D.R. Horton forecast 2025 revenue and home deliveries below estimates today, as volatile mortgage rates stoked buyer uncertainty and the builder employed discounts to whip up demand, sending its shares about 11% lower.

The largest U.S. homebuilder also missed estimates for fourth-quarter profit and revenue. The results pulled down shares of other homebuilders, with Lennar and PulteGroup down more than 4%.

After the U.S. Federal Reserve began its monetary easing cycle with a 50-basis-point interest rate cut in September, some prospective buyers are waiting for rates to potentially go lower in 2025, D.R. Horton said.

“I don’t think this is a structural issue with demand. There’s just a lot of noise in the market … the rate volatility we’ve seen combined with the election news that’s out there,” CEO Paul Romanowski said in an earnings call.

An affordability crisis also persists as median prices remain elevated due to a chronic shortage of homes in the United States.

Typical home prices in the U.S. have increased by more than 50% over the past five years, based on the Case-Shiller Home Price Index, said Lisa Sturtevant, chief economist at real estate data provider Bright MLS.

This has forced large homebuilders to give more discounts despite elevated land and material costs.

About 63% of D.R. Horton’s buyers utilized incentives in the fourth quarter and the company expects incentive levels to rise over the next few months. Consequently, it forecast home sales gross margins would decline sequentially in the current quarter.

It expects full-year revenue of $36 billion to $37.5 billion, below estimates of $39.41 billion, according to data compiled by LSEG.

For fiscal 2025, the company expects to deliver 90,000 to 92,000 homes, below estimates of more than 94,000 deliveries.

D.R. Horton’s fourth-quarter earnings per share of $3.92 and revenue of $10 billion missed estimates of $4.45 per share and $10.2 billion, respectively.