NEW YORK, MARCH 18- If you work in residential construction, you’ve likely felt the market shift underway.
After two years of elevated mortgage rates suppressing demand, single-family housing is beginning to stabilize — and in some markets, recover.
The question for investors isn’t whether the rebound is happening. It’s which stock gives you the best exposure to it.
There are three obvious candidates: D.R. Horton (DHI), the nation’s largest homebuilder by volume; Toll Brothers (TOL), the luxury end of the market; and Lowe’s (LOW), the home improvement retailer whose business is directly tied to housing activity.
All three have reported recent earnings. Here’s what the numbers say — and what they mean for a construction industry investor.
DHI – D.R. Horton
Play Type: Volume play
Q1 EPS: $2.03
Revenue: $6.9B
Homes closed: 17,818 ↓7%
Net orders: 18,300 ↑3%
FY26 guidance: $33.5–$35B
TOL – Toll Brothers
Play Type: Luxury play
Q1 EPS: $2.19 ↑25%
Revenue: $1.85B ↑15%
Homes delivered: 1,899
Avg. sale price: $1.03M
Gross margin: 26.5%
LOW – Lowe’s
Play Type: Picks & shovels
Q4 adj. EPS: $1.98 ↑2.6%
Revenue: $20.6B ↑10%
Comp sales: +1.3%
FY26 sales guide: $92–$94B
Housing tailwind: Cautious
D.R. Horton (DHI): America’s builder under pressure
D.R. Horton has been the largest homebuilder in the United States by volume since 2002, and its Q1 fiscal 2026 results — covering the quarter ended December 31, 2025 — paint a picture of a company navigating real headwinds with discipline.
Net income fell 30% year over year to $594.8 million, with EPS of $2.03. Revenue of $6.9 billion came in below the prior year’s $7.6 billion.
The headline that matters most for housing watchers: net sales orders rose 3% to 18,300 homes. That’s the green shoot in an otherwise mixed report.
Closings were down 7%, but the order improvement signals that buyer demand — while subdued — is beginning to stabilize heading into the spring selling season.
DHI Market Insight
DHI’s own management acknowledged that “affordability constraints and cautious consumer sentiment continue to impact new home demand” and expects sales incentives to remain elevated throughout fiscal 2026. For contractors working DHI subdivisions, that’s a signal that build pace will remain measured rather than aggressive.
The company still carries significant financial strength — $6.6 billion in total liquidity and a debt-to-capital ratio of just 18.8% — and returned $801 million to shareholders during Q1 through buybacks and dividends.
Full-year 2026 guidance of $33.5 to $35 billion in revenue suggests management believes the back half of the year will be stronger. Q2 results are due April 21.
DHI is the volume bet. If mortgage rates ease and the spring selling season delivers, this stock has the most operational leverage to a housing rebound of any name in the sector.
But the risk is real: at the affordable end of the market, affordability remains the central problem, and DHI can’t control interest rates.
Toll Brothers (TOL): The luxury builder is winning right now
Of the three stocks, Toll Brothers delivered the strongest Q1 2026 report — and the numbers make clear why.
Earnings per share rose 25% to $2.19, beating guidance by $0.05. Homebuilding revenue hit $1.85 billion, outpacing the guidance midpoint by $24 million. Adjusted gross margin came in at 26.5%, ahead of targets.
The reason Toll Brothers is outperforming comes down to its customer base. Management noted explicitly that its wealthy buyers are largely insulated from affordability pressures — they benefit from home equity gains and stock market appreciation rather than being squeezed by mortgage rate changes.
The average contract price in Q1 was $1.03 million. These buyers don’t depend on a 30-year fixed rate.
Toll Brothers Market Insight
Between 30% and 40% of Toll Brothers communities raised prices in the eight weeks leading up to the Q1 earnings call, with the strongest pricing power in the North and Pacific regions. That’s the kind of signal that subcontractors working luxury residential projects will recognize immediately — it means these developers have room to keep building.
