)
D.R. Horton, the nation's largest homebuilder, has begun to focus more on growing its rental platform as rising interest rates and inflation shift its housing sales projections.
The homebuilder expects to generate around $800M in revenue this year from its multifamily and single-family rental portfolios, and it plans to expand those segments as it sees home sales drop and buyer cancellations increase, CoStar reports.
"We began to see a moderation in demand and an increase in cancellations due to the rapid rise in mortgage rate and continued inflationary pressures across most of the economy," D.R. Horton CEO David Auld said on an earnings call Thursday.
The company's cancellation rate increased to 24% last quarter compared to 17% the same time last year. D.R. Horton now expects to close on sales of between 83,000 and 85,000 homes this year, a 5.6% decline from previous estimates.
The value of the company's rental portfolio skyrocketed to an estimated $2B at the end of June, a $760M increase from the previous year.
"We plan to continue growing our rental inventories as we position our rental operations to be a significant contributor to our revenues, profits and returns in future years," Bill Wheat, chief financial officer at D.R. Horton, said on the call with analysts.
In its single-family rental business, the company follows a build-to-rent model in which it builds the rental homes and sells them to investors rather than serving as the landlord, according to CoStar. It also has an apartment portfolio with 21 properties totaling more than 6,000 units.
D.R. Horton has been in business since 1978 and operates in 33 states, according to its website. The company has closed on over 81,000 homes in the past year.
)
)
)
)
)
)
)
)
)
)
)
)