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- Lennar: The Feds are cooking up something to 'address' housing affordability
Lennar: The Feds are cooking up something to 'address' housing affordability
On Wednesday, Lennar co-CEO Stuart Miller told analysts that major homebuilders are in discussions with the administration. He added: "do I think that something will come out in 2026? I'd be surprised if something isn't done."
Lance Lambert
December 18, 2025
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Lennar: The Feds are cooking up something to 'address' housing affordability
During their earnings call on Wednesday, executives at Lennar—a giant homebuilder with a market capitalization of $27 billion—said the federal government is working on a plan to help alleviate strained housing affordability.
Lennar executives said federal officials are actively engaging with homebuilders and industry groups to better understand constraints—and to avoid policies that could unintentionally damage supply. While no specific program was outlined, management suggested it would be “surprising” if no meaningful action emerged in 2026, given current discussions.
“I think the crystal ball around government activity is really complicated, but I can tell you that a number of homebuilders have gone in to see critical officials within the [federal] government. We have received a lot of attention. There's a lot of thought process going on. You've seen trial balloons put out around various types of programs. What's interesting is that the government has been very tuned in to the industry to make sure that they're not walking into unintended consequences. So whatever is done, that it be constructed properly, is important. And to your question of you know, do I think that something will come out in 2026? I'd be surprised if something isn't done. I think affordability is very much on the table. It's a political issue right now, and I think across the country, you're hearing the drumbeat of that being a primary focal point, and politically it's important that someone pick up the mantle and do something to address it, rather than just throw money at it. So it'll be interesting, and we'll have to sit back and wait and see what comes out.”
This week, America’s second-largest homebuilder, Lennar, reported additional gross margin compression in the past quarter, as it had to spend more on incentives to maintain sales volume amid the soft housing market environment. To maintain sales in this softer market, Lennar spent an average of 14.0% of the final sales price on incentives—such as mortgage rate buydowns—in Q4 2025, up from 10.0% in Q4 2024. In “normal” times, Lennar’s sales incentive rate is around 5.0% to 6.0%.
On their typical sale, Lennar spent $62,837 on incentives last quarter, according to ResiClub’s analysis published today.
What’s interesting is that Lennar appeared to suggest to analysts on Wednesday that whatever the federal government is cooking up could be enough to improve housing market conditions and reduce Lennar’s currently elevated incentive spending/improve margins.
“The strategy is let's build the volume that the country and the consumers need. Let's make it affordable at this time where affordability is so strained, and let's find ways to make ourselves more efficient, and let's expect that something is going to come through the governmental ranks to support that affordability and enable the market to enter the housing market, and the reduction in incentives is going to flow through to our margin.”
What kind of action does Lennar think the federal government could take that would be meaningful enough to reduce incentive spending and expand margins?
Lennar didn’t say.
Back on November 8, FHFA Director Bill Pulte and President Donald Trump announced that the administration was exploring a 50-year mortgage option to help lower some homebuyers’ monthly payments. Within minutes of the announcement, a sizable backlash erupted on social media, and Pulte began walking back the idea. Amid that 50-year mortgage backlash, Pulte also floated the idea of “portable” mortgages. It remains unclear what he meant by “portable” (for example, an expansion of assumable mortgages?), whether such a policy would be legal, or how seriously the idea was being considered.
Big picture: Lennar’s comment on Wednesday raises more questions than it answers—but it’s something ResiClub will be watching closely in early 2026.
ResiClub PRO members can read my full analysis of Lennar’s Q4 2025 earnings here.
America's largest mortgage lender is getting bigger
United Wholesale Mortgage (UWM)—America's largest wholesale mortgage lender—announced on Wednesday that it's acquiring Two Harbors Investment—a REIT that buys Mortgage Servicing Rights (MSRs) and has a large servicing platform—for $1.3 billion.
It looks like UWM doesn’t want to lose ground to Rocket Companies.
The move comes nine months after Rocket Companies—America’s second-largest mortgage lender—agreed to buy mortgage servicer giant Mr. Cooper for $9.4 billion.
“This transaction is expected to provide UWM with (i) expanded servicing expertise and scale as it continues to expeditiously bring servicing in-house, (ii) a high-quality $176 billion UPB MSR portfolio, nearly doubling its existing MSR portfolio to approximately $400 billion, which will create significant recurring revenues, and (iii) the opportunity for approximately $150 million of cost and revenue synergies on an annual basis to help drive meaningful earnings accretion. UWM’s strong pro forma cash flow coupled with a strengthened balance sheet is expected to allow UWM to continue investing in growth while also rewarding stockholders at both companies with continued dividends. The combined company will also be able to leverage TWO’s proven capital markets expertise and UWM’s scale to create further efficiencies around financing, hedging and secondary markets.”
“Anticipated Benefits to UWM and TWO from the Transaction
- Combined company will service over $400 billion in MSR, ranking number 8 among servicers nationwide.
- UWM’s industry-leading originations business together with TWO’s servicing expertise positions the combined company as a world class complete mortgage company.
- Expect further efficiencies around financing, hedging and secondary markets from TWO’s proven capital markets expertise and UWM’s scale.
- Opportunity for meaningful cost and revenue synergies.
- The transaction will materially increase UWM’s public float to approximately 513 million shares, or $2.6 billion based on the price of UWMC common stock on December 16, 2025, representing a 93% increase from UWMC’s current float.”