There could be problems ahead for consumers and the economy if interest rates do not fall, the latest financial results from Dr. Horton indicate. The Arlington, Texas, homebuilder reported quarterly earnings that beat Wall Street analysts' estimates and provided disappointing guidance on future results before the market opened on Tuesday, sending shares down 11%. CEO David Auld said interest rate fluctuations were keeping some homebuyers on the sidelines. “While mortgage interest rates have declined from their highs earlier this year, many potential homebuyers expect rates to be lower in 2025,” he said in a statement. DHI Year-to-date, the 30-year fixed mortgage rate is 7%, according to Mortgage News Daily. This is down from the 8% it reached last October, but the highest since July 10, according to the site. Mortgage rates are tied to the yield on 10-year Treasury bonds, which have risen recently. Bond yields move inversely with prices. In fact, interest rates have actually risen since the Fed began its rate-cutting campaign in September, when it cut the federal funds rate by half a percentage point. Strong economic data coupled with uncertainty about the central bank's path to future rate cuts weighed on benchmark Treasury bonds. DR Horton said it expects revenue of between $36 billion and $37.5 billion in the fiscal year ending September 2025, below the FactSet estimate of $38.91 billion derived from analyst estimates. For its just-ended fiscal fourth quarter, it posted earnings of $3.92 per share on revenue of $10 billion. Analysts surveyed by LSEG expected earnings per share of $4.17 on revenue of $10.22 billion. The results also sent shares of other homebuilders lower, with shares of Toll Brothers, Pulte Group and KB Home all down about 4%. The S&P Homebuilders ETF (XHB), which tracks the S&P 500 index of homebuilders, lost 3%. Among home improvement retailers, Home Depot and Lowe's both fell about 2%.
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While investors focused on Big Tech's earnings, homebuilders issued a stern warning
