# Berkshire Buys the Builder Dip as Mortgage Rates Hit 7.2 Percent - Housing & Real Estate - Week of September 25, 2026

> Housing and real estate for the week of September 25, 2026: the 10-year Treasury broke past 5.1 percent and the average 30-year mortgage hit about 7.2 percent, its highest in two years, while Berkshire Hathaway went bargain-hunting for homebuilders, reportedly buying Taylor Morrison and adding to Lennar.

## Housing & Real Estate

### Week of September 25, 2026: Berkshire Buys the Builder Dip as Mortgage Rates Hit 7.2 Percent

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Last week the Fed raised rates and everyone hoped that would be the end of the drama. It wasn't. This week the government's 10-year borrowing rate jumped past 5.1%, the average 30-year mortgage hit about 7.2% (its highest in two years), and one Fed official after another went on air to say more hikes are probably coming.

And yet the most interesting move of the week came from Omaha. While the podcasts were full of builders cutting prices and missing guidance, Berkshire Hathaway was apparently shopping for homebuilders. Warren Buffett's company has a long habit of buying when everyone else is scared. Housing is now scary enough to qualify.

## TL;DR (for the 15-second read)

* **Rates got worse, and spreads stopped helping.** The 10-year Treasury touched 5.1%–5.15% (a 19-year high), and the 30-year mortgage sits near 7.2%. The "spread" that kept mortgages from rising faster all summer (explained below) *widened* this week. Odds of another Fed hike in October rose to roughly 64%–70%.
* **Builders are selling homes by cutting prices.** August new-home sales beat forecasts at a 684,000 annual pace. But the median new-home price fell 5.8% from a year ago, to $393,000. KB Home beat on earnings, then cut its margin outlook and said conditions are "weaker since our June earnings."
* **Patient money is stepping in.** Berkshire reportedly bought Taylor Morrison for about 1.3 times book value and appears to be adding Lennar shares. Meanwhile, rental economist Jay Parsons says apartment rents bottomed last winter. Near term the picture keeps getting darker, but long-term buyers see bargains.

## What's new this week

**The bond market didn't calm down after the Fed. It sped up.** The clearest mortgage-market account came from Robbie Chrisman on [Chrisman Commentary (Sep 24)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiegl3nfrWbRd2dhZWRUoT4HMC9Qo9JuzwR6bMIIAwE-2FARpE84aOJPLPZuBjce1jyW82mEDhOR979J7N9GLS0Mg6wxTM-2FDFSDZ-2Fiu3t-2B6Ad-2Fw-3D-3D1NEC_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZh-2BsCPmUL8w0G3iBJ3APJoR7y6S84LqLNo4u8B4OUQoKi32RuWp9nOZ0GNDbZzi4wiuB8dGOgAznIYXy2rmaaQjXQSKtfyge-2FwsN81bqPWR7zqb3fstjJenWzUjAnBskwDkkrOuykDjIeYwh62v2BLQ-3D). Several things hit in the same few days: a hawkish speech from Fed Governor Michael Barr, oil moving higher again, and a weak $70 billion auction of five-year Treasuries. At that auction, demand from foreign buyers dropped to 54%. The 10-year yield jumped 14 basis points in a single day to about 5.08%. (A basis point is one-hundredth of a percentage point, so 14 of them is 0.14%.) The 30-year Treasury got close to 5.4%.

Here's the part that matters most for housing. On mortgage bonds, Chrisman said "spreads widened materially on light volume." Some quick plumbing: your mortgage rate is roughly the 10-year Treasury rate plus a "spread," which is the extra return investors want for holding mortgage bonds instead of government bonds. For most of this year, a shrinking spread was the only thing keeping mortgage rates below 7%. This week that cushion started to wear thin. Two days earlier, Chrisman had said mortgage bonds "widened in four or five sessions last week" because buyers are "waiting for treasuries to establish a more stable trading range before adding risk."

