Warren Buffett Just Put $600 Million Into This Stock As America Marches Into the Weakest Housing Market In Years
Warren Buffett is pouring hundreds of millions into America's largest homebuilder at the exact moment mortgage rates hit multi-year highs and cancellation rates set records. Here is why his conviction grows as nearly every analyst turns bearish.
Warren Buffett recognizes greater opportunity in the securities market vs. American real estate, and his portfolio reflects this conviction.
Market analyst Charlie Bilello highlighted Miami, Florida, on October 16 as the strongest buyer’s market in America, with home sellers outnumbering homebuyers by 159%. Incidentally, Miami is also where Lennar (NYSE:LEN | LEN Price Prediction), the nation’s largest homebuilder by volume, has its headquarters. That same homebuilder is where Berkshire Hathaway (NYSE:BRK-B), the conglomerate Warren Buffett built, has been putting large amounts of money.
From September 17 to October 2, 2026, Berkshire reportedly scooped up Lennar shares worth roughly $596 million. That works out to about 7.4 million Class A shares bought over 11 trading days at prices between $74.80 and $81.96.
Following Berkshire’s Buying Trail
At the end of June, Berkshire held 13,111,741 Lennar shares worth about $1.19 billion. It kept buying silently until its stake reached 10% in mid-September, CNBC reported. Once a holder crosses 10%, SEC rules require it to report each trade within two business days.
- Sept. 17 to Sept. 25: almost $349 million of shares, bought on six of seven trading days.
- Sept. 28 to Sept. 30: $53.6 million of Class A shares plus $329,000 of super-voting B shares.
- Oct. 1 to Oct. 2: about 2.42 million shares for roughly $193 million.
Berkshire now owns about 29 million Class A and Class B shares, a stake of roughly 12% worth about $2.2 billion. For investors who like borrowing Buffett’s homework, we sorted Berkshire’s dividend payers by valuation in a free report on the seven cheapest Buffett stocks you can grab right now.
Housing Data Keeps Getting Worse
Bilello also reported that over 14% of U.S. home purchases were canceled in September, the highest rate on record for that month. He illustrated that the 30-year mortgage rate is now at 7.4% against a median home price of $418,000, versus 3.4% and $235,000 a decade ago. Freddie Mac’s 30-year average just reached 7.40%, its highest since November 2023.
The 10-year Treasury yield stood at 5.10% on October 15 after peaking at 5.31% on October 5. Existing home sales ran at an annualized 3.99 million in September, close to August’s 12-month low of 3.93 million.
Lennar Is Giving Up Margin to Keep Homes Selling
In Lennar’s Q3 earnings release, revenue fell 8.52% to $8.05 billion. Adjusted EPS came in at $1.23, missing the $1.30 consensus. Home sales gross margin contracted to 15.8% from 17.5% even with incentives of about 12.0%, and new orders fell 9% to 20,879 homes. Management lowered full-year deliveries to 80,000–81,000.
CEO Stuart Miller said “the buyer at median family income is stretching well past 30% of gross income to carry a home,” and that in many markets “almost 50% of our visitors cannot immediately qualify.” He also named resale supply in Texas and Florida, Lennar’s two largest markets, as a source of “more competition than we’ve seen in a long time.”
Lennar’s balance sheet helps explain why Berkshire is willing to buy. The company owns roughly 2% of its homesites and controls 476,000 through third parties. Homebuilding debt equals 16.6% of total capital, and build cycle time fell to a record 116 days. Miller called the land-cost drag “finite” and “visible,” adding that “every quarter of volume shortens it.” Lennar is also buying back its own stock: it repurchased 3 million shares for $256 million at an average of $85.49. Shares are down 26% YTD and almost 40% over the past 12-month period.
Most Analysts Are Bearish on Lennar
Analyst coverage leans bearish, with eight sell or strong-sell ratings against two buy-side ratings. Morgan Stanley started coverage with an “underweight” rating and a $65 price target. The stock closed at $77.08 on October 16. That’s down 22.44% year to date and 35.11% over the past year.
Numbers That Will Test the Thesis
For Q4, Lennar guided to 19,500–20,500 new orders and a gross margin of 15.5%–16.0%. That outlook assumed mortgage rates near 6.8%, and rates are now higher. If orders land within that range, it would support Berkshire’s view that Lennar can keep homes moving through a long downturn. A margin below 15.5% would suggest a value trap, with high rates eating away profits faster than Lennar can work through land it bought at older, higher prices. The next earnings date will be posted on Lennar’s investor relations site.
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Gerelyn Terzo is the author of dividend investing handbook "Dividend Investing Strategies: How to Have Your Cake & Eat It Too." A veteran financial journalist, she covers agri-finance for outlets like Global AgInvesting and the broader stock market and personal finance for 24/7 Wall Street. She began at CNBC and later helped launch Fox Business in New York. Gerelyn currently resides in Woodland Park, Colorado and dabbles in nature photography as a hobby.
