Berkshire makes big Lennar bet

Berkshire Hathaway bought almost two point seven million Class A shares of Lennar over three trading days ended Monday, bringing its stake to twenty three point seven million shares worth one point eight billion dollars.

The stake reaches almost 10%

Berkshire also owns five hundred twenty eight thousand of Lennar's Class B shares, each carrying ten times the votes of a Class A share. The combined position represents almost a ten percent stake in the Miami-based homebuilder.

Stock surges on the news

Lennar surged as much as six point six percent on Tuesday to a high of eighty three dollars and twenty four cents. The stock has plunged more than thirty two percent in the past year.

Rising rates squeeze homebuilders

Berkshire's purchases came as interest rates rise, hurting homebuilders. The nationwide average thirty year fixed mortgage rate reached six point nine five percent last week, up from six point seventy six percent the prior week and six point twenty six percent last year.

Lennar reports weak earnings

Lennar reported weak fiscal third quarter results ended August thirty first. Earnings per share totaled one dollar and twenty three cents, missing Wall Street's consensus estimate of one dollar and twenty nine cents, while revenue slumped eight percent year over year.

CEO warns on affordability crisis

Lennar forecast fourth quarter guidance below expectations. CEO Stuart Millar said thirty year mortgage rates at seven percent constrain affordability and reduce the pool of qualified buyers, pricing millions of first time buyers out of the market.

“30-year mortgage rates at 7% constrain affordability and reduce the pool of qualified buyers.”