The D.R. Horton team delivered an outstanding first quarter, highlighted by a 48% increase in earnings to $3.17 per diluted share.
Our consolidated pre-tax income increased 45% to $1.5 billion on a 19% increase in revenues and our consolidated pre-tax profit margin improved 380 basis points to 21.2%.
Our homebuilding return on inventory for the trailing 12 months ended December 31 was 38.5% and our consolidated return on equity for the same period was 32.4%.
After starting construction on 25,500 homes this quarter, our homes and inventory increased 30% from a year ago to 54,800 homes with only 1,000 unsold completed homes across the nation.
Earnings for the first quarter of fiscal 2022 increased 48% to $3.17 per diluted share compared to $2.14 per share in the prior-year quarter.
Net income for the quarter increased 44% to $1.1 billion compared to $792 million.
Our first quarter home sales revenues increased 17% to $6.7 billion on 18,396 homes closed, up from $5.7 billion on 18,739 homes closed in the prior year.
Our average closing price for the quarter was $361,800, up 19% from the prior-year quarter, while the average size of our homes closed was down 1%.
Our net sales orders in the first quarter increased 5% to 21,522 homes, while the value increased 29% from the prior year to $8.3 billion.
A year ago, our first quarter net sales orders were up 56% due to the surge in housing demand during the first year of the pandemic when we had significantly more completed homes available to sale and prior to the significant supply chain challenges we've experienced since.
Our average number of active selling communities decreased 3% from the prior-year quarter and was up 3% sequentially.
Our average sales price on net sales orders in the first quarter was $383,600, up 22% from the prior-year quarter.
The cancellation rate for the first quarter was 15%, down from 18% in the prior-year quarter.
Our January home sales and net sales order volume were in line with our plans and we are well positioned to deliver double-digit volume growth in fiscal 2022 with 29,300 homes in backlog, 54,800 homes in inventory, a robust lot supply and strong trade and supplier relationships.
Our gross profit margin on home sales revenues in the first quarter was 27.4%, up 50 basis points sequentially from the September quarter.
On a per square foot basis, our home sales revenues were up 3.4% sequentially while our cost of sales per square foot increased 2.9%.
In the first quarter, homebuilding SG&A expense as a percentage of revenues was 7.5%, down 40 basis points from 7.9% in the prior-year quarter.
We started 25,500 homes during the quarter, up 12% from the first quarter last year, bringing our trailing 12-month starts to 94,200 homes.
We ended the quarter with 54,800 homes in inventory, up 30% from a year ago.
25,600 of our total homes at December 31 were unsold, of which only 1,000 were completed.
At December 31, our homebuilding lot position consisted of approximately 550,000 lots, of which 24% were owned and 76% were controlled through purchase contracts.
23% of our total owned lots are finished and at least 47% of our controlled lots are or will be finished when we purchase them.
Our first quarter homebuilding investments in lots, land and development totaled $2.2 billion, of which $1.2 billion was for finished lots, $570 million was for land development and $390 million was to acquire land.
Forestar, our majority-owned residential lot manufacturer, operates in 55 markets across 23 states.
Forestar continues to execute extremely well and now expects to grow its lot deliveries this year to a range of 19,500 to 20,000 lots with a pre-tax profit margin of 13 and a half to 14%.
At December 31, Forestar's owned and controlled lot position increased 33% from a year ago to 103,300 lots.
$330,000 million of our finished lots purchased in the first quarter were from Forestar.
Forestar is separately capitalized from D.R. Horton and had approximately $500 million of liquidity at quarter end with a net debt to capital ratio of 33.9%.
Financial services pre-tax income in the first quarter was $67.1 million with a pre-tax profit margin of 36.4% compared to $84.1 million and 44.9% in the prior-year quarter.
For the quarter, 98% of our mortgage company's loan originations related to homes closed by our homebuilding operations and our mortgage company handled the financing for 66% of our home buyers.
