Homebuilders Just Dropped a 65% Earnings Bomb — Here's What Comes Next for Home Prices

Hinzugefügt: 2026-05-10

[00:00:00]$56,400.

[00:00:02]That's the average dollar amount LAR, America's second largest home builder, is now knocking off the price of every single home it sells per home. Right now, they just don't tell you that on the listing. Last week, LAR reported a 15.2% gross margin, the weakest since 2009. KB Homes earnings just collapsed 65%. Meritage Homes earnings fell 51%.

[00:00:29]Tripoint Homes 89% PY Group missed Wall Street's number. NVR's net income dropped 34%. And in one single research note, Seapport Research downgraded seven of America's largest homebuilders with a 15% downside forecast on the worst rated names. Today, I'm telling you what comes next for home prices. Because here's what most homeowners don't realize. When builders start running 14% incentives, the resale market doesn't wobble, it follows. There are three things in this video you need to see before we get there. The first is the exact mechanism builders are using to hide these price cuts and why your home's appraisal is now disconnected from what your home is actually worth. The second is the five metro list. three Florida cities, one in Texas and one in Arizona, where this builder discount has already crossed into the resale market with one metro already down nearly 10% year-over-year.

[00:01:28]And the third is what Warren Buffett did with his home builder stake last quarter because he's holding $910 million of one of the names on the list. And what he chose to do with the other one is going to surprise you. If you own a home, you're about to find out what your equity actually is. If you're a buyer, you're about to find out what you should actually pay. And if you're a seller, well, you're competing with this. Let's get into it. Let me lay out the wreckage from Q1, 2026. Every number sourced directly from earnings releases and 8K filings. KB Home fiscal Q1 reported March 24th. Revenue 1.08 billion, down 23% year-over-year. Diluted earnings per share 52 down from a $149. That's a 65% collapse in a single year. Average selling price down 9.7% to $452,100.

[00:02:26]Gross margin compressed almost 500 basis points to 15.3%.

[00:02:32]Lenar, the company that's actually building one out of every 10 homes in America right now. Revenue down $6.6 billion. Net income $229 million, down from $520 million the year before.

[00:02:47]Average sales price down 8% to $374,000.

[00:02:52]Gross margin 15.2%, the lowest since 2009. The CEO went on the earnings call and said in plain English that incentives are running 14% versus a normalized level of 4 to 6%.

[00:03:07]Meritage Homes EPS down 51%. Tripoint Homes EPS down 89%.

[00:03:14]NBR, the most disciplined builder in America by any historical measure, saw net income fall 34%. Taylor Morrison's revenue collapsed 27% and adjusted EPS fell 46%. PTE Group missed. MI Homes EPS down 36%. That's eight publicly traded homebuilders. Eight. All reporting in the same six-w weekek window, all telling the exact same story. And then Seapport Research walked in with a research note and downgraded PTE Group, Lenar, Taylor Morrison, and KB Home from buy all the way down to sell. Three more, Dr. Horton, Toll Brothers, and MI Homes. They cut from buy to neutral.

[00:03:55]Seven downgrades one morning. a 15% downside forecast on the worstrated names. The lead analyst Kenneth Zer said the homebuilder sector is going from value trap to quote catching a falling knife. Here's where this gets uncomfortable because the data the headlines are showing you and the data the builders are reporting to their shareholders are not the same data.

[00:04:19]Zillow says home prices are flat. K Schiller says home prices are up 7% nationally. The Federal Housing Finance Agency says prices are up 1.7%.

[00:04:30]Sounds stable, right? It's not. Here's why. When a builder wants to sell a $400,000 home and the market won't bear $400,000, they have two options. Option one, they cut the sticker price to $350,000.

[00:04:45]That cut shows up everywhere. The MLS sees it. Zillow sees it. K. Schiller sees it. Your neighbors appraisal sees it. comp values across the entire neighborhood drop overnight.

[00:04:56]Option two, and this is what they're actually doing, they leave the sticker at $400,000 and they do something called a permanent rate buy down. They quietly pay the lender an upfront chunk of cash, so the buyer's mortgage rate drops from 6.5 to 4.99%.

[00:05:12]The buyer's monthly payment falls, the home becomes affordable again. The deal closes at $400,000 on paper and not one comp in the neighborhood gets touched.

