Buffett and Druckenmiller Bet on Housing: A Portfolio Manager’s Take

The market’s a jungle, and every money manager is swinging from their own vine. Some like it lush and tangled-thousands of stocks, endless trades, chaos masquerading as strategy. Others keep it lean, a handful of names, each one polished like a loaded revolver. Warren Buffett? He’s the guy who knows when to pull the trigger. Stanley Druckenmiller? He’s the shadow in the corner, watching, waiting, ready to strike. And right now, they’re both aiming at the same target.

Small portfolios are like well-cut suits-they tell you more about the man wearing them. When Buffett makes a move, people notice. When Druckenmiller does, they should. Both have just bought into two lesser-known stocks that say something big about where they think the market’s headed: the housing industry. It’s not flashy, but it’s sturdy, like a brick wall in a storm.

Interest rates are coming down-or so they hope

The Fed’s been playing God with interest rates, and for the past few years, it’s felt like we’ve all been living in Purgatory. Rates climbed after the pandemic, squeezing borrowers dry. Businesses choked on debt. Homebuyers stared at mortgage rates like they were looking at a rattlesnake coiled on their front porch. Higher rates don’t just make homes expensive; they make dreams unaffordable.

When rates dipped last year, buyers perked up like stray dogs hearing a whistle. But the reprieve didn’t last. Mortgage rates crept back up, stubborn as a mule, and the housing market stayed pinned under its own weight. Prices edged up 1.1% year over year, but sales fell by 1.6%. The national average for a 30-year fixed mortgage? A brutal 6.7%. And let’s not forget the elephant in the room: America’s short 4.5 million homes, thanks to decades of undersupply.

But whispers are circulating that the Fed might slash rates this September. If they do, the housing market could wake up faster than a drunkard at closing time. And if it does, you’ll need builders. That’s why D.R. Horton (DHI) and Lennar (LEN) are suddenly hot tickets. Buffett and Druckenmiller both snapped them up in Q2. They weren’t alone. Druckenmiller added Builders FirstSource to his cart, while Buffett went for Nucor and Allegion-steel beams and smart locks, respectively. They’re betting on bricks and mortar, but they’re hedging with steel and circuits.

Building is back-or will be

D.R. Horton is the heavyweight champ of homebuilders, throwing punches in four of the top seven U.S. markets. As of June 30, they had 38,400 homes in inventory, 25,000 unsold, and closed on 23,160. Lennar, meanwhile, plays the boutique angle, ending Q2 with 2,900 homes. They admit the market’s soft, but hey, softness can be seasonal-it doesn’t mean winter’s here forever.

Both companies are bleeding sales and earnings, their stocks battered over the past year. But in 2025, they’re clawing their way back, trading at forward P/E ratios south of 14. Buffett bought both in 2023, though he sold off D.R. Horton before year-end. He’s been stacking chips on Lennar ever since. Druckenmiller joined the party later, but he brought his checkbook.

Buying these stocks now is like betting on a boxer who’s taken a few hits but still has fight left in him. If rates drop, the housing market could roar back like a lion shaking off a nap. But if you’re skittish about tying your fortunes to homebuilders, there’s always the periphery. Steel and security won’t vanish even if mortgages stay pricey.

The market’s a poker game, and Buffett and Druckenmiller are raising the stakes. They see a rebound coming, slow and steady like dawn breaking over a smoggy city. Me? I’m watching, waiting, wondering if they’re bluffing-or if they’ve already seen the cards. Either way, it’s a bet worth considering. 🃏

2025-09-03 16:45

Interest rates are coming down-or so they hope

Building is back-or will be

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