On Monday, Berkshire Hathaway disclosed to the U.S. Securities and Exchange Commission that it had made investments in three major U.S. homebuilders: D.R. Horton (No. 120 on the Fortune 500) , Lennar (No. 119 on the Fortune 500), and NVR (No. 376 on the Fortune 500).
In total, Berkshire Hathaway bought 5,969,714 shares of D.R. Horton, 152,572 shares of Lennar, and 11,112 shares of NVR. Those shares are worth over $800 million—with more than $700 million of it being in D.R. Horton.
While Berkshire Hathaway CEO Warren Buffett did not publicly state the motive behind this investment, these stock purchases do coincide with a remarkable surge in U.S. homebuilder stocks.
This year has witnessed an impressive performance in the homebuilder sector, with D.R. Horton and Lennar up 38.0% and 36.2%, respectively, year-to-date. Not too far behind is NVR, which is up 33.5% this year. For comparison the S&P 500 Index is up 16.3% this year.
The driving force behind this growth can be attributed to the fact that new home sales in 2023 have rebounded somewhat, following the sharp pullback that took place amidst last year’s mortgage rate shock-induced housing slump.
This new construction improvement has translated into new home sales climbing 23.8% year-over-year in June 2023. That said, new home sales are still 32.2% below the cycle’s peak which occurred at the height of the pandemic housing frenzy in August 2020.