Workers assemble timber frames for homes under construction at the Lilac Ridge Community by Lennar Homes on July 14, 2026 in Vacaville, California.
David Paul Morris | Bloomberg | Getty Images
Berkshire Hathaway Began buying at a housing construction company that was in trouble. lenneraccumulating nearly 10% equity.
The position is a “classic” value play, according to CFRA analysts.
Berkshire Hathaway bought about 2.7 million shares of Lennar’s Class A stock in the three business days ending Monday, increasing its position to 23.7 million shares worth $1.8 billion, according to a securities filing late Monday. The Omaha-based conglomerate also owns 528,000 shares of Lennar’s Class B stock, each with 10 times the voting power of a Class A share.
Lennar stock soared as much as 6.6% on Tuesday, hitting a high of $83.24. The Miami-based company has plunged more than 32% over the past year.
Dimming is also affordable
Berkshire’s acquisition comes as interest rates rise, with higher rates on 30-year mortgages and lower affordability hurting home builders. The national average interest rate on a 30-year fixed mortgage hit 6.95% last week, up from an average of 6.76% the week before and 6.26% last year, according to Freddie Mac. of State Street SPDR S&P Home Builders ETF (XHB) It has fallen almost 16% since the end of June.
Lennar has fallen by almost a third in the past year
“Berkshire likes to buy undervalued assets,” said Kathryn Seifert, an analyst at CFRA Research. The bet on Mr. Lenner is a “classic Berkshire value play.”
The move makes sense for current Berkshire CEO Greg Abel, who took over from Warren Buffett last year.
Seifert said Berkshire has a “pretty significant presence” in the homebuilding market after the Taylor Morrison acquisition. Berkshire also owns building materials companies, including paint maker Benjamin Moore and roof tile maker Johns Manville. In 2003, Berkshire acquired Clayton Homes, a manufacturer of assembled and modular homes, for about $2 billion.
weak results
Lennar last week reported weak results for its fiscal third quarter, which ended Aug. 31. Earnings per share totaled $1.23, below Wall Street analysts’ consensus estimate of $1.29, and sales were down 8% from a year earlier.
More importantly, Lennar expected fourth-quarter guidance to be weaker than expected, citing affordability challenges due to rising interest rates. CEO Stuart Miller said on a management conference call with analysts that the 30-year mortgage rate of 7% is constraining affordability and reducing the pool of qualified buyers.
The housing sector, plagued by a mismatch between supply and demand, is contributing to the decline in consumer confidence. Due to the lack of supply of newly built homes, the prices of used homes have soared, making it difficult to purchase new homes. Rising mortgage rates have driven millions of first-time buyers out of the market altogether.
With its often contrarian value investing philosophy deeply ingrained, the tough housing environment could make it a rich target for Berkshire, which had a war chest of about $367 billion at the end of June.
On Friday, Buffett officially stepped down as chairman, effective immediately, and was succeeded by his son, Howard Buffett.