Toll Brothers is also making a strategic pivot worth noting: the company is fully exiting the multifamily development business over the next several years, selling half its Apartment Living portfolio in Q1 for a $72 million gain.
That capital is being redeployed into share buybacks ($650 million targeted for fiscal 2026) and its core luxury single-family business — a clear signal about where management sees the best returns.
Community count is projected to grow 8% to 10% in fiscal 2026, supported by a land bank of approximately 75,000 owned or controlled lots.
Full-year guidance targets 10,300 to 10,700 home deliveries at an average price of $970,000 to $990,000. The company is transitioning to its third CEO, Karl Mistry, on March 30.
Lowe’s (LOW): The picks-and-shovels play that’s still waiting
Lowe’s is the indirect housing play — the company that sells the materials, tools, and products that go into every new home and renovation.
When housing activity accelerates, Lowe’s benefits. The problem is that the housing market hasn’t fully turned yet, and Lowe’s Q4 2025 earnings make that tension visible.
The adjusted numbers were solid: adjusted EPS of $1.98, up 2.6% from the prior year, on revenue of $20.6 billion — a 10.7% increase.
Comparable sales rose 1.3%, driven by the Pro customer segment, online sales, and home services.
That Pro growth is significant — it reflects the same trend contractors are seeing, with professional demand holding up better than DIY consumer spending.
But CEO Marvin Ellison was direct in his assessment: Lowe’s is still dealing with a housing market that lacks meaningful tailwind.
The company’s 2026 guidance projects comparable sales of flat to up 2% — not a strong recovery thesis.
Management called the outlook “appropriately conservative” given the uncertain mortgage rate environment and what Ellison described as a “lock-in effect” keeping existing homeowners from selling and upgrading.
Lowe’s Market Insight
Lowe’s also recently acquired Foundation Building Materials and Artisan Design Group — two significant moves into the Pro and building materials supply space. These acquisitions cost $149 million in Q4 expenses but signal a long-term strategy to capture more of the professional contractor market. If the housing rebound accelerates, Lowe’s will be better positioned to capture Pro spend than it was two years ago.
Full-year 2026 guidance calls for $92 to $94 billion in sales. That’s 7% to 9% growth — impressive for a mature retailer — but heavily dependent on the housing market cooperating in the back half of the year.
So which stock do you buy?
The honest answer is that these three stocks aren’t really competing for the same investor thesis. They offer different exposure, different risk profiles, and different timing on the housing rebound.
Best for Rebound Upside – DHI
Most direct leverage to a volume recovery in affordable single-family. High reward if rates ease, high risk if they don’t.
Best Performing Now – TOL
Strong margins, pricing power, and a customer base insulated from rate pressure. The safest homebuilder bet in the current environment.
Best Long-Term Setup – LOW
Lowe’s Pro acquisitions position it well for when housing fully recovers. A patient play for investors willing to wait for the tailwind.
For construction industry professionals, there’s a useful frame here: these stocks tell you something about where the money is flowing in residential construction right now. Luxury single-family is the healthiest segment.
Volume affordable builders are managing through headwinds. And material supply is growing its Pro footprint in anticipation of a recovery that’s still developing.
What to watch next
DHI – Upcoming Earnings
Date: April 21, 2026
Q2 fiscal 2026 — spring selling season data will be the key read. Watch net orders and incentive levels.
TOL – Upcoming Earnings
Date: ~May 2026
Q2 fiscal 2026 — new CEO Karl Mistry’s first earnings call. Watch community count growth and margin guidance.
LOW – Upcoming Earnings
Date: ~May 2026
Q1 fiscal 2026 — Pro segment growth and comparable sales will signal whether the housing recovery is feeding through to materials demand.
This article is part of our Stock Watch section — tracking publicly traded companies relevant to the construction industry. This is not financial advice. Always conduct your own due diligence before making investment decisions.
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