Billionaire Investors Warren Buffett and Stanley Druckenmiller Are Betting on the Same Trend. Here are 2 Stocks They Both Just Bought.

Key Points

• Despite some interest rate cuts, mortgage rates have remained stubbornly high.

• There's a backlog of homes waiting for sale, even though there's a shortage being built.

• Homebuilding stocks look cheap today as they struggle in this challenging market.

• 10 stocks we like better than D.R. Horton ›

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Recently, two billionaires -- Berkshire Hathaway CEO Warren Buffett and Stanley Druckenmiller, who runs the Duquesne Family Office -- both bought two of the same lesser-known stocks, as well as others that signal their confidence in a burgeoning housing industry. Here's the lowdown.

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Interest rates are slated for slashing

The last few years have been chock-full of changing economic trends and a market to match. Investors have been carefully watching how the Federal Reserve is setting interest rates, which have started to come down from post-pandemic highs.

Higher interest rates are meant to stall economic activity with the goal of bringing down inflation. Elevated rates make it harder for both businesses and individuals to borrow money, curtailing some economic development, and they also make it harder to buy a home, since most buyers need to take out a mortgage for what is usually the most expensive thing they ever buy.

Higher interest rates could make the cost of a home over time significantly more expensive, and they could add thousands of dollars to a buyer's monthly expenses.

When interest rates were cut last year, that had a short-term positive effect on mortgage rates. However, mortgage rates went back up and have remained stubbornly high, and the housing market is still under major pressure.

According to the latest public data, home prices went up 1.1% year over year, homes sold decreased 1.6%, and the national average fixed 30-year mortgage rate increased 0.13% to 6.7%. On top of that, there's been a housing shortage in the U.S. for years, and the supply is tight. According to the U.S. Chamber of Commerce, the country is short 4.5 million homes due to years of underbuilding.

But if interest rates get slashed at the Fed's September meeting, the market might start to move again. And if it does, there's going to be a need for more housing. That's where homebuilders D.R. Horton (NYSE: DHI) and Lennar (NYSE: LEN) come in, and Buffett and Druckenmiller each bought both of these stocks in the second quarter.

They each bought other stocks in this space as well. Druckenmiller bought Builders FirstSource stock, which makes components for buildings like doors, countertops, and drywall, and Buffett picks were more building-adjacent, including Nucor, which makes steel products, and Allegion, which makes tech-based home security products.

Building is back

D.R. Horton is the largest U.S. homebuilder, with a top presence in 4 out of the top 7 U.S. housing markets. As of the end of the 2025 fiscal third quarter (ended June 30), it has 38,400 homes in inventory, with 25,000 unsold. It closed on 23,160 homes.

Lennar, which is somewhat smaller and more boutique, ended the second quarter with 2,900 homes in inventory. It also sees "softness" in the market, but it says this is within historical norms.

With so many thousands of new homes waiting to get picked up, it's ripe for returning to growth as soon as mortgages get cheaper. That's why the time to buy the stocks is now.

Both companies are experiencing declines in sales and earnings. Both of their stocks are down over the past year but are climbing in 2025. And both of them are trading at low forward, one-year P/E ratios of less than 14.

Interestingly, Buffett bought both of these stocks, as well as fellow homebuilding company NVR, in 2023. He still owns NVR, but he sold off D.R. Horton before the end of that year, and he's been adding to the position in Lennar.

Homebuilding may be the most obvious way to play this trend, and these purchases imply that Buffett and Druckenmiller envision a housing turnaround soon. But if you're worried about the risk in the housing market continuing to stagnate, you can also play the trend by purchasing some housing-adjacent stocks that aren't as acutely exposed to the housing market pressure.

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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, D.R. Horton, Lennar, NVR, and Nvidia. The Motley Fool has a disclosure policy.