D.R. Horton's Costly Missteps Send Stock Tumbling

D.R. Horton's stock plummeted 9.2% after revealing a $65 million mark-to-market charge for a hedge gone awry due to the unexpected costs of mortgage-rate buydowns, on top of regular buydown costs, caused by the massive swing in mortgage rates during the quarter. The company increased the use of buydowns, with 70% of its deals made with mortgage-rate buydowns in Q4, and plans to continue using them to stay competitive. The plunge in mortgage rates in November and December caused the company's hedges on those buydowns to lose market value, triggering the charge.