“This year’s spring selling season started slower than expected, as potential homebuyers have been more cautious due to continued affordability constraints and declining consumer confidence,” Paul Romanowski, CEO of D.R. Horton, the largest homebuilder in the country, said on an earnings call Thursday morning. Romanowski echoed comments made by executive chairman David Auld in the earnings release. 

Home prices soared throughout the pandemic, but once inflation became scorching hot, hitting a four-decade high, and the central bank hiked its key interest rate to tame it, mortgage rates rose from their pandemic rock-bottom of sub-3% too. The one-two punch of high home prices and high mortgage rates is bruising demand. Plus, President Donald Trump’s on-again, off-again tariffs, spiraling stocks, and inflation fears shattered consumer sentiment. 

Homebuilders were mostly better off in the latest housing bust because existing supply is so tight since would-be sellers aren’t selling out of fear of losing the low mortgage rate they locked in during the pandemic or earlier, and the U.S. is short almost four million homes. Plus, builders can craft smaller homes, offer mortgage rates buydowns, or cut prices, to bring back demand. Builders can, and are, still using incentives. 

“We expect our incentive levels to remain elevated and increase further, the extent to which will depend on market conditions and changes in mortgage interest rates,” Romanowski said. 

But builders aren’t immune to market pain. 

D.R. Horton missed earnings estimates and slashed its revenue forecast through the year. For the second quarter of the fiscal year, the company reported $7.7 billion in revenue, a 15% drop from the same quarter a year ago. Its homebuilding revenue also decreased 15% to $7.2 billion in the second quarter compared to a year before. D.R. Horton sold fewer homes than it had a year ago. The homebuilder now anticipates revenues between $33.3 billion to $34.8 billion while it had originally projected revenues between $36 billion to $37.5 billion. Still, D.R. Horton shares rose 4% Thursday but are down almost 13% over the past year, at the time of writing.

Romanowski acknowledged market volatility and economic uncertainty, but did not mention tariffs once during the earnings call until asked. 

“There’s so much noise around tariffs today, and it’s changing day to day, sometimes hour to hour,” he said. “Hard to figure out exactly where that lands.” 

He later said wherever tariffs land, he sees a less substantial impact for the company and feels good about the builder’s supply chain and labor force. 

“We’ll just take whatever comes out of the tariffs as it comes at us, once it settles down,” Romanowski said.