America's largest homebuilder, D.R. Horton (DHI), warned on Thursday that its key spring selling season has gotten off to a sluggish start as elevated mortgage rates and growing economic uncertainty continue to erode consumer confidence.

"This year's spring selling season started slower than expected," D.R. Horton CEO Paul Romanowski told analysts and investors on the company's second quarter earnings call. "We have been more cautious due to continued affordability constraints and declining consumer confidence."

The homebuilder reported a 15% year-over-year decline in net sales orders for its fiscal second quarter ending March 31, totaling 22,437 homes, falling short of analyst estimates for 26,228. Home closings also fell 15% year over year to 19,276, missing the analysts' forecast of 20,219 homes.

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The company’s cancellation rate increased slightly to 16% from a year earlier for the second quarter, signaling some hesitancy among buyers compared to the prior quarter's 15% rate. 

D.R. Horton also dialed back its full-year sales forecast, expecting revenue to land between $33.3 billion and $34.8 billion, below the analysts' forecasts for $36.02 billion. The company also revised its home closings estimate, projecting a range between 85,000 and 87,000 homes, missing the forecast of 89,669.

DHI stock rose 2% in early trade on Thursday following the results. The stock is still down over 13% in 2025 and 17% over the past year. 

Builders have been grappling with a complex landscape, now compounded by unresolved trade fights with Canada, Mexico, and China. This uncertainty has weighed heavily on builders' outlook for the year, adding another layer of obstacles to an already muted housing market.

"There's so much noise around tariffs today, and it's changing day-to-day, sometimes hour-to-hour. Hard to figure out exactly where that lands,” Romanowski said.

Data from the National Association of Home Builders revealed suppliers have raised prices by 6.3% on average in response to current, enacted, or anticipated tariffs, adding an estimated $10,900 to the cost of a new home.

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Meanwhile, land costs have also been rising, with DHI reporting a 3% increase last quarter and a 10% jump in these costs over the prior year. Romanowski noted these costs are not expected to pull back anytime soon and could contribute to inflationary pressures.

Despite the uncertainty regarding rising costs, Romanowski expressed confidence in their supply chain and labor force, noting that their past suppliers have navigated past challenges.

Affordability for buyers, however, is likely to remain challenged with mortgage rates remaining unstable, with some metrics showing rates approaching 7%.

"We've had to incentivize a little more to get them off the fence and into contract and working towards their homeownership," Romanowski said. 

"But we have seen March and into April, sales pace better than we saw in February, and traffic is still pretty good, but there is certainly uncertainty and people watch that."

Dani Romero is a reporter for Yahoo Finance. Follow her on X @daniromerotv.

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