Shares of D.R. Horton (DHI) advanced Tuesday when the country's biggest homebuilder posted better-than-expected results as incentives boosted purchase activity.

The company reported fiscal 2025 first-quarter earnings per share (EPS) of $2.61, with revenue declining 1.5% year-over-year to $7.61 billion. Both easily exceeded analysts' estimates compiled by Visible Alpha.

'Demographics Supporting Housing Demand Remain Favorable'

Executive Chair David Auld explained that even though the market continued to face buyer affordability challenges and competitive conditions, "incentives such as mortgage rate buydowns have helped to address affordability and spur demand." Auld noted that "demographics supporting housing demand remain favorable."

Auld added that because the high prices have made purchasing homes difficult for many, D.R. Horton has "continued to start and sell more of our homes with smaller floor plans to meet homebuyer demand." 

The company also noted that it will increase its stock buybacks during the year to $2.6 billion to $2.8 billion from its previous outlook of $2.4 billion.

Despite today's nearly 2% gains, D.R. Horton shares remain slightly lower over the past year.