Joe Raedle

Berkshire Hathaway bought more shares in Lennar (LEN.US), the second-largest US homebuilder listed on the New York Stock Exchange, twice in one week, raising its stake to about 10.9%. This makes Berkshire an insider required to report its trades to the US Securities and Exchange Commission (SEC), as its holding exceeds 10%.

SEC filings showed that Berkshire bought about 2.67 million Class A shares and about 75,000 Class B shares between September 17 and 21, for approximately US$212 million. It bought a further 1.66 million Class A shares and about 21,000 Class B shares between September 23 and 25, for about US$136 million. The two purchases were made at between US$74.80 and US$81.65 per share, totalling about US$349 million.

Following the purchases, Berkshire held about 25.38 million Class A shares and 550,000 Class B shares, worth about US$2.1 billion. That represented roughly 10.9% of Lennar's approximately 238 million outstanding Class A and Class B shares combined.

Not all of the stake was acquired during the week. CNBC, citing 13F filings, reported that Berkshire held about 13.4 million shares at the end of June, meaning its current holding was about 93% higher. The two rounds of purchases accounted for about 4.4 million shares. The remaining roughly 8 million shares were likely bought between early July and mid-September, before the stake exceeded 10% and the transactions became subject to insider reporting.

Lennar's share price rose 6.38% at the close on September 22 after news of the first purchase was disclosed. However, the stock remains down more than 18% this year and more than 30% over the past 12 months. Its 52-week high is US$133.76.

Buying comes as earnings deteriorate

Lennar reported its third-quarter results for the fiscal year ending August 31, 2026, on September 16. Revenue fell about 8% year on year to approximately US$8.05 billion, while net profit dropped 52% to US$284 million from US$591 million a year earlier. Adjusted earnings per share came in at US$1.23, below analysts' estimate of about US$1.30.

New orders fell 9% year on year to 20,879 units, while deliveries declined 3% to 20,840 units. The gross margin on home sales fell from 17.5% to 15.8%. The company lowered its full-year delivery forecast from 82,000-83,000 units to 80,000-81,000 units. Chief executive and executive chairman Stuart Miller said operating conditions had deteriorated since the previous earnings call.

The company's guidance calls for fourth-quarter deliveries of 22,000-23,000 units, a gross margin of 15.5%-16% and earnings per share of about US$1.30-US$1.65. Lennar also said its mortgage business had an 83% capture rate, while its financial services business generated quarterly operating profit of US$129 million.

Mortgage rates hit a new high for the year

Data from Freddie Mac showed that the average rate for a 30-year fixed-rate mortgage in the US rose to 7.03% in the week ending September 24. It was the fifth consecutive weekly increase, up from 6.30% a year earlier and the highest level in 2026. Lennar said higher mortgage rates and affordability pressures had weakened demand, forcing it to rely on discounts and incentives to maintain sales. Incentives were offered on about 12% of homes delivered in the third quarter.

Link to the Taylor Morrison acquisition

Berkshire's activity in the US homebuilding sector this year has extended beyond Lennar. On May 31, it announced an all-cash offer to acquire Taylor Morrison for US$72.50 per share, valuing the equity at about US$6.8 billion and the company, including debt, at about US$8.5 billion. The offer represented a 24% premium to Taylor Morrison's closing price on May 29. The transaction was completed on July 24, making Taylor Morrison a wholly owned Berkshire subsidiary. Its chief executive, Sheryl Palmer, remained in her post.

According to Berkshire, Taylor Morrison will be integrated with the on-site homebuilding operations of Clayton Properties Group, which comprises 15 regional builders under Berkshire. Lennar is not part of the integration plan, and the two moves are separate investments.

Who is behind the purchases?

Berkshire's filings did not explain the reason for the purchases. CNBC said the holding was relatively small compared with Berkshire's size and was likely made by investment manager Ted Weschler. Greg Abel took over as chief executive in January this year, and the Taylor Morrison acquisition was the first multibillion-dollar deal completed under his leadership.

What to watch next

Berkshire's 13F filing due in mid-November will provide a full picture of its holdings at the end of the September quarter. Whether Lennar can meet its fourth-quarter guidance — particularly whether it can keep its gross margin above 15.5% — and the direction of mortgage rates will determine whether demand for new homes can recover.