* Fourth-quarter profit rises 39 pct to $139.5 mln
* Revenue jumps 40 pct to $1.80 bln
* Value of new orders rises 14 pct to $1.43 bln
* Shares rise 2 pct premarket
(Adds analyst comment, details; updates shares)
By Sagarika Jaisinghani
Nov 12 D.R. Horton Inc said home sales
picked up in October as mortgage rates eased from two-year highs
and the effects of policy paralysis in Washington faded.
Shares of the largest U.S. homebuilder, which also reported
a better-than-expected 40 percent jump in quarterly revenue,
rose 2 percent before the bell.
"Since D.R. Horton ... did not cut prices or raise consumer
incentives to drive volumes, we view today's beat as enough of a
catalyst to continue buying the shares," Sterne Agee & Leach
analyst Jay McCanless wrote in a note to clients.
Orders booked by homebuilders slowed this year - the second
full year of the U.S. housing market recovery - as mortgage
rates hit a two-year high in July and the Federal Reserve
started talking about easing the stimulus launched during the
However, industry experts expect demand to recover once
buyers adjust to the elevated mortgage rates.
While interest rates in October remained above those a year
earlier, they were down from the high of 4.8 percent touched in
"The interest rate headwinds obviously are having some short
term impact, but we remain convinced it is more of a pause and
not a structural change in the strength of the underlying
fundamentals of housing demand," Williams Financial Group
analyst David Williams said.
D.R. Horton, which reported a 2 percent fall in orders for
the fourth quarter ended Sept. 30, said sales in October rose
from a year earlier.
PulteGroup Inc, the second-largest U.S. builder,
reported a 17 percent fall in quarterly orders last month but
said it expected the fall in demand to be "short-lived".
Orders are a key indicator of the performance of builders as
their revenue is recognized only after a house is handed over to
D.R. Horton, faced with a shortage of developed land, is
also building fewer homes and raising prices. The company said
on Tuesday that the value of its orders rose 14 percent to $1.43
billion in the latest quarter.
Net income jumped 39 percent to $139.5 million, or 40 cents
per share, from $100.1 million, or 30 cents per share, a year
Homebuilding revenue rose 40 percent to $1.80 billion.
Analysts on average had expected earnings of 40 cents per
share on revenue of $1.78 billion, according to Thomson Reuters
D.R. Horton shares were up at $18.50 before the bell. They
had dropped by about a third to Monday's close since interest
rates started rising in May.
(Reporting by Sagarika Jaisinghani and Mridhula Raghavan in
Bangalore; Editing by Kirti Pandey)