April 21 (Reuters) - D.R. Horton's ( DHI ) narrowed forecast for annual revenue still came in above analysts' estimates, despite high interest rates and inflation weighing on the homebuilder's margins.

Shares of D.R. Horton ( DHI ) were up nearly 4% before the bell on Tuesday.

U.S. homebuilders are navigating rising costs due to persistent inflation, as well as President Donald Trump's tariffs on key construction raw materials.

This has prompted builders to offer incentives like mortgage rate buydowns and smaller, more affordable homes to stimulate demand - which in turn has hurt their margins.

The Arlington, Texas-based company now expects 2026 consolidated revenue in the range of $33.5 billion to $34.5 billion, compared with its previous forecast range of between $33.5 billion and $35 billion.

But the midpoint of the range is still above analysts' expectations of $33.8 billion, according to data compiled by LSEG.

"Affordability constraints and cautious consumer sentiment continue to impact new home demand," D.R. Horton's ( DHI ) executive chairman, David Auld, said.

"We expect our sales incentives to remain elevated in fiscal 2026," he added.

Second-quarter net income decreased 20% from a year ago to $647.9 million and earnings per share decreased 13% to $2.24.

Quarterly consolidated revenue fell to $7.56 billion from $7.73 billion a year ago, compared with analysts' estimate of $7.6 billion, according to data compiled by LSEG.