D.R. Horton’s September 30th fiscal year-end means that the company is now at work finalizing its 2027 plan. What makes this important is that Horton – the largest builder in the country – will be the first to offer its view on the coming year.
Given its scale, it sets the tone for the rest of the industry.
Why it matters for the industry
When Horton sets its plan for the year, it embeds a strategy and approach to the market. Horton delivers upwards of 13% of total new home sales in the U.S. If Horton pursues a strategy of volume in an uncertain market, others understand that it may lead to pressure on prices and margins for the industry. On the contrary, if Horton chooses a strategy of discipline in a tough market, other homebuilders can expect a market that will be difficult, but less bruising from a competitive standpoint.
Horton embraced that disciplined and conservative approach in the context of its outlook for 2026. Going back to late October2025 when Horton offered its outlook for a range between 86,000 and 88,000 closings in fiscal 2026 (2.5% growth from 2025), Horton had delivered 84,863 homes in fiscal 2025 and expected low double-digit growth in community count.
So, the expectation of 2.5% growth in closings was based on a conservative expectation for closings per community – down 7-to-8%, year over year. That also followed an approximately 14% decline in closings per community in fiscal 2025.
Planning for a 20% decline in closings per community in 2026 (on a two-year basis compared with 2024) sent a message of restraint on volume. Consistent with the discipline on volume, Horton noted its efforts to reduce inventory. This theme continued in Horton’s actions in 2026, choosing to accept slightly lower volume (now expecting from 83,800 to 84,300 closings for the year), rather than using even more incentives to meet its original plan for closings.
Horton’s approach to 2026 did not go unnoticed by others, which means Lennar as Lennar is the only other homebuilder with similar scale. When Lennar later offered its outlook for 2026 in December 2025, it announced its plan for approximately 85,000 closings in 2026. That 85,000 level was interesting for two reasons. First, it couldn’t be missed that 85,000 was just below Horton’s 86,000-88,000 range, suggesting that Lennar didn’t want to battle for the title of the largest builder in the U.S.Secondly, it also made clear that Lennar was willing to also see lower closings per community, as Lennar’s community count was up 18% year-over-year at that point and it closed 82,583 homes in 2025. So, even with Lennar’s moderation in community count growth over the course of 2026, this still implied a roughly 6%decline in closings per community. This sent a clear message that Lennar would not disrupt the market by excessively pushing volume with increasingly deep incentives.
When will D. R. Horton get to 100,000 closings?
Aside from setting a plan based on Horton’s view of the market and operating strategy, there is also the question of when Horton will reach what has been an elusive goal of 100,000 closings in a year. While it may be achievable in 2027, it seems more fitting as a goal for 2028, as 2028 will be Horton’s 50th anniversary of its founding in 1978. Reaching 100,000 closings while marking the 50th anniversary would seem to be a fitting tribute and way to honor Donald R. Horton, the company’s namesake founder.
Framing Horton’s approach to 2027
Sticking with the 100,000 closings for a moment, as Horton is likely to close approximately 84,000 homes in 2026, generating 19% growth (to reach 100,000 closings in 2027) in an affordability-challenged environment might be difficult – and result in a need for higher-than-desired incentives. However, given that Horton will likely have upper-single-digit growth in community count, 10% growth in closings per community could lead to 100,000 closings. While that might be achievable – in an environment of declining mortgage rates and improving affordability, that is not the environment in which Horton is developing its plan for the year.
Instead, Horton is setting its plan while watching rates tick higher and as homebuyers are even more impacted by affordability challenges. We would expect Horton to continue with its theme of remaining agile and disciplined, with the discipline translating into an expectation of lower closings per community in 2027 than in 2026. However, as closings per community in 2026 were already down 20% from 2024, we would expect Horton’s management to assume no more than a 5-10% decline in closings per community. That, along with upper-single-digit growth in community count would translate into closings in a range between 82,000 and 86,000, which would leave the midpoint consistent with the closings estimate for2026.
What would D. R. Horton’s choice mean for other builders?
Should Horton offer a plan reflecting discipline, with an expectation of closings around that 82,000 – 86,000 range, other smaller builders might be able to breathe a slight sigh of relief. Sure, with the affordability challenges for potential buyers, it islikely to remain a difficult environment. However, a climate in which the largest builders have elevated goals for closings and build spec homes based on those goals is far more difficult – and painful – for the industry from a pricing and margin perspective.
We think it’s relatively unlikely that Horton would offer a plan south of the low end of the 82,000 – 86,000 range, as that wouldimply more than a 10% decline in closings per community, with that coming on top of the 20% decline in closings per community already seen from 2024 to 2026. While it inconceivable that Horton’s closings could end up below 82,000 in 2027, we think that Horton would end up revising its plan lower over the course of the year, rather than starting at a lower level.
Should Horton offer a plan for 90,000 or more closings in 2027, we think it could amount to a warning signal to other builders. Horton generated an 11.4% pre-tax profit margin in homebuilding for the first nine months of fiscal 2026 so it still has some cushion if it chose to be more aggressive on volume and incentives (to achieve that volume). Other builders – public and private – have margins well below this level and would feel the impact if Horton were to take such an approach. However, Horton has shown its understanding that it does not make sense to push volume if it would only drive margins lower. So, our view is that it is unlikely that Horton would pursue this volume-seeking approach in 2027.
One way that Horton could pursue higher volume that would not be broadly disruptive, but could be in certain markets would be 1) a choice to seek greater market share in the 30 markets Horton has entered since 2022, or 2) an effort to gain further market share in markets where it is not the largest builder, as Horton is the largest builder in just about half of its markets at present.
Could Lennar’s plan lead Horton to reassess? Maybe
Horton should offer its view of its fiscal 2027 closings in late October when it reports its fiscal 2026 results. Lennar will then follow with its plan in mid-December, following its November 30th fiscal year-end. If Lennar were to announce a less-disciplined plan with an outlook of closings at a level above Horton’s plan, this might make Horton’s fur bristle for two reasons. First, it would mean that Lennar wanted to pursue a more disruptive path of growing while Horton remained disciplined. Secondly, it would mean that Lennar would then hold claim to the title as the nation’s largest builder, a position Horton has occupied for the past 25 years (assuming it holds through 2026).
In that scenario, Horton might choose to pursue more aggressive targets for volume to defend its position as the largest builder, although it might choose to do so through its actions and operations, rather than announcing a change. However, a scenario with Horton and Lennar pursuing greater volume would almost certainly lead to more price-driven competition and put more pressure on the margins of other builders. The homebuilding industry would much rather avoid that type of self-inflicted pain.
