The Sun Belt housing market is so weak the largest U.S. homebuilder pulls back

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The 2025 spring selling season isn’t shaping up the way publicly traded homebuilders had hoped. KB Home, a giant homebuilder, told investors on March 24th that the traditionally strong spring buying window was off to a weaker-than-anticipated start. Just days earlier, Lennar, the nation’s second-largest builder, had offered a similar readout on its March 21 earnings call.

Now, D.R. Horton—the largest homebuilder in the U.S. and No. 120 on the Fortune 500—is adding its voice to the chorus.

“This year’s spring selling season started slower than expected as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence,” D.R. Horton CEO Paul Romanowski told investors last week.

In response, the company has leaned more heavily on concessions in regions where for-sale housing inventory has risen most.

“So we’re still dealing with a lot of the markets where we’ve seen the much written and talked about buildup in inventory,” Romanowski said. “We’ve had to add a little more concessions in the process, depending—again, similar to our wholesale market—on the competitive environment, market by market. But we still feel pretty good about that business.”

Despite macroeconomic factors like high mortgage rates and inflation concerns continuing to weigh on buyer confidence, Romanowski pointed to rising inventory levels in the housing market as the primary challenge facing D.R. Horton this spring.

“I would say that the macro environment hasn’t done a lot to change either the pace or the concessions as much as it’s been the availability of inventory in the market. We are moving through that inventory in a lot of the markets and the starts pace has been down,” he said.

The impact is evident in D.R. Horton’s numbers: Net new orders are down 15% year-over-year. The company’s South Central (which includes Texas), Southwest, and Southeast (which includes Florida) divisions posted the steepest year-over-year declines in new orders.

“I think you look at our concentration in Texas and through Florida, and certainly when those markets are a little softer, it’s going to cause us to have fewer starts in those markets in response to market conditions,” Romanowski told investors on April 17th.

As ResiClub has covered in great detail, the balance of power in many pockets of Florida and Texas has shifted from sellers to buyers as active housing inventory for sale there has climbed back above pre-pandemic 2019 inventory levels.

Still, not all of D.R. Horton’s markets are weak, particularly those places where active inventory remains well below pre-pandemic 2019 levels. 

“We have expanded our geographic footprint and have some newer markets that are seeing good stable activity without much supply and we’re expecting some of those markets to grow potentially beyond our expectations. So it really is a balance, but it is market to market and community to community across our platform,” Romanowski said.

As D.R. Horton navigates a choppy 2025 housing landscape, its focus remains on managing inventory, adapting pricing strategies, and finding growth in less inventory saturated markets.

Go here to view all of ResiClub’s six main takeaways from D.R. Horton’s recent earnings.

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