Lennar Corporation (LEN), one of America’s largest homebuilders, will report earnings tomorrow amid a flurry of market speculation and investor attention. On the eve of its Q3 2025 results, Berkshire Hathaway (BRK.B) disclosed a nearly $800 million stake in Lennar, sparking speculation about whether the investment came directly from Warren Buffett or one of his lieutenants.
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Either way, the Buffett seal of approval has given Lennar a modest boost—shares were up 1.5% in volatile early morning trade before settling at ~$135 by midday in New York.
This isn’t Buffett’s first rodeo in the housing sector, as Berkshire already owns Clayton Homes, the nation’s largest manufactured homebuilder. However, the timing is notable. Lennar has been navigating a mixed housing environment in 2025. On the positive side, the company sold 22,601 homes in Q2, an improvement that helped close the gap from last quarter’s shortfall.
Direct construction costs have trended lower, falling 1.5% sequentially and 3.5% year-over-year to their lowest level since late 2021. The builder has also successfully transitioned toward an asset-light model: only 0.1 years of homesites are now owned outright, while 98% are controlled through options—up from 79% a year ago.
Yet challenges remain. Gross margin declined to 18% in Q2, pressured by heavier sales incentives and a softer average sales price. SG&A crept up to just over 8% as investments in technology continued.
Meanwhile, a much broader concern for the likes of Buffett is the cooling of housing demand in several key regions across the U.S., particularly the Pacific Northwest, Northern California, and the Southwest, where rising prices have eroded affordability. Elevated mortgage rates and wary consumers continue to dampen sentiment nationwide. While these macro pressures may not dominate tomorrow’s earnings report, investors will be watching closely for any signals that housing momentum is faltering.
For the time being, Wall Street is maintaining a holding pattern over LEN, although that could soon change if the dominoes start to fall. The current consensus is targeting $118.02 per share and expects LEN stock to decline ~13% over the next twelve months.
Could Buffett be zeroing in on a company-specific opportunity, or does he view homebuilders more broadly as a sector worth betting on? The parallel $180 million stake in D.R. Horton (DHI) suggests it’s not just Lennar that could benefit in the near term. With the Federal Reserve on the cusp of a rate-cutting cycle—a shift that typically provides a tailwind for housing—both Lennar and D.R. Horton may be well positioned to extend their gains so far this year.
Major investors like Berkshire Hathaway and Eagle Capital—the two largest names in the latest SEC filings—may be wagering that interest rates have only one direction left to go: down. If that proves true, a rotation into housing-related stocks could be timely. Still, there’s a scenario where the sector performs well overall, yet Lennar or D.R. Horton lags due to company-specific risks or unexpected challenges.
Even so, Lennar has demonstrated agility in meeting those challenges. The homebuilder continues to broaden its reach through new “master-planned” communities nationwide. Just last month, the homebuilder unveiled what it described as “more than a new neighborhood – it’s a destination” in North River Farms, Oceanside, California. The development offers 17 distinct home designs and a suite of resort-style amenities, with starting prices in the mid-$900,000s.
More recently, Lennar introduced its Dream Collection at Tillage Farms in Princeton, Texas, with pricing starting in the mid-$100,000s—highlighting its ability to serve both premium and entry-level buyers.
The Homebuilder That Stacks Tallest
Lennar currently trades at a discount to both peers and the sector median, with a forward P/E of 15.5x compared to the sector’s 20.1x, and a trailing P/E of just 11x versus the sector’s 20.5x. Its EV/Sales multiple of 0.92 is also well below the sector median of 1.34–1.38, highlighting an attractive valuation relative to sales.
In contrast, D.R. Horton is slightly more expensive in terms of sales multiples, trading at 1.64x–1.67x EV/Sales, compared to sector medians of around 1.34. However, DHI’s forward P/E of 14.5x and trailing P/E of 13.8x still sit below sector averages, suggesting the stock remains modestly valued on earnings power.
A key caution for investors is D.R. Horton’s unusually high PEG ratio of 6.64, well above the sector median of 1.76, suggesting its valuation looks far less attractive once growth expectations are factored in.