It’s raining cancellations on homebuilder, DR Horton, thanks to worst housing slump in 16 years
D.R. Horton Inc., the second-largest U.S. homebuilder, said orders in the fiscal fourth quarter plunged to the lowest in almost six years as customers backed out of purchases and banks restricted lending.
The number of homes sold is down 39 percent than a year earlier. Customers canceled 48 percent of homes they reserved, up from 38 percent in the previous quarter.
Chairman Donald Horton said in a statement that prospective buyers had more difficulty obtaining mortgages, hurting demand. Total mortgage originations fell 8.8 percent in the second quarter to $730 billion from a year earlier, according to Inside Mortgage Finance, an industry newsletter. In the fourth quarter, they may drop 36 percent to $460 billion, the Mortgage Bankers Association in Washington estimated.
Customers are backing out of house orders because they can't sell their existing home and they're having trouble obtaining financing, said Leon, who rates D.R. Horton shares “buy.'' Others are canceling because they anticipate they can get a better deal later, Leon said.
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