By Will Feuer

D.R. Horton, the Arlington, Tex.-based homebuilder, is anticipated to announce a decline in sales and earnings for the fiscal third quarter. The report is set to be released on Thursday before the market opens, and it comes as the company faces challenges from rising interest rates.

Earnings Projection

Analysts surveyed by FactSet estimate that D.R. Horton will post earnings of $2.83 per share for the third quarter, which ended on June 30. This figure is lower than the $4.67 per share earnings reported in the same period last year.

Revenue Expectations

According to FactSet, analysts are projecting sales of $8.27 billion, down from $8.79 billion in the previous year.

Key Factors to Observe

1. Demand

Recent data released by the Commerce Department on Wednesday indicated that U.S. housing starts fell by 8% in June, reaching 1.43 million. This was lower than May’s figure of 1.56 million, as homebuilders scaled back on both single and multi-family construction. Economists surveyed by The Wall Street Journal expected a steeper decline of 9.3%. The upcoming report from D.R. Horton will provide investors with further insights into the state of the housing market during the period of rising interest rates.

2. Cancellation Rate

Investors will be closely monitoring D.R. Horton’s buyer cancellation rate. In the previous quarter, the cancellation rate increased to 18% from 16% in the same quarter the previous year. FactSet survey results indicate that analysts anticipate the cancellation rate to be 18.7% in the recently concluded quarter.

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