FHA and VA loans accounted for 44% of the mortgage company's volume.
Borrowers originating loans with DHI Mortgage this quarter had an average FICO score of 721 and an average loan-to-value ratio of 88%.
First-time homebuyers represented 55% of the closings handled by the mortgage company this quarter.
Our rental operations generated pre-tax income of $70.1 million on revenues of $156.5 million in the first quarter compared to $8.6 million of pre-tax income on revenues of $31.8 million in the same quarter of fiscal 2021.
Our rental property inventory at December 31 was $1.2 billion compared to $386 million a year ago.
We sold one multifamily rental property of 350 units for $76.2 million during the quarter.
We sold two single-family rental properties totaling 225 homes during the quarter for $80.3 million compared to one property sold in the prior-year quarter for $31.8 million.
At December 31, our rental property inventory included $519 million of multifamily rental properties and $642 million of single-family rental properties.
In fiscal 2022, we continue to expect our rental operations to generate more than $700 million in revenues.
We also expect to grow the inventory investment in our rental platform by more than $1 billion this year based on our current projects in development and our significant pipeline of future projects.
During the three months ended December, our cash used in homebuilding operations was $115 million as we invested significant operating capital to increase our homes and inventory to meet the current strong demand.
At December 31, we had $4.1 billion of homebuilding liquidity consisting of $2.1 billion of unrestricted homebuilding cash and $2 billion of available capacity on our homebuilding revolving credit facility.
Our homebuilding leverage was 17.3% at the end of December and homebuilding leverage net of cash was 6.9%.
Our consolidated leverage at December 31 was 25.1% and consolidated leverage net of cash was 15.2%.
At December 31, our stockholders' equity was $15.7 billion and book value per share was $44.25, up 29% from a year ago.
For the trailing 12 months ended December, our return on equity was 32.4% compared to 24.4% a year ago.
During the quarter, we paid cash dividends of $80.1 million and our board has declared a quarterly dividend at the same level as last quarter to be paid in February.
We repurchased 2.7 million shares of common stock for $278.2 million during the quarter.
Our remaining share repurchase authorization at December 31 was $268 million.
We expect to generate consolidated revenues in our March quarter of $7.3 billion to $7.7 billion and homes closed by our homebuilding operations to be in a range between 19,000 and 20,000 homes.
We expect our home sales gross margin in the second quarter to be approximately 27.5% and homebuilding SG&A as a percentage of revenues in the second quarter to be approximately 7.5%.
We anticipate the financial services pre-tax profit margin in the range of 30% to 35% and we expect our income tax rate to be approximately 24% in the second quarter.
For the full fiscal year, we continue to expect to close between 90,000 and 92,000 homes, while we now expect to generate consolidated revenues of $34.5 billion to $35.5 billion.
We forecast an income tax rate for fiscal 2022 of approximately 24% and we also continue to expect that our share repurchases will reduce our outstanding share count by approximately 2% at the end of fiscal 2022 compared to the end of fiscal 2021.

Summary:
The D.R. Horton team delivered an outstanding first quarter, highlighted by a 48% increase in earnings to $3.17 per diluted share.
Our consolidated pre-tax income increased 45% to $1.5 billion on a 19% increase in revenues and our consolidated pre-tax profit margin improved 380 basis points to 21.2%.
Earnings for the first quarter of fiscal 2022 increased 48% to $3.17 per diluted share compared to $2.14 per share in the prior-year quarter.
Our first quarter home sales revenues increased 17% to $6.7 billion on 18,396 homes closed, up from $5.7 billion on 18,739 homes closed in the prior year.
Our net sales orders in the first quarter increased 5% to 21,522 homes, while the value increased 29% from the prior year to $8.3 billion.
Our remaining share repurchase authorization at December 31 was $268 million.
For the full fiscal year, we continue to expect to close between 90,000 and 92,000 homes, while we now expect to generate consolidated revenues of $34.5 billion to $35.5 billion.