**Why the 10-year broke higher: the economy is running hot.** On [Unhedged (Sep 24)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOg4rUiN8ixZ8-2BrLUkvKxXQS6EImzoP1EYJDNnYuOKcE6n7ov2thv6yM3USSlfH93ZoOsv0QnH0txFf1CXjVUuV5Jt3nv1heRN2KBE30Wqoavg-3D-3D3wlx_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZlaiZQRkCJH62SSwYMP3XMznMr3U0a1lyTYLWs0HcfLrX4gvxqR1B11UXsl62MLnM7vHXXgW-2F2DZ2lblu2Hx4BcohOiIFRl-2Fz3feJrCYdbkF9gnS-2BIk2CLusKJP1nNKFKPTb4v-2Fa-2FEm0raTv8DSxvqg-3D), the Financial Times team said Treasuries had their worst stretch since the tariff shock of 2025, with a one-day move of up to 17 basis points. The trigger was a survey of business activity (the "flash PMI"). On [The Exchange (Sep 23)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOioEbwYyHtxxIBOnGsi-2BxN-2BELHw81KtnkgZfsrPWs8IWMzmKe659nD9RL9ipWHY5PFg-2F-2FVVYz0iyZRmc39ZD0N5IpDUHQbtFGC1zu6EQ5t3Ng-3D-3Do7hq_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZjTpPb96T2emUu1bqalHDi2XupWFlqOpGYVu729as0noPZE-2Bm0C-2FDozlNa5n5JLoETS982mlFobGwgGSgZDqd97W-2Fgsh52y2gFS4wSA2cHNAsUx1WHVla1ZeEDZI4v2MdedAhNKLRcFHIxw3-2FdX-2Fsfg-3D), Kelly Evans gave the numbers: business output rose to 58.4, the highest since July 2021, and business input costs rose at the fastest pace since late 2022. Wells Fargo's Paul Christopher added a structural point. Borrowing by AI-related companies is now on track to equal "close to 40 percent of net U.S. Treasury issuance," so it is competing with the government for the same investor dollars.

**The Fed chorus is loud, and it's all saying the same thing.** On [Squawk on the Street (Sep 24)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgjjBvvm0HFu7XrihkCqrzYIlgGVoY5gpF-2FXuDkPlYeRmbe7MXCdI6OxSVKR3gCl6DRrxjScwLQU-2Bad-2B1-2BW023AugPyzTADPocLnZM0w75ZXg-3D-3DHHGp_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZpqhRvf16tm-2F6RM2B89iPqskj5KSuOPWh0VNB6mYSJjVgp6uwiTPM7mztl2Dmmub-2B5BbLgx0RC7mpJz-2BhnCLT7axW6NyQ3pkHovLVa2k1mH2HI4MZ0HmJlCKoAjZSlHUq6E692cHHkMFP7BoBzQP5cM-3D), CNBC's Steve Liesman went through the list: New York Fed President Williams, Governor Barr, and Fed presidents Musalem, Collins, Paulson, Hammack and Schmid. All of them have hinted that another hike is more likely than not. Philadelphia Fed President Anna Paulson said "some modest further tightening may be warranted," with underlying inflation at 2.5%–3%. Liesman's summary:

> *"The center of the board, Carl, is for more rate hikes."*

**New-home sales beat, but only because builders are cutting prices.** Diana Olick reported the August numbers on the same Squawk episode. The annual sales pace was 684,000 against a forecast of 618,000, up 6.4% from July. The median price fell to $393,000, down 5.8% from a year ago. Her caveat matters: new-home sales are counted when contracts are signed, so these buyers were shopping in August, when mortgages were "around 6.8%," compared with about 7.26% now. She also flagged two warning signs. Adjustable-rate mortgages now make up nearly 10% of applications, compared with about 2% when rates were near 3%. And late payments are "starting to tick up" among people who bought in the last two or three years expecting to refinance at a lower rate.

**KB Home: a solid quarter wrapped in a gloomy outlook.** On [The Rundown (Sep 23)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOh1YJHmfaeqnmvFF7MKRzYjXG434YT0bw-2FXUP8-2BArEVM6qslmJ7GbDoGe0BTMysnmfOYHWgOZG9rPoyiISOu-2FaarLX1HskeNK7URqsVkCFl6g-3D-3DmYA__7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZs-2B6sdrZXRsngAHseiQhS0ElAQE9mdXkeGerH0FNV1pafSdhBbLQfx5o624axQqxfZaC-2Bm-2Brzu4SoWqrTfDRFnEwaOmT4X6e00hOjkmknzBw5lnUa4z5NHjrpqXWMrwoydCxO1Pny-2FEfcEvE6RxxUOQ-3D), the host went through KB's fiscal third quarter. Earnings were $1.05 a share against $0.89 expected. Gross margin (the share of each sale left after construction and land costs) was 16.5%, better than expected. But KB cut its full-year margin forecast and expects fewer deliveries. It blamed ~7% mortgages (especially in Southern California), existing-home inventory at its highest in a decade, and prices "starting to fall in more of its markets." On [Fast Money (Sep 22)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgn7-2ByrmuvdxSWMl5snrfK9nBzfKf2zYFlN5dP6t4uw8-2FmE9XfZL9DR6CDNIv2lghw5086AJheB0zy4aIGCtTfCefiBSh2Y9WhGiWMQT9GO4w-3D-3DiWRG_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZhm9EBWKZshFon2tfIy8Sb5eia5aCfjArT5m4r4HatWXrjqLlTQ-2FUHC6pCVsBvQaHUFkQf7d7JEGoiOdL4C9yFX9OXm3Xa5BRnMvWb-2FEmZKyAg9toHFmtdTuIqwhBDmxAi1-2FLcqF6A1KbpfWmvFI-2FBE-3D), Olick read Chairman Jeff Metzger's line from the earnings release (operator):

> *"We are operating in a housing market that continues to be challenging with conditions weaker since our June earnings."*

The average selling price came in $700 below forecasts, at $473,000. That's a small miss, but a telling one: KB is lowering prices to keep homes moving.

