Why D.R. Horton Is Well Poised to Meet Demand for Affordable Starter Homes

The National Association of Homebuilders (NAHB) released a study that concludes that 63 million households cannot afford a home that costs more than $250,000. Given that there are roughly 129 million households in the US to begin with, that is an eye-popping statistic. D.R. Horton (NYSE:DHI) is one of the few builders out there (LGI Homes is the other) that focus on building low-cost homes for entry level buyers, which is where the demand is most acute.

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Today, $250,000 is at the lower end of the range of price points out there. Based on December data, the Census Bureau reported the median sales price of a new home was $331,400. The average sales price was quite a bit higher, at $384,000. The census report also breaks down the production into price buckets. 90% of all new homes in December cost more than $200,000, and 57% cost more than $300,000. The National Association of Realtors (NAR) estimated the median home price to be $274,500 in December. This number includes new and existing homes, so it is lower than the census data, which looks only at new homes.

Source Fool.com