D.R. Horton, the nation's largest home builder, reported strong financial results for its fiscal-year fourth quarter. Earnings were up 44% year over year. Orders, an important metric for future revenue, were up 19%. D.R. Horton executives see strong sales and solid earnings growth into the relevant future.

But it's not D.R. Horton's consolidated numbers that is the key takeaway. D.R. Horton's success in the starter-home segment is what we find encouraging.

In late 2013, D.R. Horton started its Express brand of entry-level homes. In the quarter ended this past June, D.R. Horton reported that Express homes had grown to account for 19% of its orders.

The segment continues to grow. First-time home buyers accounted for 40% of D.R. Horton's sales in the latest quarter. Year over year, Express sales tripled to 5,648 homes. D.R. Horton sold a lot of Express homes, and sold them at a lower price. The average price for an Express home was a very reasonable $185,000, which was $6,000 less than the previous quarter.   

To be sure, we're looking at markets that tend to be lower priced – those in Florida and the Carolinas. Margins aren't as thick as those on higher-priced homes. But if the turnover is high enough, good money can be made selling to first-time buyers, as D.R. Horton proves.   

We frequently mention that first-time buyers are key to maintaining the housing market. Given Horton's success, we expect more builders to follow its lead and up their investment in the segment. That would be good news for near-term sales prospects and for housings' long-term health.

Information provided by Jessica Regan.

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