U.S. homebuilder stocks are proving a valuable investment this year—and Warren Buffet’s management company has jumped into the market.
Key Details
- On August 14, Berkshire Hathaway disclosed new investments to the U.S. Securities and Exchange Commission.
- These investments include large purchases of homebuilder stocks, including D.R. Horton (5,969,714 shares), Lennar (152,572 shares), and NVR (11,112 shares).
- These shares are collectively worth $800 million, with the majority of $700 million coming from D.R. Horton—Fortune 500’s No.120 company.
- All three stocks—D.R. Horton (38%), Lennar (36.2%), and NVR (33.5%)—have all seen sizable year-to-date valuation increases.
- Warren Buffett did not publicly disclose his company’s motive for recently investing in homebuilding stocks, Fortune notes.
Why It’s Important
The U.S. housing market continues to face a volume crisis as millions of Americans have migrated between states over the past three years amid political turmoil, economic uncertainty, remote work options, and COVID lockdown regulations. Many states like Florida, Tennessee, and Texas face a continuous crisis of limited housing as thousands of people migrate to these states and compete for a small number of available houses on the market.
This has resulted in an increased demand for new home construction and sales, which has rebounded significantly in the past year. Year-over-year new-home sales for the month of June increased by 23.8%.
“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,” D.R. Horton CEO David Auld tells Fortune.
The increase is a notable data point in the overall economic picture, with most analysts being optimistic about the possibility of an economic soft-landing due to the economy’s resilience. However, these pronouncements are not universal. Famed investor Michael Burry also disclosed his company Scion Asset Management’s dealing to the Securities and Exchange Commission on Monday, which suggested the famous Wall Street prophet sees negative trends among tech companies, regional banks, and Chinese companies.