By Sagarika Jaisinghani
(Reuters) - D.R. Horton Inc's
Record-low interest rates and rising rents have prompted more Americans to buy homes, leading to a shortage of new houses and allowing builders to command higher prices.
D.R. Horton is in a better position than competitors to meet this demand as it has a large inventory of homes built without a sales contract.
"We are in an excellent position to continue to meet increased sales demand and aggregate market share with 15,800 homes in inventory," Chairman Donald R. Horton said in a statement on Friday.
The company, which sells homes priced between $100,000 and $600,000, said its average selling price rose 14 percent in the second quarter ended March.
"D.R. Horton's strong results should abate a lot of fears about slowing housing trends that a lot of people were expecting coming out of the first quarter," Williams Financial Group analyst David Williams said.
Ground-breaking to build new homes rose 7 percent in March to their highest level since June 2008.
"There's a clear runway ahead of (D.R. Horton) to push sales," Williams said.
Orders rose 34 percent to 7,879 homes, with a total value of $2 billion, up from $1.3 billion in the same quarter last year. Orders are a key indicator for builders, who do not recognize their value until they close on a home.
Net income rose to $111.0 million, or 32 cents per share, in the second quarter from $40.6 million, or 13 cents per share, a year earlier. Revenue rose 49 percent to $1.39 billion.
Analysts on average expected a profit of 19 cents per share and revenue of $1.26 billion, according to Thomson Reuters I/B/E/S.
D.R. Horton's shares have risen 52 percent in the last 12 months, slightly lagging the Dow Jones U.S. Home Construction index <.DJUSHB>. The stock was up 7 percent at $26.15 before the bell on Friday.
Shares of No.3 builder Lennar Corp
(Editing by Roshni Menon)