Housing Market Woes: Bank of America Cools on D. R. Horton

Bank of America has given D. R. Horton a reality check, downgrading its stock from "buy" to "neutral. " Analyst Rafe Jadrosich now expects the homebuilder to face tough times ahead, with a target price of $150 per share, just a 5% increase from its current value. High interest rates and rising input costs are putting a damper on housing demand and squeezing D. R. Horton's profits. Jadrosich warns that these challenges will likely continue to hurt the company's margins through 2025.

The cost of buying land, which makes up about 26% to 27% of D. R. Horton's total expenses, has been climbing. In the past year, these costs jumped by 10%. In a tough economic climate, it's hard for the company to make up for these extra costs. Additionally, D. R. Horton is already trading at a higher price compared to similar homebuilders. This makes its stock less attractive to investors. Over the past year, the stock has only gone up by 1. 7%. Not everyone agrees on D. R. Horton's future. While nine analysts think the stock is a good buy, thirteen are less optimistic, rating it as a hold or underperform.

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