* 1st-quarter orders rise 4 pct to 5,454 homes
* Net income jumps 86 pct to $123.2 mln
* Revenue rises 33 pct to $1.64 bln
* Average sales price increases 10 pct
* Shares rise as much as 10 pct
(Adds CEO quote, analyst comment; updates shares)
By Sagarika Jaisinghani
Jan 28 Homebuilder D.R. Horton Inc's
sales pace picked up in January ahead of what it said would be a
"very strong" spring selling season as Americans become more
comfortable with higher mortgage rates in a stabilizing U.S.
The largest U.S. homebuilder's shares rose as much as 10
percent after higher selling prices boosted its profit by 86
percent in the first quarter, making it the most profitable
first quarter since 2006.
The company, which caters mostly to first-time home buyers,
said its average sales price rose 10 percent to $275,600 in the
quarter, indicating that the company may not have to resort to
heavy discounts to promote sales.
D.R. Horton warned in November that it could step up
discounting if demand did not pick up by the spring selling
season - traditionally the strongest period for U.S.
"January sales are accelerating into the spring and we have
a supply of spec homes available to meet that demand," Chief
Executive Donald Tomnitz said on a conference call with
Spec homes, or speculative homes, are houses a company
builds in expectation of future demand. D.R. Horton has one of
the strongest inventories of spec homes among U.S. homebuilders.
Orders booked by D.R. Horton increased to 5,454 homes in the
first quarter ended Dec. 31 - seasonally the slowest selling
period for U.S. homebuilders.
The fact that orders didn't dip again after falling 2
percent in the preceding quarter was encouraging, Morningstar
Inc analyst James Krapfel said.
"Potential homebuyers are getting more comfortable with the
higher interest rate environment and returning to buying homes,"
U.S. consumer confidence rose in January as consumers grew
more optimistic about both business conditions and the job
market, according to a private sector report released on
The Dow Jones Home Construction index was up 5
percent on Tuesday morning.
D.R. Horton has lagged some peers in the housing market
recovery due to weaker land assets. It took a bigger hit when
demand slowed over the summer.
Orders at No. 3 builder Lennar Corp and largest
luxury builder Toll Brothers Inc stayed strong through
the recent slowdown as they have a wider presence in city
centers thanks to their strategy of buying land through the
economic downturn of 2008-2010.
But Tomnitz said the company was better prepared to handle
growing demand in the spring selling season.
D.R. Horton had 16,800 homes in inventory as of Dec. 31 of
which 9,300 were speculative homes. Its average community count
for the quarter was up 13 percent from a year earlier.
D.R. Horton's net income almost doubled to $123.2 million,
or 36 cents per share from $66.3 million, or 20 cents per share,
a year earlier.
Revenue rose 33 percent to $1.64 billion.
The company's shares were up at $23.06 on Tuesday morning on
the New York Stock Exchange.
(Additional reporting by Aman Shah in Bangalore; Editing by Don