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My decision to move against Berkshire’s homebuilder trade is a margin-and-rates decision, not a claim that housing demand is permanently weak. New-home supply is structurally limited, but builders are currently paying heavily to make monthly payments affordable. Those incentives can protect sales while transferring value from shareholders to buyers. Berkshire’s own rapid changes in its positions also make a single 13F filing a poor substitute for an investment thesis.
The evidence below covers Berkshire’s disclosed U.S.-listed holdings through the third quarter of 2025. It does not identify whether Warren Buffett, Todd Combs or Ted Weschler selected any individual stock, and it does not reveal Berkshire’s reasons for each trade.
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What Berkshire bought—and how the trade changed
Berkshire’s second-quarter 2023 filing disclosed three homebuilders:
| Company | Shares disclosed | Value at June 30, 2023 |
|---|---|---|
| D.R. Horton | 5,969,714 | $726.4 million |
| Lennar | 152,572 | $17.2 million |
| NVR | 11,112 | $70.6 million |
The three positions totaled more than $800 million. That disclosure was a snapshot of holdings on June 30, 2023, not a statement that Berkshire intended to hold each stock for a decade.
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Subsequent filings show why copying the initial purchase is risky. Berkshire sold all 5,969,714 D.R. Horton shares in the fourth quarter of 2023, repurchased about 1.5 million in the second quarter of 2025, and sold that position again in the third quarter of 2025. At the same time, it retained about 7.2 million Lennar shares—HousingWire reported roughly 7.232 million, worth just over $910 million—and 11,112 NVR shares. The shift toward Lennar in a soft market is an outside interpretation, not an explanation Berkshire has publicly confirmed.
The case for owning builders
Resale scarcity can redirect buyers to new homes
Rising mortgage rates slowed demand in Berkshire’s housing businesses in 2023, but the shortage of existing homes for sale partly offset that weakness. When owners with older, cheaper mortgages avoid moving, buyers who still need a home have fewer resale choices. Builders can capture some of that demand with completed or nearly completed homes.
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The supply deficit is a long-term tailwind
D.R. Horton chief executive David Auld said in 2023: “It is hard to pinpoint exactly how underbuilt the country is, but I firmly believe we are still in an extremely undersupplied housing market, for both new and existing homes, likely for years to come due to development and construction capacity constraints in the industry.” That is a structural argument, not a forecast for any particular quarter’s earnings.
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Builders can lower the payment without cutting the sticker price
During the 2023 slowdown, builders used mortgage-rate buydowns, cash back at closing and price reductions. Auld said D.R. Horton was generally offering a mortgage rate about one percentage point below the market rate on a 30-year fixed loan for the life of the loan. These tools can keep a buyer’s monthly payment within budget when a headline price cut would reset local comparables.
The 2023 sales rebound did not restore the prior peak
U.S. new-home sales rose 23.8% year over year in June 2023, but remained 32.2% below the cycle peak reached in August 2020. The rebound therefore demonstrated resilience without proving that builders had regained peak-cycle pricing power.
Why I am taking the opposite direction
Incentives make reported volume less valuable
National Association of Home Builders survey figures reported by the Associated Press found that 60% to 64% of builders were offering incentives and 30% to 33% were cutting prices. FactSet data cited by AP showed average operating margin for 12 large builders falling to 15.08% in the fourth quarter, from 16.3% a year earlier. A closing that requires a rate subsidy can look like a sale in the order book while producing less profit.
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Lennar illustrates the scale of the issue: Fast Company reported incentives equal to about 14.3% of final sales, compared with roughly 5% to 6% in normal periods. Lennar co-CEO Stuart Miller said on September 19, 2025, “For Lennar, this is an opportune time to pause and let the market catch up a little bit.” That comment is consistent with a strategy of protecting volume and market share, but it also signals that demand is not clearing without substantial assistance.
More listings can shift negotiating power
Active listings were up 25% year over year in the 2025 data cited by AP. BofA Securities analysts wrote, “We expect order growth to come at the expense of margins for homebuilders.” If resale inventory continues to rebuild, builders may have to compete with both existing-home sellers and one another, making incentives harder to withdraw.
Mortgage rates can overwhelm the housing shortage
A structural shortage does not eliminate payment shock. Higher mortgage rates reduce the amount a household can borrow at a given monthly budget, and the effect is immediate for rate-sensitive first-time buyers. Builders can bridge that gap temporarily, but the cost appears in gross margin, operating margin or both. I would rather wait for evidence that payment support is receding than assume today’s sales pace reflects durable pricing power.
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Berkshire’s turnover defeats a simple copy-Buffett signal
Buffett wrote in 1996, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” Berkshire’s documented D.R. Horton buy, sale, repurchase and subsequent sale over roughly two years shows that the homebuilder positions do not function as a permanent sector forecast. A 13F arrives after the quarter ends and does not disclose the manager, entry price, hedges or intended holding period.
How I would test the thesis before changing course
My opposite-direction stance means avoiding a broad homebuilder commitment until the operating evidence improves. I would monitor these measures in company filings and industry data:
- Incentive burden: Track incentives as a percentage of the final sales price and whether that percentage declines for several quarters.
- Margins: Look for stabilization in gross and operating margins, not just higher unit deliveries.
- Mortgage sensitivity: Separate sales achieved through rate buydowns from sales made at prevailing market rates.
- Orders versus production: Compare net orders with homes completed and inventory carried. Faster orders are less reassuring if cancellations or unsold completed homes rise.
- Land exposure: Examine how much land is owned outright versus controlled through options. Option-heavy models can reduce capital risk in a downturn; owned land can provide control but tie up cash.
- Affordability and geography: Check entry-level price points and the markets contributing growth rather than treating national housing statistics as uniform.
- Normalized valuation: Value the shares against through-cycle earnings, not a single year inflated by unusually low incentives or unusually high demand.
These checks also explain why D.R. Horton, Lennar and NVR should not be treated as interchangeable. Their incentive policies, land strategies, geographic mixes, production rates and balance-sheet choices can produce different outcomes even when they sell into the same mortgage-rate environment.
What the Berkshire filings do—and do not—tell investors
The filings establish that Berkshire had meaningful exposure to major U.S. builders and later reshaped that exposure toward Lennar while exiting D.R. Horton again. They do not establish that Buffett personally made every decision, that Berkshire expects a housing boom, or that the positions are suitable for another investor’s risk tolerance and time horizon.
For a long-term investor, the key question is not whether the United States needs more homes. It does. The question is who will capture the economics of building them while buyers need financial help to purchase them. Until incentives normalize, margins stop falling and sales hold up at less subsidized payments, I prefer to stay on the opposite side of Berkshire’s apparent housing bet.
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