebuilding senior notes maturing in October 2026.

At March 31, 2026, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 21.7% compared to 19.8% at September 30, 2025 and 21.1% at March 31, 2025.

Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 16.4% at March 31, 2026 compared to 11.0% at September 30, 2025 and 14.3% at March 31, 2025.

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

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.

At March 31, 2026, we had outstanding letters of credit of $262.7 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 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.

Cash and Cash Equivalents — At March 31, 2026, cash and cash equivalents of our homebuilding segment totaled $1.1 billion.

Bank Credit Facility — We have a senior unsecured homebuilding revolving credit facility that was amended in March 2026 to increase its capacity from $2.305 billion to $3.295 billion.

The amendment also extended the maturity dates of the facility.

Of the total commitments, $265 million matures on October 28, 2027, $1,012.5 million matures on March 27, 2029 and $2,017.5 million matures on March 27, 2031.

The facility has an uncommitted accordion feature that allows for an increase in its size to $4.0 billion, subject to certain conditions and availability of additional bank commitments.

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 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.

At March 31, 2026, there were $250 million of borrowings outstanding at a 4.5% annual interest rate and $219.8 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.825 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 December 31, 2025, we had $3.0 billion principal amount of homebuilding senior notes outstanding that mature from October 2026 through October 2035.

Public Unsecured Debt — At March 31, 2026, 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.

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.

Compliance and Guarantors — At March 31, 2026, 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 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.

During the six months ended March 31, 2026, we repurchased 10.4 million shares at a total cost including commissions and excise taxes of $1.6 billion.

At March 31, 2026, the full amount of the debt repurchase authorization was remaining, and $1.7 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 $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.

The inventory in our rental segment totaled $3.0 billion at March 31, 2026 compared to $2.7 billion at September 30, 2025 and $3.1 billion at March 31, 2025.

Cash and Cash Equivalents — At March 31, 2026, cash and cash equivalents of our rental segment totaled $142.5 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 facility also provides for the issuance of letters of credit with a sublimit equal to the greater of $100 million and 50% of the total revolving credit commitments.

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

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 facility was amended in March 2026 to extend its maturity date to March 27, 2030.

At March 31, 2026, there were $865 million of borrowings outstanding at a 5.4% annual interest rate and no letters of credit issued under the facility, resulting in available capacity of $185 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.

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.

Compliance and Guarantors — At March 31, 2026, 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 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.

At March 31, 2026, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 30.4% compared to 31.2% at September 30, 2025 and 34.7% at March 31, 2025.

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 19.2% compared to 19.3% at September 30, 2025 and 29.8% at March 31, 2025.

Cash and Cash Equivalents — At March 31, 2026, Forestar had cash and cash equivalents of $362.2 million.

Bank Credit Facility — Forestar has a $715 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.

The current capacity of the facility reflects additional bank commitments of $25 million and $50 million obtained in October 2025 and March 2026, respectively.

Of the total commitments, $650 million matures on December 18, 2029, and $65 million matures on October 28, 2026.

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

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.

At March 31, 2026, there were no borrowings outstanding and $42.9 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $672.1 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 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.

Unsecured Debt — As of March 31, 2026, 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 March 31, 2026, 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 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.

All of the $30 million authorization was remaining at March 31, 2026, and the authorization has no expiration date.

Issuance of Common Stock — During the six months ended March 31, 2026, there were no shares issued under Forestar’s ATM program.

At March 31, 2026, $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 December 31, 2025, cash and cash equivalents of our financial services segment totaled $228.8 million.

Cash and Cash Equivalents — At March 31, 2026, cash and cash equivalents of our financial services segment totaled $242.4 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.

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

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.

At March 31, 2026, DHI Mortgage had an obligation of $1.1 billion under the committed mortgage repurchase facility at a 5.4% annual interest rate.

DHI Mortgage is currently in discussions with its lenders and expects to renew and extend the facility prior to its maturity date.

At March 31, 2026, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $416.1 million at a 4.9% annual interest rate.

At March 31, 2026, $2.31 billion of mortgage loans held for sale with a collateral value of $2.26 billion were pledged under the committed mortgage repurchase facility, and $464.6 million of mortgage loans held for sale with a collateral value of $430.7 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.

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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.

Compliance and Guarantors — At March 31, 2026, 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.

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Operating Cash Flow Activities

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.

In the six months ended March 31, 2026, net cash provided by operating activities was $441.5 million compared to $210.5 million in the prior year period.

Cash provided by operating activities in the current year period primarily consisted of $618.8 million and $136.6 million of cash provided by our homebuilding and financial services segments, respectively, partially offset by $321.0 million and $5.1 million of cash used in our rental and Forestar segments, respectively.

The most significant source of cash provided by operating activities in both years was net income, partially offset by increases in our inventories which was the most significant use of cash.

In the six months ended March 31, 2026 and 2025, cash used to increase inventories was $689.4 million and $1.4 billion, respectively, and cash used to increase our rental properties was $297.5 million and $216.0 million in those periods.

Investing Cash Flow Activities

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 six months ended March 31, 2026, net cash used in investing activities was $160.4 million compared to $94.5 million in the prior year period.

In the current year period, uses of cash included the payment of $87.9 million related to a business acquisition and purchases of property and equipment totaling $64.6 million.

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

During the 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 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.

During the six months ended March 31, 2026, net cash used in financing activities was $1.3 billion, consisting primarily of cash used to repurchase shares of our common stock of $1.6 billion and payment of cash dividends totaling $261.2 million.

These uses of cash were partially offset by net borrowings on our rental and homebuilding revolving credit facilities of $265 million and $250 million, respectively, and net borrowings on our mortgage repurchase facilities of $69.9 million.

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

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

During each of the first two quarters of fiscal 2026, our Board of Directors approved a quarterly cash dividend of $0.45 per share, the most recent of which was paid on February 12, 2026 to stockholders of record on February 5, 2026.

Cash dividends declared and paid in the three and six months ended March 31, 2026 totaled $129.7 million and $261.2 million, respectively.

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.

In April 2026, our Board of Directors approved a quarterly cash dividend of $0.45 per share, payable on May 14, 2026 to stockholders of record on May 7, 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 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.

As of March 31, 2026, D.R.

had $3.0 billion principal amount of homebuilding senior notes outstanding due through October 2035 and $250 million outstanding on its homebuilding revolving credit facility.

All of the homebuilding senior notes and the homebuilding revolving credit facility are fully and unconditionally guaranteed, on a joint and several basis, by certain subsidiaries of D.R.

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and Guarantor Subsidiaries

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

Summarized Balance Sheet Data March 31, 2026 September 30, 2025

(In millions)

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20,223.3 20,911.8

Summarized Statement of Operations Data Three Months Ended

December 31, 2025 Year Ended

Summarized Statement of Operations Data Six Months Ended

March 31, 2026 Year Ended

September 30, 2025

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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 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.

At March 31, 2026 and September 30, 2025, we had reserves for approximately 860 and 875 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the six months ended March 31, 2026, we were notified of approximately 165 new construction defect claims and resolved 180 construction defect claims for a total cost of $46.0 million.

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

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

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis