What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-07-23 compared with 2026-04-23 · 235 added, 230 removed, 678 unchanged (41% of the section changed)

10 unchanged sentences

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

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

Approximately 85% of our home sales revenue in the nine months ended June 30, 2026 was generated from the sale of single-family detached homes, with the remainder from the sale of attached homes, such as townhomes and duplexes.

We have closed 1.3 million homes during our 47-year history, and we have been the largest volume homebuilder in the United States every year since 2002.

Our product offerings include a broad range of homes for entry-level, move-up, active adult and luxury buyers.

2 unchanged sentences

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

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

At June 30, 2026, we owned 62% of the outstanding shares of Forestar Group Inc.

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

5 unchanged sentences

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

During the six months ended March 31, 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%.

During the nine months ended June 30, 2026, we closed 61,287 homes compared to 61,495 homes in the prior year period.

Our home sales revenues decreased 3% and our consolidated revenues decreased 4% to $23.7 billion in the nine months ended June 30, 2026 compared to $24.6 billion in the prior year period.

Our pre-tax income was $2.9 billion in the nine months ended June 30, 2026 compared to $3.5 billion in the prior year period, and pre-tax operating margin was 12.2% compared to 14.4%.

Net income was $2.2 billion in the nine months ended June 30, 2026 compared to $2.7 billion in the prior year period, and diluted earnings per share were $7.45 compared to $8.53.

In the trailing twelve months ended June 30, 2026, our return on equity (ROE) was 12.8% compared to 16.1% in the prior year period, and return on assets (ROA) was 8.5% compared to 11.1%.

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

2 unchanged sentences

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 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.

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

Our net sales orders and the value of those orders increased slightly compared to the prior year quarter.

Home sales revenues increased 1% compared to the prior year quarter.

Home sales gross margin was 20.7% for the third 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 currently expect sales incentives to remain elevated during the remainder of fiscal 2026 and into fiscal 2027, and we will continue to adjust incentive levels based on changes in market conditions and mortgage interest rates.

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

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

Within our homebuilding land and lot portfolio, lots controlled through purchase contracts represented 78% of the lots owned and controlled at June 30, 2026 compared to 75% at September 30, 2025 and 76% at June 30, 2025.

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

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.

During the nine months ended June 30, 2026, 67% of the homes we closed were on lots developed by either Forestar or a third party compared to 65% in the prior year period.

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

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

1 unchanged sentence

Our strategy includes the following initiatives:

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

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

• Maintaining a significant cash balance and strong overall liquidity position while controlling our level of debt.

11 unchanged sentences

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

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

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

• Opportunistically evaluating potential acquisitions to enhance our operating platform.

1 unchanged sentence

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 March 31, 2026, as compared to the same period of 2025 unless otherwise indicated, were as follows:

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

Consolidated Results:

• Consolidated revenues decreased 2% to $7.6 billion compared to $7.7 billion.

• Consolidated pre-tax income decreased 19% to $867.4 million compared to $1.1 billion.

• Consolidated revenues were essentially unchanged at $9.2 billion.

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

• Consolidated pre-tax income was 13.3% of consolidated revenues compared to 14.7%.

1 unchanged sentence

• Net income attributable to D.R.

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

Horton decreased 12% to $904.9 million compared to $1.0 billion.

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

Horton decreased 5% to $3.20 compared to $3.36.

• 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.

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

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

• Debt to total capital was 23.0% compared to 19.8% and 23.2% at September 30, 2025 and June 30, 2025, respectively.

Net debt to total capital was 17.4% compared to 11.0% and 16.2% at September 30, 2025 and June 30, 2025, respectively.

Homebuilding:

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

• Homebuilding revenues increased 1% to $8.7 billion compared to $8.6 billion.

• Homes closed increased 4% to 23,983 homes, while the average closing price of those homes decreased 2% to $362,000.

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

• Net sales orders of 23,084 homes and the value of net sales orders of $8.4 billion both increased slightly from the prior year.

• Sales order backlog increased 14% to 15,983 homes, and the value of sales order backlog increased 16% to $6.2 billion.

1 unchanged sentence

• Homebuilding SG&A expense was 8.3% of homebuilding revenues compared to 7.8%.

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

• Homebuilding pre-tax income decreased 10% to $1.1 billion compared to $1.2 billion.

• Homebuilding pre-tax income was 12.3% of homebuilding revenues compared to 13.8%.

• 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.

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

• Homebuilding inventories totaled $21.3 billion compared to $20.3 billion and $21.1 billion at September 30, 2025 and June 30, 2025, respectively.

• Homes in inventory totaled 38,000 compared to 29,600 and 38,400 at September 30, 2025 and June 30, 2025, respectively.

• Owned lots totaled 126,600 compared to 147,000 and 145,900 at September 30, 2025 and June 30, 2025, respectively.

Lots controlled through purchase contracts totaled 441,900 compared to 444,900 and 455,500 at September 30, 2025 and June 30, 2025, respectively.

• Homebuilding debt was $3.7 billion compared to $3.2 billion and $3.7 billion at September 30, 2025 and June 30, 2025, respectively.

• Rental revenues were $266.1 million compared to $380.7 million.

2 unchanged sentences

• Rental pre-tax income was $31.0 million compared to $54.8 million.

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

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

• Forestar’s revenues increased 4% to $407.0 million compared to $390.5 million.

Revenues in the current and prior year quarters included $360.5 million and $325.0 million, respectively, of revenue from land and lot sales to our homebuilding segment.

• Forestar’s lots sold decreased 14% to 2,938 compared to 3,411.

• Forestar’s lots sold increased 1% to 3,659 compared to 3,605.

Lots sold to D.R.

Horton totaled 3,370 compared to 3,075.

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

• Forestar’s revenue from tract acres sold was $8.3 million compared to $3.6 million in the prior year quarter.

• Forestar’s pre-tax income increased 12% to $48.7 million compared to $43.6 million.

• Forestar’s pre-tax income was 12.0% of revenues compared to 11.2%.

• 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.

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

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

• Forestar’s owned and controlled lots totaled 91,700 compared to 99,800 and 102,300 at September 30, 2025 and June 30, 2025, respectively.

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

Horton compared to 40,400 and 43,900 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.

Horton compared to 40,400 and 42,700 at September 30, 2025 and June 30, 2025, respectively.

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

• Forestar’s debt to total capital was 30.0% compared to 31.2% and 34.2% at September 30, 2025 and June 30, 2025, respectively.

Forestar’s net debt to total capital was 17.7% compared to 19.3% and 28.9% at September 30, 2025 and June 30, 2025, respectively.

Financial Services:

2 unchanged sentences

• Financial services pre-tax income was 31.9% of financial services revenues compared to 35.7%.

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

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

Consolidated Results:

10 unchanged sentences

• Homebuilding revenues decreased 3% to $22.3 billion compared to $23.0 billion.

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

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

• Net sales orders increased 5% to 66,376 homes, and the value of net sales orders increased 4% to $24.3 billion.

3 unchanged sentences

• Homebuilding pre-tax income was 11.4% of homebuilding revenues compared to 13.7%.

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

• Net cash provided by homebuilding operations was $1.3 billion compared to $1.7 billion.

• Rental revenues were $587.4 million compared to $835.0 million.

2 unchanged sentences

• Rental pre-tax income was $43.5 million compared to $89.4 million.

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

• Forestar’s revenues increased 6% to $1.1 billion compared to $991.9 million.

Revenues in the current and prior year periods included $840.1 million and $811.3 million, respectively, of revenue from land and lot sales to our homebuilding segment.

2 unchanged sentences

Horton totaled 7,447 compared to 7,688.

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

• Forestar’s revenue from tract acres sold was $73.2 million compared to $3.6 million in the prior year period.

• Forestar’s pre-tax income increased 7% to $113.4 million compared to $106.2 million.

35 unchanged sentences

Modesto/Merced/Stockton Mississippi Gulf Coast Virginia Northern Virginia

Redding/Chico/Yuba City Hattiesburg Richmond

Redding/Yuba City Hattiesburg Richmond

Riverside County Jackson Virginia Beach/Williamsburg

11 unchanged sentences

Oklahoma Oklahoma City Raleigh/Durham/Fayetteville

Tulsa Wilmington

Tulsa Wilmington/Jacksonville

Texas Abilene South Carolina Charleston

2 unchanged sentences

Bryan/College Station Hilton Head

Corpus Christi Myrtle Beach

Corpus Christi Myrtle Beach/Florence

Dallas Tennessee Chattanooga

5 unchanged sentences

New Braunfels/San Marcos

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

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

Net Sales Orders (1)

Three Months Ended March 31,

Three Months Ended June 30,

Net Homes Sold Value (In millions) Average Selling Price

8 unchanged sentences

23,084 23,071 — % $ 8,439.7 $ 8,422.3 — % $ 365,600 $ 365,100 — %

Six Months Ended March 31,

Nine Months Ended June 30,

Net Homes Sold Value (In millions) Average Selling Price

9 unchanged sentences

Sales Order Cancellations

Three Months Ended March 31,

Three Months Ended June 30,

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

7 unchanged sentences

5,607 4,837 $ 2,064.9 $ 1,819.7 20 % 17 %

Six Months Ended March 31,

Nine Months Ended June 30,

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

11 unchanged sentences

Net Sales Orders

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.

The value of net sales orders was $8.4 billion (23,084 homes) and $24.3 billion (66,376 homes) for the three and nine months ended June 30, 2026, respectively, compared to $8.4 billion (23,071 homes) and $23.4 billion (63,345 homes) in the prior year periods.

Comparing the three month periods, the number, value and average selling price of homes sold were essentially unchanged.

In the nine month period, the increase in the value of net sales orders was attributable to a 5% increase in sales order volume.

The highest percentage increase was in the North region where the Pittsburgh and Ohio markets contributed most to the increase.

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

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

Sales Order Backlog

As of March 31,

As of June 30,

Homes in Backlog Value (In millions) Average Selling Price

13 unchanged sentences

Homes Closed and Home Sales Revenue

Three Months Ended March 31,

Three Months Ended June 30,

Homes Closed Value (In millions) Average Selling Price

8 unchanged sentences

23,983 23,160 4 % $ 8,681.9 $ 8,561.0 1 % $ 362,000 $ 369,600 (2) %

Six Months Ended March 31,

Nine Months Ended June 30,

Homes Closed Value (In millions) Average Selling Price

9 unchanged sentences

Home Sales Revenue

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.

Revenues from home sales were $8.7 billion (23,983 homes) and $22.2 billion (61,287 homes) for the three and nine months ended June 30, 2026, respectively, compared to $8.6 billion (23,160 homes) and $22.9 billion (61,495 homes) in the prior year periods.

The number of homes closed increased 4% in the three months ended June 30, 2026 compared to the prior year period.

In regions where homes closed increased, the markets contributing most to the increase were the Phoenix market in the Southwest, the Houston market in the South Central, the Atlanta market in the East and the Pittsburgh market in the North.

These increases in volume were largely offset by decreases in the average selling price, particularly in the Northwest and South Central regions.

The number of homes closed was essentially unchanged in the nine months ended June 30, 2026 compared to the prior year period due to offsetting fluctuations between the regions.

Home sales revenues decreased due to decreases in the average selling price, particularly in the South Central region.

Homebuilding Operating Margin Analysis

1 unchanged sentence

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2026 2025 2026 2025

7 unchanged sentences

Home Sales Gross Profit

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.

Gross profit from home sales decreased to $1.8 billion in the three months ended June 30, 2026 from $1.9 billion in the prior year period and decreased 110 basis points to 20.7% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 110 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 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.

These decreases were partially offset by an increase of 10 basis points due to lower warranty and construction defect costs.

Gross profit from home sales decreased to $4.5 billion in the nine months ended June 30, 2026 from $5.1 billion in the prior year period and decreased 170 basis points to 20.4% as a percentage of home sales revenues.

The percentage decrease resulted from a decrease of 190 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.

2 unchanged sentences

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

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

Land/Lot Sales and Other Revenues

Land/lot sales and other revenues from our homebuilding operations were $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.

Land/lot sales and other revenues from our homebuilding operations were $4.3 million and $38.2 million in the three and nine months ended June 30, 2026, respectively, and $19.8 million and $63.1 million in the prior year periods.

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

2 unchanged sentences

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

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.

As of June 30, 2026, our homebuilding operations had $31.7 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 $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 a result of this review, there were $3.7 million and $6.7 million of impairment charges recorded in our homebuilding segment during the three and nine months ended June 30, 2026, respectively, compared to $15.9 million and $23.3 million in the 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.

1 unchanged sentence

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

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.

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

Selling, General and Administrative (SG&A) Expense

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.

Homebuilding SG&A expense was $720.6 million and $2.0 billion in the three and nine months ended June 30, 2026, respectively, compared to $670.0 million and $1.9 billion in the prior year periods.

As a percentage of homebuilding revenues, SG&A expense was 8.3% and 9.0% in the three and nine months ended June 30, 2026, respectively, compared to 7.8% and 8.5% in the prior year periods.

Employee compensation and related costs were $560.6 million and $1.5 billion in the three and nine months ended June 30, 2026, respectively, compared to $532.3 million and $1.5 billion in the prior year periods.

These costs represented 78% and 76% of SG&A costs in the three and nine months ended June 30, 2026, respectively, compared to 79% and 78% in the prior year periods.

Our homebuilding operations employed 9,997 and 10,190 people at June 30, 2026 and 2025, respectively.

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

3 unchanged sentences

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

Interest incurred by our homebuilding operations increased 59% 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.

Interest incurred by our homebuilding operations increased 40% to $43.3 million and 52% to $106.4 million in the three and nine months ended June 30, 2026, respectively, compared to $31.0 million and $69.8 million in the prior year periods.

The increases were primarily due to increases in the weighted average interest rate of homebuilding debt outstanding in the three and nine months ended June 30, 2026, as well as an increase of 26% in the average amount of that debt in both periods.

Interest charged to cost of sales was 0.5% of homebuilding cost of sales (excluding inventory and land option charges) in both the three and nine months ended June 30, 2026 compared to 0.4% in both prior year periods.

Other income, net of other expenses, included in our homebuilding operations was $9.6 million and $37.9 million in the three and nine months ended June 30, 2026, respectively, compared to $36.0 million and $83.0 million in the prior year periods.

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

6 unchanged sentences

Homebuilding Results by Reporting Region

Three Months Ended March 31,

Three Months Ended June 30,

Revenues Homebuilding

11 unchanged sentences

$ 8,686.2 $ 1,066.6 12.3 % $ 8,580.8 $ 1,186.3 13.8 %

Six Months Ended March 31,

Nine Months Ended June 30,

Revenues Homebuilding

Income (1) % of

Income (1) Pre-tax Income as % of

Revenues Homebuilding

Income (1) % of

Income (1) Pre-tax Income as % of

(In millions)

9 unchanged sentences

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

Northwest Region — Homebuilding revenues decreased 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.

Northwest Region — Homebuilding revenues decreased 7% and 8% in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Seattle and Salt Lake City markets.

The region generated pre-tax income of $68.3 million and $182.3 million in the three and nine months ended June 30, 2026, respectively, compared to $116.4 million and $286.3 million in the prior year periods.

Gross profit from home sales as a percentage of home sales revenue (home sales gross profit percentage) decreased by 440 and 370 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to the average cost of homes closed increasing by more than the average selling price of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 160 and 100 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

Southwest Region — Homebuilding revenues decreased 1% and 8% in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods.

The decrease in the nine month period was primarily due to decreases in the number of homes closed in our Las Vegas and Southern California markets.

The region generated pre-tax income of $136.0 million and $338.8 million in the three and nine months ended June 30, 2026, respectively, compared to $152.7 million and $444.4 million in the prior year periods.

Home sales gross profit percentage decreased by 120 and 180 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 30 and 50 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods.

The increase in the nine month period was primarily due to the decrease in homebuilding revenues, while the increase in the three month period was primarily due to a slight increase in SG&A costs.

South Central Region — Homebuilding revenues increased 1% and decreased 2% in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods.

The region generated pre-tax income of $269.5 million and $609.3 million in the three and nine months ended June 30, 2026, respectively, compared to $290.2 million and $719.9 million in the prior year periods.

Home sales gross profit percentage decreased by 60 and 100 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to the average selling price of homes closed decreasing by more than the average cost of those homes.

As a percentage of homebuilding revenues, SG&A expenses increased by 40 and 60 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to an increase in SG&A costs.

Southeast Region — Homebuilding revenues decreased slightly in the three months ended June 30, 2026 and decreased 7% in the nine months ended June 30, 2026 compared to the prior year periods, primarily due to decreases in the number of homes closed, particularly in our Jacksonville market.

The region generated pre-tax income of $230.8 million and $539.5 million in the three and nine months ended June 30, 2026, respectively, compared to $224.6 million and $658.7 million in the prior year periods.

Home sales gross profit percentage was flat in the three months ended June 30, 2026 and decreased by 100 basis points in the nine months ended June 30, 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 in the nine month period.

As a percentage of homebuilding revenues, SG&A expenses increased by 30 and 50 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to the decrease in homebuilding revenues.

East Region — Homebuilding revenues increased 5% and 1% in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to increases in the number of homes closed, particularly in our Atlanta, Greenville and Myrtle Beach markets.

The region generated pre-tax income of $206.7 million and $464.9 million in the three and nine months ended June 30, 2026, respectively, compared to $230.4 million and $596.6 million in the prior year periods.

Home sales gross profit percentage decreased by 120 and 250 basis points in the three and nine months ended June 30, 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 was essentially unchanged.

As a percentage of homebuilding revenues, SG&A expenses increased by 70 and 60 basis points in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods, primarily due to an increase in SG&A costs.

North Region — Homebuilding revenues increased 5% in both the three and nine months ended June 30, 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 $155.3 million and $397.8 million in the three and nine months ended June 30, 2026, respectively, compared to $172.0 million and $428.3 million in the prior year periods.

Home sales gross profit percentage decreased by 180 and 150 basis points in the three and nine months ended June 30, 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 increased by 10 basis points in the three months and was flat in the nine months ended June 30, 2026 compared to the prior year periods.

HOMEBUILDING INVENTORIES, LAND AND LOT POSITION AND HOMES IN INVENTORY

2 unchanged sentences

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

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

March 31, 2026

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

June 30, 2026

Construction in Progress and

32 unchanged sentences

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

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

March 31, 2026

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

June 30, 2026

Owned (1) Lots Controlled

24 unchanged sentences

___________________

(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.

(1) Land/lots owned included approximately 72,500 and 78,400 owned lots that are fully developed and ready for home construction at June 30, 2026 and September 30, 2025, respectively.

(2) The total remaining purchase price of lots controlled through land and lot purchase contracts at June 30, 2026 and September 30, 2025 was $27.5 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 June 30, 2026 and September 30, 2025 included $2.1 billion and $2.0 billion, respectively, related to lot purchase contracts with Forestar, secured by $210.1 million and $200.2 million, respectively, of earnest money.

(3) Lots controlled at June 30, 2026 included approximately 41,000 lots owned by Forestar, 21,800 of which our homebuilding divisions had under contract to purchase and 19,200 of which our homebuilding divisions had a right of first offer to purchase.

Of these, approximately 10,700 lots were in our Southeast region, 9,600 lots were in our South Central region, 8,600 lots were in our East region, 6,700 lots were in our North region, 3,700 lots were in our Southwest region and 1,700 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 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.

(4) Approximately 23,300 and 19,600 of our homes in inventory were unsold at June 30, 2026 and September 30, 2025, respectively.

At June 30, 2026, approximately 7,600 of our unsold homes were completed, of which approximately 600 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 2,900 and 2,700 model homes at March 31, 2026 and September 30, 2025, respectively.

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

RESULTS OF OPERATIONS - RENTAL

3 unchanged sentences

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

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

The following tables provide further information regarding our rental operations as of and for the three and nine months ended June 30, 2026 and 2025.

Rental Homes/Units Closed and Revenue

Three Months Ended March 31,

Three Months Ended June 30,

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

4 unchanged sentences

940 1,393 (33) % $ 258.1 $ 379.6 (32) % 274,600 272,500 1 %

Six Months Ended March 31,

Nine Months Ended June 30,

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

5 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2026 2025 2026 2025

14 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2026 2025 2026 2025

3 unchanged sentences

Rental pre-tax income 11.6 % 14.4 % 7.4 % 10.7 %

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.

Revenues from our rental operations decreased to $266.1 million and $587.4 million during the three and nine months ended June 30, 2026, respectively, from $380.7 million and $835.0 million in the prior year periods.

Pre-tax income was $31.0 million and $43.5 million during the three and nine months ended June 30, 2026, respectively, compared to $54.8 million and $89.4 million in the prior year periods.

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

A decrease in multi-family units closed also contributed to the decline in pre-tax income in the nine month period.

At June 30, 2026, our rental property inventory of $3.1 billion included $320.5 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 March 31, 2026 and September 30, 2025 consisted of the following:

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

Rental Inventory

3 unchanged sentences

Multi-family rental units (3) 13,830 12,480

(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.

(1) Single-family rental homes at June 30, 2026 consist of 640 homes under construction and 560 completed homes compared to 370 homes under construction and 1,050 completed homes at September 30, 2025.

(2) Single-family rental lots at June 30, 2026 consist of 590 undeveloped lots and 760 finished lots compared to 440 undeveloped lots and 710 finished lots at September 30, 2025.

(3) Multi-family rental units at June 30, 2026 consist of 3,580 units under construction and 10,250 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 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.

At June 30, 2026, we owned 62% of the outstanding shares of Forestar.

Forestar is a publicly traded residential lot development company with operations in 65 markets across 24 states as of June 30, 2026.

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

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

Results of operations for the Forestar segment for the three and nine months ended June 30, 2026 and 2025 were as follows:

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2026 2025 2026 2025

8 unchanged sentences

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 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,

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

Three Months Ended June 30,

Lots Sold Value (In millions)

8 unchanged sentences

Total tract acres sold 184 63 $ 8.3 $ 3.6

Six Months Ended March 31,

Nine Months Ended June 30,

Lots Sold Value (In millions)

2026 2025 2026 2025

Residential single-family lots sold

Residential lots sold

Lots sold to D.R.

18 unchanged sentences

Owned lots fully developed 9,600 8,900

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.

At June 30, 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 $0.8 million and $7.9 million of earnest money and pre-acquisition cost write-offs in the three and nine months ended June 30, 2026, respectively, compared to $1.9 million and $3.9 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.

SG&A expense for the three and nine months ended June 30, 2026 included charges of $1.8 million and $5.4 million, respectively, related to the shared services agreement between Forestar and D.R.

Horton whereby D.R.

1 unchanged sentence

Shared services charges were $1.8 million and $5.4 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.

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

RESULTS OF OPERATIONS – FINANCIAL SERVICES

The following tables and related discussion set forth key operating and financial data for our financial services operations, comprising DHI Mortgage and our subsidiary title companies, for the three and six months ended March 31, 2026 and 2025.

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

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

2026 2025 % Change 2026 2025 % Change

7 unchanged sentences

Loans sold by DHI Mortgage to third parties 18,926 18,107 5 % 48,366 48,842 (1) %

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

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

2026 2025 % Change 2026 2025 % Change

13 unchanged sentences

Three Months Ended

March 31, Six Months Ended

June 30, Nine Months Ended

2026 2025 2026 2025

4 unchanged sentences

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 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.

In the three months ended June 30, 2026, the volume of first-lien loans originated or brokered by DHI Mortgage for our homebuyers increased 5% primarily due to an increase of 4% in the number of homes closed by our homebuilding operations.

In the nine months ended June 30, 2026, the volume of loan originations and homes closed were essentially unchanged from the prior year period.

The percentage of homes closed for which DHI Mortgage handled our homebuyers’ financing was 82% and 81% in the three and nine months ended June 30, 2026, respectively, compared to 81% and 80% in the prior year periods.

The number of loans sold increased 5% and decreased 1% in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods.

Substantially all mortgage loans held for sale on June 30, 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 nine months ended June 30, 2026, approximately 74% of our mortgage loans were sold directly to Fannie Mae, Freddie Mac or into securities backed by Ginnie Mae, and 18% 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 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.

Total loan origination volume increased 5% and increased slightly in the three and nine months ended June 30, 2026, respectively, compared to the prior year periods.

Revenues from our mortgage operations decreased 5% to $169.1 million and $462.1 million, respectively, from $177.2 million and $488.1 million in the prior year periods, primarily due to reduced profit margin on loans sold.

Revenues from our title operations were $51.6 million and $136.1 million in the three and nine months ended June 30, 2026, respectively, compared to $50.6 million and $134.9 million in the prior year periods.

General and administrative (G&A) expense related to our financial services operations was $172.1 million and $477.0 million in the three and nine months ended June 30, 2026, respectively, compared to $171.0 million and $485.4 million in the prior year periods.

As a percentage of financial services revenues, G&A expense was 78.0% and 79.7%, respectively, compared to 75.1% and 77.9% 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 2,872 and 3,121 people at March 31, 2026 and 2025, respectively.

Our financial services operations employed 2,862 and 2,989 people at June 30, 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 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.

Other income decreased 11% to $21.7 million and 10% to $58.8 million in the three and nine months ended June 30, 2026, respectively, from $24.5 million and $65.4 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

1 unchanged sentence

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 $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.

The pre-tax income of all of our subsidiaries engaged in other business activities was $9.0 million and $26.7 million in the three and nine months ended June 30, 2026, respectively, compared to $5.9 million and $28.6 million in the prior year periods.

RESULTS OF OPERATIONS - CONSOLIDATED

Income before Income Taxes

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

Pre-tax income for the three and nine months ended June 30, 2026 was $1.2 billion and $2.9 billion, respectively, compared to $1.4 billion and $3.5 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.

Our income tax expense for the three and nine months ended June 30, 2026 was $307.5 million and $713.5 million, respectively, compared to $325.0 million and $831.0 million in the prior year periods.

Our effective tax rate was 25.1% and 24.7% for the three and nine months ended June 30, 2026, respectively, compared to 23.9% and 23.5% in the prior year periods.

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

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 June 30, 2026, we had deferred tax liabilities, net of deferred tax assets, of $43.4 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.

8 unchanged sentences

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

At June 30, 2026, we had outstanding notes payable with varying maturities totaling an aggregate principal amount of $7.1 billion.

$2.6 billion was payable within 12 months, which includes $1.8 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.

At June 30, 2026, our ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 23.0% compared to 19.8% at September 30, 2025 and 23.2% at June 30, 2025.

Our net debt to total capital (notes payable net of cash divided by stockholders’ equity plus notes payable net of cash) was 17.4% at June 30, 2026 compared to 11.0% at September 30, 2025 and 16.2% at June 30, 2025.

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

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.

At June 30, 2026, we had outstanding letters of credit of $285.4 million and surety bonds of $3.4 billion issued by third parties to secure performance under various contracts.

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

7 unchanged sentences

Capital Resources - Homebuilding

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

Cash and Cash Equivalents — At June 30, 2026, cash and cash equivalents of our homebuilding segment totaled $1.3 billion.

Bank Credit Facility — We have a senior unsecured homebuilding revolving credit facility that was amended in March 2026 to increase its capacity from $2.3 billion to $3.3 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.

Of the total commitments, $265 million matures on October 28, 2027, $1.0 billion matures on March 27, 2029 and $2.0 billion 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.

1 unchanged sentence

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

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.

At June 30, 2026, there were $500 million of borrowings outstanding at a 4.5% annual interest rate and $240.3 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $2.6 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.

2 unchanged sentences

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

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.

Public Unsecured Debt — At June 30, 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 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.

Compliance and Guarantors — At June 30, 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.

2 unchanged sentences

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

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.

During the nine months ended June 30, 2026, we repurchased 14.6 million shares at a total cost including commissions and excise taxes of $2.2 billion.

At June 30, 2026, the full amount of the debt repurchase authorization was remaining, and $1.1 billion of the stock repurchase authorization was remaining.

The debt and stock repurchase authorizations have no expiration date.

1 unchanged sentence

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

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.

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

Cash and Cash Equivalents — At June 30, 2026, cash and cash equivalents of our rental segment totaled $118.4 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.

2 unchanged sentences

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.

At June 30, 2026, there were $820 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 $230 million.

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

2 unchanged sentences

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 March 31, 2026, DRH Rental was in compliance with all of the covenants, limitations and restrictions of its revolving credit facility.

Compliance and Guarantors — At June 30, 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.

4 unchanged sentences

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

At March 31, 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.

At June 30, 2026, Forestar’s ratio of debt to total capital (notes payable divided by stockholders’ equity plus notes payable) was 30.0% compared to 31.2% at September 30, 2025 and 34.2% at June 30, 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 17.7% compared to 19.3% at September 30, 2025 and 28.9% at June 30, 2025.

Cash and Cash Equivalents — At June 30, 2026, Forestar had cash and cash equivalents of $394.9 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.

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

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.

1 unchanged sentence

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

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.

At June 30, 2026, there were no borrowings outstanding and $45.1 million of letters of credit issued under the revolving credit facility, resulting in available capacity of $669.9 million.

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

2 unchanged sentences

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.

Unsecured Debt — As of June 30, 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 June 30, 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.

2 unchanged sentences

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

All of the $30 million authorization was remaining at March 31, 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.

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

Issuance of Common Stock — During the nine months ended June 30, 2026, there were no shares issued under Forestar’s ATM program.

At June 30, 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 March 31, 2026, cash and cash equivalents of our financial services segment totaled $242.4 million.

Cash and Cash Equivalents — At June 30, 2026, cash and cash equivalents of our financial services segment totaled $255.5 million.

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

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

The committed mortgage repurchase facility has a total capacity of $1.4 billion and a maturity date of May 6, 2026.

In May 2026, the committed mortgage repurchase facility was amended to increase its capacity to $1.925 billion and extend its maturity date to May 4, 2029.

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

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.

At June 30, 2026, DHI Mortgage had an obligation of $1.5 billion under the committed mortgage repurchase facility at a 5.6% annual interest rate.

