By Brian Swint

Home builders were surging before the market opened on Friday after Warren Buffett's Berkshire Hathaway revealed that it had bought shares of D.R. Horton and Lennar in the second quarter.

The investments will be seen as a sign that the selloff among those stocks has gone too far. The industry has been hurt by high mortgage rates which have dented demand for new homes, and an uncertain economic outlook as unemployment edges higher.

The vote of confidence from Buffett, whose stock picks are often copied by others when they are revealed, is a good sign for builders. The outlook is also brightening--the Federal Reserve is widely expected to lower interest rates next month, and President Donald Trump last month floated the idea of removing capital-gains taxes on home sales to spur the housing market. The uncertainty around the White House's tariff policies have also been reduced as other countries agreed to new trade arrangements.

D.R. Horton gained 4.1% in the pre-market, and Lennar gained 5.3%. PulteGroup, another builder, added 4%. The iShares U.S. Home Construction exchange-traded fund was up 2%.

On July 22, D.R. Horton lowered the top end of its revenue guidance, citing cautious consumer demand. Before the market opened Friday, the stock was down 6.5% over the past 12 months--but it has rallied 33% over the past three months.

Lennar has also made a big comeback--it's up 18% over the past three months, though remains 10% lower than 12 months ago and is still down year-to-date.

Write to Brian Swint at brian.swint@barrons.com

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August 15, 2025 07:59 ET (11:59 GMT)

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