Those watching the housing market received cause for potential optimism. Berkshire Hathaway—the parent company of Berkshire Hathaway HomeServices—has announced the acquisition of homebuilding giant Taylor Morrison for $6.8 billion.
In the announcement, Berkshire Hathaway CEO Greg Abel said that: “We are excited to welcome Taylor Morrison into Berkshire’s portfolio, reflecting our long-standing commitment to housing, exemplified by Clayton Homes and our other building products businesses. Over time, we expect to unify our site-built homebuilding operations into a combined platform enabling us to deliver the dream of homeownership to more Americans.”
At one point, Compass was rumored to be discussing an acquisition of HomeServices, though the brokerage strongly denied the reports.
Berkshire Hathaway’s acquisition, and Abel’s stated plans of building out their homebuilding operations, has led to speculation the housing and construction market is due for a rebound. Berkshire Hathaway Chairman and CEO Emeritus Warren Buffett, renowned for his investing expertise and foresight, praised Abel for making the deal—the first of this size since he became CEO—in comments to CNBC.
The most recent data findings on homebuilder confidence also showed some improvement in May. The housing market remains troubled, however, by affordability challenges such as high mortgage rates and high inflation due in large part to international conflict between the U.S. and Iran. These factors brought new-home sales down as of April.
Sheryl Palmer, CEO of Taylor Morrison, alluded to the cycle of the homebuilding market to CNBC: “I think one of the things we’re so excited about is homebuilding runs in 5-, 7-, 10-year cycles. Berkshire thinks in probably 7-, 10-(year) and longer cycles. That alignment is very rare.”