[00:05:23]Dr. Horton just disclosed in its earnings call that 73% of its closings use some form of mortgage buy down. 90% of buyers using Dr. Horton's own mortgage company received one. Per John Burns research, the typical builder is paying 5 to 6% of the home's purchase price upfront to fund these buyowns. on a $400,000 home. That's 20 to $24,000.

[00:05:47]Money that could have gone to a price cut instead. And LAR Lenar's Q1 incentive load was $14.1% on a $400,000 home. That is $56,400 in hidden discount per home. Per home.

[00:06:02]Right now, the MLS shows you nothing.

[00:06:06]This is what Joel Burner, senior economist at Realtor.com, told reporters earlier this year. He said builders have an interest in keeping the sticker price high. That if they're going to spend $10,000 to move a home, they'd rather do it through a buy down than knock it off the price because, quote, there's a chance the price of the house gets artificially inflated. That's not a theory. That's a senior economist at the largest listing platform in America telling you the prices you're seeing are not the prices that are actually being paid. Look, if you've made it this far, you already know this is the kind of housing analysis you can't get anywhere else. Most channels in this space are quoting Zillow forecasts. We're pulling earnings call transcripts. Hit the subscribe button and tap the bell because the next move in this market is going to be fast and you don't want to be the last one to find out the comp on your block isn't real anymore.

[00:07:00]Builders can hide a price cut from the MLS. They can't hide it from time.

[00:07:05]Here's the math that nobody wants to do on camera. A typical buyer holds a home for 8 to 10 years. the builder buy down that made the deal possible. Most of them are 30-year permanent rate locks tied to that specific buyer, that specific loan, and that specific home.

[00:07:21]When the buyer sells, the buyer sells without that subsidy. They have to compete in the resale market at the real post incentive price against existing homeowners who never got a buy down.

[00:07:33]That's the moment the price discovery happens, and it's already started. The American Enterprise Institute Housing Center pegged February 2026 national home price appreciation at 1.1%. That's the lowest reading in their entire data set, which goes back to 2012. AEI is now projecting national prices to be down roughly 1% by year end 2026, down 2% in 2027, and down another 2% in 2028.

[00:08:02]That's a 5-year stretch of declines.

[00:08:05]Totality, formerly Core Logic, just cut its national home price forecast for the second straight month. Their February 2026 reading showed year-over-year growth of just.5%.

[00:08:17]Their list of metros at the highest risk of price declines. Cape Coral, Lakeland, Palm Bay, West Palm Beach, Deltona, all Florida. And the existing home sales data is already waving the flag. The National Association of Realtors reported existing home sales for March 2026 at 3.98 million annualized, the slowest March since 2009.

[00:08:41]Wait, it gets worse. Per Intercontinental Exchange mortgage technology, US home prices grew just 6% in all of 2025. That's the smallest calendar year gain since 2011. And more than 1.1 million borrowers ended 2025 underwater on their mortgage, the highest level since early 2018. In several southern markets, more than 1 in 10 mortgaged homes are now underwater.

[00:09:07]The signal builders are sending isn't a wobble, it's a leak, and the resale market is catching it. So where does the bleed through show up first? In the metros, where builders have the most concentration, where they put up the most spec inventory, where they need to clear it the hardest. Here are the five.

[00:09:27]Number five, Phoenix, Arizona. Case Schiller has Phoenix down 1.8% year-over-year as of February. Dr. Horton, LAR, and Meritage have a heavy footprint here. Builder incentives in Phoenix are running well above the national average. Number four, Dallas, Texas. Down 1.7% per case Schiller. Top five in the nation for share of listings with price cuts per red fin. The Austin to Dallas to San Antonio corridor is now the deepest discount territory in America.

[00:09:58]But wait, once again, it gets worse.

[00:10:00]Number three, Tampa, Florida. Down 3 12% year-over-year per Zillow. Down 2.1% per K Schiller. almost 8 months of housing supply on the market, which is double what economists call a balanced market.

[00:10:14]Number two, Austin, Texas. Down 5.9% year-over-year per Zillow. Now 27.8% below its 2022 peak. Austin was the canary that nobody wanted to talk about for 2 years. It's no longer a canary.

[00:10:30]It's the entire mine. And number one, Cape Coral, Florida, down 9.6% 6% year-over-year per AEI, down close to 10% per regional Zillow data. This is where the math is already broken. You have a metro with extreme builder concentration, hurricane insurance costs that nobody could afford, condo HOA collapses, and now a flood of new home inventory selling with 14% builder incentives. Existing homeowners cannot compete with that. So, they cut and then they cut again. Here's the controversial part. Most analysts will tell you Cape Coral is an outlier. A hurricane story, an insurance story, an HOA story. We're going to tell you something different.

