Canox HK - This Warren Buffett Stock's Earnings Are a Housing Market Test

SHEUNG WAN, Hong Kong - Oct. 4, 2023 - PRLog -- Analysts estimate that the luxury homebuilder's quarterly earnings would fall by 30%, but that the new-home property market will stay strong. The shares of LEN dropped on Wednesday.

Homebuilders are at a crossroads. Stocks surged in the first half of the year as increasing loan rates hindered existing-home sales, pushing up demand and prices for newly constructed homes. Building-Residential/Commercial is ranked 14th out of 197 industry groupings covered by IBD. So far in 2023, homebuilder stocks have gained more than 36%.

During that period, Warren Buffett's Berkshire Hathaway (BRKB) made a wager on the housing market in the United States. Berkshire said this month that it added new investments worth more than $800 million in Lennar, D.R. Horton (DHI), and NVR (NVR) during the second quarter.

However, the increase in homebuilding stockpiles has now been halted for over nine weeks. This has left certain companies, such as Toll Brothers (TOL), NVR, and M/I Homes (MHO), with viable base layouts.

The surge may persist from here, and equities might rise. However, high price incentives and other advantages used to entice purchasers into new houses may start to take their toll, driving homebuilder profits and stocks down. That image will be updated by Lennar's findings on Thursday.

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