Berkshire exits D.R. Horton, adds to Lennar — what it means for homebuilders

While headlines scream that Berkshire Hathaway has taken a $4-plus billion position in Alphabet, a quieter, “closer-to-home” move slips into the latest 13F filing.

In the same quarter that Berkshire built its stake in Google’s parent, it closed out its position in D.R. Horton and added to its stake Lennar.

For the broader market, that’s a footnote. For homebuilding strategists and capital partners, it may amount to a tell.

Buffett’s team didn’t abandon housing – and wouldn’t, considering its structural strategic ownership position in Clayton Homes, a top-20 ranked portfolio of regional homebuilders. They reshaped how they want to be exposed to it.

In a Q3 2025 market that looks more fragile by the week, Berkshire has made a judgment about which operator’s playbook best fits the next 24–36 months of risk, rate pressure, and affordability stress.

And right now, that judgment leans towards Lennar.

1. This Isn’t “Horton Bad, Lennar Good” — It’s “What Wins Now?”

Start with what this move is not.

It is not a repudiation of D.R. Horton’s business model. Horton remains the largest, most diversified production builder in America, with an unmatched entry-level engine, deep land control in high-growth markets, and a track record of operational discipline through multiple cycles.

What Berkshire has done is something more surgical:

• Exit Horton completely — selling ~1.485 million shares, about $191.5 million in value.
• Increase Lennar modestly but deliberately — to roughly 7.232 million shares, worth just over $910 million at quarter-end.

If you’re a homebuilding CEO, the question isn’t, “What does Buffett know that I don’t about Horton?”

The question is, “What about Lennar’s position and strategy makes it the preferred homebuilding exposure for this stage of the cycle?”

Because what changed from Berkshire’s perspective was not Horton’s existence. It was the shape of the risk curve in late 2025.

2. The Market Backdrop: Flat Pace, Rising Inventory, Higher Incentives

The macro housing story we’re living shows a stark litany of uncertainty and risk:

• New home sales in July ran at a 652,000 annual rate — flat to down and 8.2% lower than a year ago, per HUD/Census and NAHB’s read.
• New single-family inventory climbed to 499,000 homes, with months’ supply stuck above 9.0, well above the “balanced” six-month mark.
• Builder confidence, via NAHB’s HMI, has been stuck in the low 30s, in negative territory for 16 straight months.
• Around 37–38% of builders are cutting prices, with two-thirds using incentives, typically at 5% or more of home value.

In other words: The market isn’t collapsing. It’s soft, incentive-heavy, and unforgiving of error.

The New York Times’ late-August coverage of new home sales and incentives made the same point from the consumer angle: buyers are scarce, cautious, and highly payment-sensitive; builders with in-house finance and scale have been able to “make the math work” with rate buydowns and smaller lots, but only by leaning harder into the incentive lever and negotiating down construction costs.

Against that backdrop, two things matter immensely to a Berkshire-style investor:

1. Who can protect returns while using incentives aggressively?
2. Whose land, cost, and capital structure can take a longer slog without flinching?

That’s where Lennar’s last three quarters stand out.

3. Why Lennar Fits the Buffett Playbook in Late 2025

When you lay out the Q3 (and trailing 12-month) patterns across the public builder cohort, Lennar checks three boxes that matter a lot to a risk-averse, long-horizon capital allocator.

A. Pace and Price Management in a Tougher Tape

Lennar moved early and decisively on incentives. During its mid-2025 calls, the company acknowledged that its total incentive load had climbed to more than 13% of home value in some communities — more than double pre-COVID “normal.” That’s an uncomfortable number for any operator.

But Lennar paired those incentives with:

• Carefully calibrated starts-per-community,
• A relentless focus on sell-through, not just closings, and
• Tight cycle time management to avoid bloated WIP.

Berkshire isn’t thrilled that any builder has to give away that much rate and closing cost. But if incentives are now a structural cost of doing business in this phase of the cycle, the question becomes: who can deploy them and still generate acceptable returns?

Lennar’s answer, so far, has been clearer than most.

