D.R. Horton Orders Jump

It books 15,771 homes in the second quarter, a company record.
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Updated from 7:15 a.m. EDT

D.R. Horton

(DHI) - Get Report

, the largest U.S. homebuilder, said second-quarter new home orders rose 10% from a year ago, as the builder saw strength in almost every real estate market.

Horton is reaping the benefits of its geographical diversity and its focus on entry-level homes. The builder said orders in the three months to March 31 totaled 15,771, up from 14,401 a year ago and representing the company's highest single-quarter order count in its history. The orders' value rose 7% to $4.4 billion, from $4.1 billion last year.

"We had positive sales growth in every region of the company, except the Midwest, where we have only two markets," Horton said. "The company's double-digit sales momentum and our record sales backlog continue to position the company for another record year in fiscal year 2006."

Orders rose 24% in the Southeast, increased 13% in the Southwest, rose 9% in the Mid-Atlantic, and jumped 7% in the West. Orders fell 25% in the Midwest.

The quarterly 9.5% order growth came in higher than the 6.7% growth estimate of Bank of America analyst Daniel Oppenheim, who wrote in research note that the "Horton's operational focus will allow it to generate order growth in a challenging market."

Oppenheim, who rates Horton a buy, expects further slowdown and tougher order comparisons for Horton in the second half of this year. The overall value of the company's orders was dampened by a 2.8% decline in the average order price compared to a year ago.

"We believe the lack of price appreciation is a function of weaker market conditions, Horton's efforts to maintain a strong pace of sales, and better demand at lower price points," wrote Oppenheim. Bank of America provides investment banking service to the builder.

Analysts expect the company to earn $5.38 a share in the fiscal year ending in September. Horton's shares closed at $34.02 Monday, down 5% on the year and roughly 6.3 times this year's earnings estimate.