D.R. Horton (NYSE: DHI) reported fiscal first-quarter net sales orders that came in below Wall Street expectations, as the homebuilder pointed to ongoing affordability pressures that continued to weigh on buyer demand.

Rising housing costs and elevated mortgage rates remained a key concern for U.S. homebuyers, making affordability a central issue as the country approached the November midterm elections. Against this backdrop, net sales orders—defined as newly signed home purchase contracts—increased 3% year over year to 18,300 homes for the quarter ended December. Analysts had expected net orders of 18,653.

Management said it anticipated sales incentives would remain elevated throughout fiscal 2026, noting that the scope of these promotions would depend on spring demand trends, changes in mortgage interest rates, and broader market conditions. Homebuilders across the industry have introduced incentives to attract more price-sensitive buyers, a strategy that has pressured profitability.

Despite these headwinds, D.R. Horton's pre-tax profit margin came in at 11.6%, slightly above expectations of 11.5%. Earnings per share totaled $2.03, exceeding projections even though earnings declined 22% compared with the prior year.