Berkshire Hathaway is better the ranch on homebuilders?

My take. Homebuilder stocks have been hammered as homes aren't moving (response to massive price rises). On the other hand the nation likely needs another 4-6 million homes built. Ergo pent up demand.

Will there be a correction as folks eventually start buying homes? Perhaps, the Southern states offer the best op for new housing as there is a new labor pool of recent immigrants, more favorable zoning practices and pro business policies. They also have hurricanes? Ouch.

I had Claude look at the new aquisition's positions by state & added Clayton Homes also owned by Berkshire: Taylor Morrison's footprint is concentrated in high-growth Sun Belt markets, and Clayton's geographic stronghold is the Southeast, particularly the Carolinas. Taylor Morrison is HQ'd in Scottsdale and its core markets — built across multiple acquisitions (AV Homes 2018, William Lyon 2020) — are Phoenix, Orlando, Charlotte, Raleigh, Dallas-Ft. Worth, and Jacksonville, plus Tampa, Houston, Austin, Atlanta, Nashville, Las Vegas, Denver, and the Carolinas. So expect the combined portfolio to be heavily weighted to Texas, Florida, Arizona, North Carolina, South Carolina, Georgia, Tennessee, and Nevada, with secondary positions in Colorado and the Pacific Northwest.

Berkshire has also invested heavily in a number of companies that supply materials to homebuilders, so yes they are "all in".

Berkshire Is Convinced the American Dream of Homeownership Will Stay Alive

Under its new chief executive, Greg Abel, Berkshire raises its bet on a market recovery by adding another housing company to its portfolio

By Rebecca Picciotto and Krystal Hur, WSJ

June 2, 2026

Berkshire Hathaway agreed to acquire Taylor Morrison Home Corp. for $6.8 billion, reflecting its faith in a housing-market recovery.

Berkshire Hathaway’s $6.8 billion deal to acquire a major home builder reflects its conviction that the housing market will shake off its yearslong slump and recover as it always has.

With an all-cash agreement Sunday for Taylor Morrison Home Corp., the Omaha, Neb.-based conglomerate is poised to become a top-five U.S. home builder, adding to its growing portfolio of housing-related companies.

Berkshire’s home-builder deal is a sign that a prominent investor thinks the housing slump will eventually pass—and it wants to be positioned to take advantage of any market turn. More than 75% of young renters still think they someday will own a home, according to a survey by John Burns Research & Consulting.

“This investment is grounded in a long-term belief in the strength of America’s housing market and its underlying fundamentals, which we see as enduring over time,” Berkshire Chief Executive Greg Abel said.

Still, Berkshire is raising its exposure to a housing market in its fourth year of dismal sales.

High mortgage rates, job-market uncertainty and the rising cost of living have kept many prospective buyers on the sidelines. Builders have been forced to offer incentives, such as paying part of buyers’ mortgage costs, just to unload their inventory.

Builder confidence is low. Single-family home starts declined 9% in April, the steepest drop since August, census data shows. A third of builders said they had to cut their prices last month, according to the NAHB/Wells Fargo Housing Market Index.

Moreover, many Americans now think homeownership is beyond their budget. More people are renting for longer, or putting their savings into the stock market rather than investing in a home.

But analysts say the U.S. housing shortage of more than four million homes means new homes need to be built. They expect more buyers will return to the market once mortgage rates, which recently hit a nine-month high, come down and trigger pent-up buyer demand.

Berkshire has agreed to pay a 24% premium to Taylor Morrison’s closing stock price of $58.50 on Friday. Analysts see the price as a good deal for Berkshire because the actual value of the builder’s home portfolio belies its lagging stock price.

“That is an incredible bargain,” said Tony Avila, chief executive of Builder Advisor Group, which advises on home builder mergers and acquisitions.

Taylor Morrison’s stock shot up 22% Monday to $71.55 a share, marking its biggest daily percentage gain since 2020. Berkshire’s Class A shares were flat. Berkshire will pay $72.50 a share for the home developer, which is based in Scottsdale, Ariz. The deal is expected to close later this year.

The Taylor Morrison acquisition would continue Berkshire’s decadeslong buying spree of home businesses. It owns companies across the housing supply chain from manufactured-housing firm Clayton Homes to real-estate brokerage service HomeServices of America. Over the past several years, Berkshire has held stakes in other large public builders, such as D.R. Horton and Lennar.

“They’ve put together soups and nuts of suppliers and home builders,” said Rick Palacios, director of research at John Burns Research & Consulting.

The deal is one of the first for Berkshire under Abel, who succeeded Warren Buffett in January. Sheryl Palmer, Taylor Morrison’s CEO, told CNBC on Monday that she began negotiations with Abel weeks ago before striking a deal. Buffett told the TV network that he wasn’t involved in the acquisition and praised Abel’s dealmaking prowess.

“He has launched,” Buffett said.

On Monday, Berkshire followed up with a deal of a different flavor: The conglomerate agreed to buy $10 billion of stock in Alphabet, Google’s parent company.

Taylor Morrison has all the ingredients of a typical Berkshire purchase: It is a cheap American company in an out-of-favor industry that has struggled with high mortgage rates, expensive housing prices and expectations for higher inflation. Taylor Morrison’s forward price-to-book ratio—a valuation metric that divides a company’s stock price by its projected book value—was 0.9 on Friday, below its peak of 2.1 in 2013.

Taylor Morrison is a safer bet in a precarious home-building market. The company tends to focus on the higher end of the market, which has performed better. A significant part of its business is built around buyers looking to upgrade to nicer homes, rather than entry-level buyers who are struggling the most.

In addition, the company is part of a small segment of builders that have leaned in to so-called “build-to-rent” communities of single-family homes constructed for the sole purpose of renting. Congress recently threatened build-to-rent developers with a proposal that would force them to sell their properties within seven years of building them. But House lawmakers removed that proposal in an attempt to rescue the burgeoning sector.

The Taylor Morrison deal is the latest example of consolidation in the residential-construction industry. Last month, AvalonBay Communities and Equity Residential agreed to merge in the largest multifamily combination on record after years of sluggish profits. Japanese home builders have also been more actively acquiring U.S. companies with the wager that long-term American homeownership trends are on a better trajectory than those on their home turf. Analysts expect more to come.

“This puts pressure on others to find a dance partner,” said Alan Ratner, managing director at Zelman & Associates, a real-estate research and advisory firm.