Fitch upgrades ratings outlook on D.R. Horton

Associated Press Modified: June 27, 2012 at 7:00 pm •  Published: June 27, 2012
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NEW YORK (AP) — Fitch Ratings on Wednesday upgraded its outlook on homebuilder DR Horton's ratings, saying it expects better prospects for the housing industry this year.

The ratings firm changed its outlook to "Positive" from "Stable," which means Fitch sees at least a 40 percent chance that it will upgrade the builder's ratings at some point over the next 18 months.

Fitch also affirmed its ratings on the Fort Worth, Texas, homebuilder.

While Fitch expects improving prospects for the housing industry this year, the firm noted that the housing market continues to face challenges that are likely to "meaningfully moderate the early stages of this recovery."

Even so, D.R. Horton Inc. has the financial flexibility to navigate the market and continue to invest in land, Fitch said.

Like many other large builders, D.R. Horton aggressively reduced debt during the housing downturn.

The company's homebuilding debt fell from $5.5 billion as of June 2006 to its current level at $1.94 billion, Fitch said.

The builder typically buys land parcels already prepared for construction or enters into a contract with the seller giving it the option to acquire the land.

Fitch expects D.R. Horton will continue buying land and rolling out new home communities.

The builder has $662.2 million in unrestricted cash and marketable securities of $299.1 million, as of March 31.

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