[00:11:13]Cape Coral is not the exception. Cape Coral is the preview. Every Sunb Belt metro with heavy builder concentration is on the same trajectory, just earlier or later in the cycle. The data hasn't caught up to the reality yet because the comp lag is real and the buyown distortion is real, but the wave has already moved. You're just not seeing the shoreline yet. I know that take is going to upset some people. So, tell us in the comments, are you in one of these five metros? What are you actually seeing on the ground? Because we read every comment, and the on the ground intel from this audience is sharper than any data set we can pull. Drop your zip code, drop your story, and if you think we're wrong, tell us why. Hit the like button if this is the kind of analysis you wish more housing channels were doing. It genuinely helps the algorithm push this to people who need to see it before they make a $400,000 decision.

[00:12:08]Now, here's the part nobody on Wall Street wanted to flag because Warren Buffett's last home builder move tells you everything about which way this is going. In the second quarter of 2025, Berkshire Hathaway disclosed brand new positions in two homebuilders, Dr. Horton and LAR. Roughly $200 million in Dr. Horton, an initial stake in LAR.

[00:12:29]Then Q3 2025 came and Bergkshire's 13F filing revealed something unusual. They closed out the entire Dr. Horton position, sold every share, and they expanded the LAR position to roughly $910 million, about 3% of the company.

[00:12:47]Read that again. Bergkshire dumped one of the two largest home builders in America in less than 90 days and concentrated almost a billion dollars into the other one, the one that just reported the lowest gross margin since 2009 and is openly running 14% incentives. The question is why? And the answer matters for every homeowner watching this video. Birkshire isn't betting on the housing market. They're betting on which builder will survive the cycle. Lenar has the lowest debt, the most cash, the most aggressive volume strategy, and now the strongest commitment to keeping the production line moving, even at 15% margins. Stuart Miller, Lenar's executive chairman, called the company's margin a quote circuit breaker. Translation: We will burn margin to keep volume. We will accept lower perome profit to keep the factory open. We will outlast you.

[00:13:43]That's not a bullcase for housing.

[00:13:45]That's a bullc case for being the last builder standing when the cycle bottoms.

[00:13:50]And if Buffett is positioning for that, for the survival trade, not the recovery trade, what does that tell you about how soon the bottom is coming? It tells you it isn't. Let's break it down by who you are. Because the leverage is different depending on which side of the table you're sitting on. If you're a seller, you have the most exposure. You're now competing directly with a builder one mile down the road who can offer a 4.99% mortgage rate and $30,000 in closing credits. You can't match that. The only way to compete is to cut your sticker price. And once you do, your comp drops and then your neighbors comp drops and then their neighbors. If you're listed right now in any Sunb Belt Metro and not getting offers, the issue isn't your house, it's the builder around the corner. If you're a current homeowner not selling, your equity is theoretical.

[00:14:40]Your home is worth what someone will pay for it, not what Zillow says. If you're sitting on substantial equity and not planning to move for another decade, the price action probably doesn't touch you.

[00:14:51]If you're considering a heliloc or a cash out refinance, do it on conservative numbers, not on the Zillow estimate. If you're a buyer, patience is paying you for the first time in 5 years. The $400,000 home you're looking at today probably has 14% in hidden builder discount available. Ask negotiate the buy down into a price cut if you can. Mortgage research has shown that for buyers who plan to hold past year five, a price cut beats a buy down almost every time. Run the math. Don't take the first offer the sales office hands you. Subscribe because next week we're breaking down the exact 12 American cities where existing home prices have already crossed into negative territory year-over-year, ranked by total dollar value of equity that's evaporated. Three of them are in Texas, five in Florida. One is going to surprise you because it's not in the sunb belt at all. You'll see why. Tap the bell so YouTube actually shows it to you. Here's the line you're going to hear me come back to in the months ahead. The headline number is not the real number. The sticker price is not the sale price. And the housing market the news is describing is not the housing market the builders are pricing for. The next 18 months are going to be a slow unmasking where every comp in your zip code adjusts to the truth that the builders already accepted 6 months ago. The builders just told you what comes next. Don't let anyone convince you otherwise. I'll see you in the next one.