Warren Buffett’s Berkshire Hathaway has a long history of doubling down on companies it believes are undervalued.
Now the conglomerate appears to be doing precisely that in the homebuilding sector, at a moment when mortgage rates remain stubbornly high and buyers are still hesitant.
The move comes as one major builder posted quarterly numbers that hint at a turning point.
Berkshire boosts Lennar stock position
According to Berkshire Hathaway’s (BRK.A)(BRK.B) most recent 13F filing with the Securities and Exchange Commission, dated June 29, 2026, the firm raised its stake in Lennar Class A shares by 29.82%.
Berkshire now holds 13,111,741 Class A shares worth about $1.19 billion, equal to 6.23% of Lennar’s outstanding Class A stock.
Berkshire also added to its Lennar Class B position, lifting that stake by 25.42% to 298,117 shares, worth roughly $26.4 million.
Together, the two moves rank among Berkshire’s more notable portfolio changes disclosed in the filing, placing Lennar alongside other consumer-facing names Buffett’s team has favored in recent years.
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The timing lines up closely with Lennar’s (LEN) own message to investors: The company believes its stock does not reflect years of operational change.
In its June 2026 investor presentation, Lennar laid out what it describes as a full transformation of its business model.
- Lennar said it now controls 98% of its home sites through third-party land banks and developer agreements, rather than owning that land outright.
- Back in 2018, Lennar owned 72% of its home sites directly.
- The shift freed up cash for other uses. Owned inventory fell from $16.6 billion to $10.5 billion, even as deliveries grew about 80% over the same stretch.
Lennar also pointed to how cheap its stock looks next to peers.
The company’s average forward price-to-earnings ratio has run around 10.2 times since 2020, compared with 15.1 times for rival homebuilder NVR and 19 times for the S&P 500, the presentation said.
Lennar’s margins show signs of improvement
In Q2 of 2026, the homebuilder delivered 20,519 homes and generated 21,749 new orders, both landing near the top end of its own guidance.
Gross margin came in at 15.6%, an improvement from the prior quarter, while net margin reached 6.4%.
Net income totaled $305 million, with earnings per share of $1.31, excluding mark-to-market items.
The most encouraging data point may have been the incentive rate.
Lennar’s sales incentives on delivered homes dropped to 12.9%, down from 14.1% in the first quarter and 14.5% in the fourth quarter of 2025.
“After three years of incentive levels that have been generally increasing, we’re starting to see the first real and potentially sustainable decline,” Lennar CEO Stuart Miller said on the earnings call.
Construction costs also moved in the builder’s favor. Lennar said its cost per square foot fell to $81, down 7% from a year earlier, while its construction cycle time hit a record low of 121 days.
Housing stock faces mixed economic backdrop
Mortgage rates have stayed in the mid-to-upper 6% range, with the 30-year fixed rate near 6.4% to 6.5%, still high enough to strain affordability for buyers earning the median household income.
Inflation added another wrinkle. May’s consumer price index rose 4.2% year over year, up from 3.8% in April, driven largely by gasoline prices tied to disruptions from the conflict involving Iran, Miller said.
Core inflation, which strips out food and energy, cooled to 2.9% for the month.
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With the Federal Reserve holding its benchmark rate at 3.5% to 3.75%, Miller said the central bank is unlikely to offer near-term relief.
“We are not waiting for them. We are building and executing to the market as it currently exists,” he told analysts.
Lennar CFO Diane Bessette said the company ended the quarter with $1.8 billion in cash and $4.9 billion in total liquidity, along with a home-building debt-to-total-capital ratio of 15.8%.
Why Lennar stock trades at a discount
Looking ahead, Lennar guided to third-quarter deliveries of 20,500 to 21,500 homes, with earnings per share expected between $1.20 and $1.40.
The company also trimmed its full-year delivery guidance to 82,000 to 83,000 homes, citing interest rate pressure and continued macro uncertainty.
Even with that more cautious near-term outlook, Lennar’s own presentation argues the stock’s valuation has not caught up with the balance sheet work completed since 2018, including $9.6 billion in stock buybacks and $6.9 billion in retired senior notes.
Analysts tracking Lennar stock project adjusted earnings to expand from $5.54 in fiscal 2026 (ending in November) to $17 in fiscal 2030, based on consensus data from Tikr.com.
If Lennar stock trades at 11x earnings, in line with its 10-year average, it could return more than 100% within the next 40 months.
Out of the 14 analysts covering Lennar stock, one recommends “Buy,” six recommend “Hold,” and seven recommend “Sell.” The average Lennar stock price target is $86, similar to the current price.
For Berkshire, the larger Lennar stake suggests Buffett’s team sees value in a homebuilder, betting that today’s discipline sets up stronger returns once the housing market’s headwinds finally ease.
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