At June 30, 2026, the uncommitted mortgage repurchase facility had a borrowing capacity of $500 million, of which DHI Mortgage had an obligation of $301.1 million at a 4.9% annual interest rate.

At June 30, 2026, $2.74 billion of mortgage loans held for sale with a collateral value of $2.69 billion were pledged under the committed mortgage repurchase facility, and $332.6 million of mortgage loans held for sale with a collateral value of $310.0 million were pledged under the uncommitted mortgage repurchase facility.

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

1 unchanged sentence

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 March 31, 2026, DHI Mortgage was in compliance with all of the conditions and covenants of the mortgage repurchase facilities.

Compliance and Guarantors — At June 30, 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.

1 unchanged sentence

Operating Cash Flow Activities

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.

In the nine months ended June 30, 2026, net cash provided by operating activities was $880.8 million compared to $949.1 million in the prior year period.

Cash provided by operating activities in the current year period primarily consisted of $1.3 billion and $27.6 million of cash provided by our homebuilding and Forestar segments, respectively, partially offset by $324.6 million and $221.7 million of cash used in our rental and financial services 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 were the most significant use of cash.

In the nine months ended June 30, 2026 and 2025, cash used to increase inventories was $1.0 billion and $1.6 billion, respectively, and cash used to increase our rental properties was $342.9 million and $230.8 million in those periods.

Investing Cash Flow Activities

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.

In the prior year period, uses of cash included the payment of $53.1 million related to a business acquisition and purchases of property and equipment totaling $47.6 million.

In the nine months ended June 30, 2026, net cash used in investing activities was $213.5 million compared to $123.5 million in the prior year period.

In the current year period, uses of cash included purchases of property and equipment totaling $106.6 million and the payment of $87.9 million related to a business acquisition.

In the prior year period, uses of cash included purchases of property and equipment totaling $93.6 million and the payment of $53.1 million related to a business acquisition.

Financing Cash Flow Activities

1 unchanged sentence

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

During the six months ended March 31, 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.

During the nine months ended June 30, 2026, net cash used in financing activities was $1.6 billion, consisting primarily of cash used to repurchase $2.2 billion of our common stock and payment of cash dividends totaling $388.3 million.

These uses of cash were partially offset by net borrowings on our rental and homebuilding revolving credit facilities of $220 million and $500 million, respectively, and net borrowings on our mortgage repurchase facilities of $404.9 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.

During the nine months ended June 30, 2025, net cash used in financing activities was $2.7 billion, consisting primarily of cash used to repurchase $3.6 billion of our common stock, 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 and payment of cash dividends totaling $376.4 million.

These uses of cash were partially offset by note proceeds from our issuances of $700 million principal amount of 5.5% homebuilding senior notes and $500 million principal amount of 4.85% homebuilding senior notes, 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 and mortgage repurchase facilities of $275 million and $170.4 million, respectively.

During each of the first three 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 May 14, 2026 to stockholders of record on May 7, 2026.

Cash dividends declared and paid in the three and nine months ended June 30, 2026 totaled $127.1 million and $388.3 million, respectively.

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

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.

In July 2026, our Board of Directors approved a quarterly cash dividend of $0.45 per share, payable on August 13, 2026 to stockholders of record on August 6, 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 March 31, 2026, D.R.

As of June 30, 2026, D.R.

had $3.0 billion principal amount of homebuilding senior notes outstanding due through October 2035 and $500 million outstanding on its homebuilding revolving credit facility.

19 unchanged sentences

and Guarantor Subsidiaries

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

Summarized Balance Sheet Data June 30, 2026 September 30, 2025

(In millions)

11 unchanged sentences

20,305.9 20,911.8

Summarized Statement of Operations Data Six Months Ended

March 31, 2026 Year Ended

Summarized Statement of Operations Data Nine Months Ended

June 30, 2026 Year Ended

September 30, 2025

9 unchanged sentences

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 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.

At June 30, 2026 and September 30, 2025, we had reserves for approximately 895 and 875 pending construction defect claims, respectively, and no individual existing claim was material to our financial statements.

During the nine months ended June 30, 2026, we were notified of approximately 225 new construction defect claims and resolved 205 construction defect claims for a total cost of $65.8 million.

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

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

RECENT ACCOUNTING PRONOUNCEMENTS

See Note A to our consolidated financial statements included in this report for discussion of recent accounting pronouncements.

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.

34 unchanged sentences

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