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Warren Buffett's successor makes another third big homebuilding bet this year—now owning around 11% of Lennar
In SEC filings last week, Berkshire Hathaway disclosed that it increased its stake in Lennar by 94% in the third quarter. Since the start of the year, its holdings of Lennar—America’s second largest homebuilder—have jumped by a staggering 260%, ResiClub calculates. While Wall Street has punished Lennar's stock over the past two years, Berkshire has quietly been buying it up, and as the stock slid further this past quarter, Berkshire got even more aggressive.
The Lennar buying is the latest in a series of big bets on U.S. homebuilders since Greg Abel succeeded legendary investor Warren Buffett, who led Berkshire for 60 years, as CEO on Jan. 1, 2026. On May 31, Berkshire announced it was acquiring Taylor Morrison, America's sixth-largest homebuilder. Combined with Clayton Properties, the nation's 12th-largest homebuilder, which Berkshire already owns, the deal will make Berkshire America's fourth-largest site-built homebuilder. Then in early July, Mungo Homes, part of Clayton Properties, announced it was acquiring South Carolina homebuilder McGuinn Homes—America’s 65th largest homebuilder.
After Berkshire Hathaway’s latest round of stock buying in Q3 2026, it now owns around 11% of Lennar—which closed 82,583 homes in calendar year 2025.
Over the past two years, Lennar has been one of Wall Street's most sold-off homebuilder stocks, with shares ending Q3 2026 -49.7% below their October 2024 high. Since Dec. 31, 2019, Lennar's stock is up just +44.2%, trailing the S&P 500 (+138.6%) and peers such as D.R. Horton (+152.6%), PulteGroup (+193.8%), and Toll Brothers (+242.7%). Part of the reason is Lennar's heavy exposure to entry-level Sun Belt markets, a segment that has been particularly weak during the cooling that followed the Pandemic Housing Boom. To keep sales from falling further, take market share, and keep its massive land pipeline moving, Lennar has been the most aggressive builder this cycle in cutting net effective prices. Lennar’s average sales price is down -24.2% from its 2022 peak, and ResiClub calculates that affordability adjustments and net effective price cuts account for two-thirds of that decline, with mix shift (smaller homes and more sales in lower-priced markets) making up the other third. That strategy has come at a cost: Lennar's Q3 2026 gross margin of 15.8% was its weakest third quarter since 2009. Margins have ticked up from 15.2% in Q1 2026 and 15.6% in Q2 2026, and Lennar's incentive rate has dropped to 12.0% from a cycle high of 14.3% in Q3 2025. But the recent jump in long-term yields could push incentives back up, and CEO Stuart Miller said that "if anything, [housing has] gotten more difficult since we last spoke in June."
As Lennar's stock selloff deepened in Q3 2026, Berkshire Hathaway, which had been buying Lennar shares through much of the pullback over the past year and a half, ramped up its purchases.
It appears that Berkshire Hathaway’s new CEO Greg Abel does not seem scared off by the fact that U.S. homebuilders, particularly those in the Sun Belt, have been navigating a cyclical cooling period ever since the Pandemic Housing Boom ended in mid-2022. As housing demand has come down, mortgage rates have remained elevated and some regional housing markets have slipped into outright home price corrections, many of the nation’s largest builders have had to compress their margins—offering larger buyer incentives, mortgage rate buydowns, and price concessions—to keep sales volumes from falling even further.
Back in July, Doug Bauer, the CEO of Tri Pointe Homes—America's 19-largest homebuilder, which was acquired by Japanese conglomerate Sumitomo Forestry—told ResiClub that both Berkshire Hathaway and Sumitomo have a long-term view of the U.S. homebuilding sector that is looking beyond just cyclical weakness. Bauer added that: "Let's face it—Berkshire Hathaway, like Sumitomo, invests in management teams and thinks in decades, not quarters. That's the beauty of the deal we have with Sumitomo... it's a great proxy to see Berkshire Hathaway make a similar conclusion."
Berkshire Hathaway, Bauer told ResiClub in July, is attracted to the lower valuation. "They like to buy into industries and companies that are undervalued," Bauer said of Berkshire Hathaway. "So there's two dynamics: Japanese [firms] are seeing they want to be part of the growth in U.S. housing because their markets are dropping, and Berkshire Hathaway says, 'these are undervalued assets.'"
ResiClub members (paid tiers) can read our latest homebuilder margin report here.
The big picture
Few executives in modern business history have inherited a tougher act to follow than Greg Abel. Replacing Warren Buffett means every early move gets read as a referendum on whether Berkshire Hathaway can still out-think Wall Street without its legendary founder. And Abel has chosen to stake a meaningful share of that early goodwill on one of Wall Street’s most unloved sectors over the past couple years: U.S. homebuilding. So far, Wall Street isn't buying the thesis, at least not yet. The consensus rating on Lennar sits at Underweight, with a mean price target near $77 implying the stock is overvalued at current levels. Several major quant and multistrategy funds cut Lennar in the same quarter Berkshire was adding, with Millennium holding puts recently as homebuilders are still working through the hangover of the Pandemic Housing Boom, and with affordability stretched and incentives still high.
Speaking on CNBC on September 2, Abel said he doesn't "envision a quick recovery" for homebuilders and expects the softness to persist. However, he added that their homebuilding investments are long-term, not short-term, bets.
“It [looking beyond current weakness] was an important part of the discussions with Taylor Morrison and the discussions I had with Sheryl [Palmer], their CEO, in that when we looked at housing and housing specifically in North America, we were taking a very long-term view, that American dream will continue to exist. And 5 years and 10 years from now, this will be a very strong asset for Berkshire, i.e., Taylor Morrison. We did combine and our combining some of our operations from Clayton Homes. We had 15 site, what we call site builders, homebuilders over in Clayton Homes, they’re now joining the Taylor Morrison team. But the conversation we were having, was that we didn’t see any type of immediate recovery or any type of hockey stick there. We did see it from Berkshire’s perspective that it was going to be a bumpy road for a while… We don’t, we don’t envision a quick recovery there, but we do see it as an industry that we definitely want to be invested in, and we’re invested in for the the long-term.”
Berkshire Hathaway’s direct homebuilding footprint
In the ResiClub Terminal, clients can find the individual footprints for America’s largest homebuilders. Firms that would like a demo of the ResiClub Terminal should email [email protected]
ResiClub is hosting ResiDay 2026 on Friday November 6 in NYC
ResiDay is back for the third straight year.
We’ll look at risks and opportunities across regional housing markets, homebuilding, and SFR.
Our biggest speakers this year include QXO CEO Brad Jacobs and KB Home's new CEO Rob McGibney. Last year, we had 260 attendees—this year we’ll have an even bigger turnout.
