Homebuyers and Builders Look Ready for a Truce

There’s been no love lost between builders and buyers in the entry-level housing market over the past five years. Good news for one was invariably bad news for the other. But we finally seem to be hitting a sweet spot where both sides can be cautiously optimistic.

Lennar Corp., one of largest US homebuilders, is the best company to watch for this shift because it was the most aggressive in sacrificing profitability to maintain production when the boom times of the early 2020s ended in a buyers’ strike. The message from its latest earnings update is that we are past the worst when it comes to buyer affordability and pressure on profit margins. If Lennar is right, the economic drag from housing should start to abate this year.