B. Land Risk That’s Flexible, Not Heroic

Public filings and the sell-side round-ups tell a consistent story: Lennar’s land strategy has shifted steadily toward options, shorter-duration deals, and structure over speculation.

In a world where:

• Finished lots that used to cost $30,000 now pencil at $90,000+,
• Development, fees, and off-site costs are not trending lower, and
• Capital is becoming more discriminating again,

Buffett’s team will favor land-light control with land-smart execution over big, long-dated bets — even when those bets are made by a very capable operator like Horton.

Horton has been clear that it intends to keep growing volumes and communities. That’s part of its DNA. Lennar, while still growth-oriented, has positioned itself with a bit more visible optionality in how and where it expands.

For Berkshire, that nuance may be what matters.

C. Systems, Not Stories

Finally, Lennar is attractive because it looks less like a collection of market arenas and more like a repeatable, anywhere-and-everywhere operating system:

• Product simplification.
• Deep vendor relationships and cost recuts.
• A more unified platform for sales, construction, and financing.

Buffett does not need upside surprises from Lennar. He needs fewer downside surprises. In that regard, Lennar’s last three quarters of meeting the market where it is—rather than hoping it will revert to 2021—may reinforce Berkshire’s thesis.

4. What Horton’s Exit Really Means

For Horton, Berkshire’s exit is a capital markets play, period.

The core truths about DHI remain:

• Its entry-level franchise is best-in-class nationally.
• Its geographic footprint is broad, diverse, and still highly relevant.
• Its land positions, while heavier than Lennar’s in many submarkets, often come with superior long-term control.

But Horton has also:

• Been more explicit about its growth targets,
• Operated in some of the Sun Belt markets where softening has been sharpest, and
• Carried a land posture that, while disciplined, exposes it more directly to the volume/price knife edge.

In a softer, longer, more incentive-heavy stretch, Berkshire appears to have concluded that:

• If you only want one big national builder on your sheet, Lennar is better calibrated to the next 2–3 years of choppiness.

That doesn’t mean Horton is strategically or structurally weaker. It means that from Buffett’s seat, the combination of Lennar’s systems, land optionality, and recent operating choices may be a cleaner way to own the sector into an uncertain 2026.

5. The Message to the Rest of the Homebuilding Ecosystem

For public builders, the takeaway is straightforward and sobering:

• The market is re-rating predictability over growth.
• Incentives are now table stakes; the differentiator is who can maintain acceptable margins and cash conversion while using them.
• Balance sheet flexibility and land duration will increasingly drive valuation gaps.

For private builders—especially those reliant on regional and national banks—the signal is sharper:

• Capital providers are watching the same Berkshire moves you are.
• They see Buffett exiting Horton and adding to Lennar not as a trade, but as a statement about what “resilient” looks like in this environment.
• That frame will bleed into how banks underwrite AC&D loans, how PE looks at platform investments, and how bond investors price private builder credits.

None of this means privately-held builders are doomed to subordinate roles. It does mean:

• Thin margins + rising incentives + expensive lots + uncertain volume = less patience from lenders.
• Those who can show the same virtues Buffett is rewarding—discipline on land, clear pace strategies, cost control, and predictable cash—will still find support.
• Those who rely on “the market coming back soon” will find fewer chairs when the music slows again.

The wrap

Buffett’s Q3 2025 portfolio reshuffle is easy to file under “tech pivot” and move on. But buried in the footnotes is a message that matters a lot more to homebuilders’ world:

Berkshire Hathaway has not stepped away from homebuilding. It has sharpened its exposure to the one operator it believes can earn its way through a harder, longer, incentive-heavy cycle: Lennar.

For everyone else—public or private—that move is less about stock picking and more about standards.

• Can you manage pace and price without losing the room?
• Can you carry land without betting the company?
• Can you keep your systems tight enough that investors and lenders know what they’re going to get from you, even when the macro doesn’t cooperate?

Buffett and the team he trusts just told you, in the most explicit language he speaks—capital allocation—who he thinks has those answers today.

The rest of the field now has to show it belongs in that same conversation.