**Berkshire goes bargain-hunting.** On [Closing Bell Overtime (Sep 22)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiAx28iPP0VDixMKP1Gh-2FDp1JviZZlAYdLC7GSw9lIHpPPVr2DQa-2FbmFaL7bAmae667oxV-2BNDKdq6VbzBjGzZ3Nj-2FStxO3vlD7ZpDnzkfbQaQ-3D-3DqbLT_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZo24d5jr4iDxyUO8OnulYnwgDfffmH5LzFKjHs6q8BtQJ3lSI181WpHsPmQ26ZLcGzvyXrw4kitqs1rNUFh5RMgujrvRgoi8RXQDpVtf3G199ZhNvCJc01BlfreeLPzzIjeXLFJOAVTGi29kx4fLY4A-3D), a guest analyst said Berkshire "recently acquired Taylor Morrison for about one point three times book value." (Book value is roughly what a company's assets are worth on paper after subtracting its debts.) He described Berkshire as long-term believers in the "housing shortage thesis." The discussion then moved to Berkshire's apparent interest in the second-largest builder, Lennar. CNBC's Mike Santoli noted that Berkshire already owns "20 something million shares" and would be "averaging down." He compared it to Berkshire's 2003 purchase of Clayton Homes, a manufactured-housing company it bought at a low point in that cycle and "arguably... underpaid for." The analyst's caveat: this looks like "an attractive entry point" for a multi-decade holder, but "I don't see a near term catalyst." Olick said Lennar's Stuart Miller wouldn't comment beyond saying "Berkshire Hathaway is a wonderful company."

## The debate

This week's evidence mostly supports the bear case. The bull case is real, but it's a long-term argument, and it rests on two specific facts: Berkshire's purchase and a turn in apartment rents.

**The bear case (clearly ahead this week).**

* **Rates are going the wrong way and may keep going.** On [BiggerPockets (Sep 25)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOg-2BPFV1B0UkJ72GNOnHEAoKxW-2BCTl1U5KpNhX-2BlUMNoS42QKnrOCjOpe-2BDlFa8TagMBMbCkLDaGR3XC21qcoJZk7JxO-2F731gP08iqHliPEaYQ-3D-3DQfUm_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZgQf1N60x4k9qtw3L-2Fx-2FqBgIcWOZzpcibVMlJbL-2BO2QrtO2TFZX6FiAXorL1hRN4xhMMkuFf237McIrPz-2B-2BLxIkM9ZxAI6b9Ir30sfGEuHaVtKKmHd9DKcEjMqdxOB0-2FpiwZa-2Ba-2FSZH6pWIocyTK17o-3D), Dave Meyer (analyst) said there are more homes for sale "than at any point since 2020." He expects mortgages to stay near 7% through year-end and doubts they drop below 6.75%. His bluntest line: "We're not going to see a number with a five in front of it for a long time." The reason, he argues, is inflation driven by the Iran war (record diesel prices, higher fertilizer and food costs), tariffs and the deficit. None of those has an end in sight.
* **Homebuilders themselves don't expect relief.** On [Marketplace (Sep 23)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOjnBuoTi-2BmH8KmKjObRbgbGyY1eZnN8M6yTv0Kaf4Agw-2BIqldCifvXspqCJVgwyj4OaHakcrQVvYdxWPUi7KhY-2Fy0MX8KiOcZCNjRmy38dSqw-3D-3D_yZZ_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZuV6SxpuI9QM9Ekfrc1k7esHkp-2FSKryJF0LUrbfFkJXr4yBN8dn-2FcQwnBTnSmdKvkqx8NHEbQU7Jh0O7DFNEvJI9y7q0dbJSeEs-2Fd8yYeC99G3IfZl1GcjmHLCtvhFwCOZxBJ8IwDLEq-2FbyJ0NLKV0c-3D), a forecaster at the National Association of Home Builders said: "In our forecast, we don't have the mortgage rates coming close to 6 or below 6 in the next two-year window." Zonda's Ali Wolf put a number on the damage: "Since the start of the year, consumers have lost roughly 10 percent in purchasing power just from higher interest rates." Redfin's Daryl Fairweather added a newer worry. More owners are listing their homes, either because they're "tired of waiting" or because they're "getting nervous that prices might fall."
* **The strongest bear voice.** On [The Julia La Roche Show (Sep 19)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOjKsJySZhWxmUI-2B3ahlWBuxb03lLEdS6EeTVpm1udolp26EMHRLxFA5nixgcEtDCud9C6GbRqFEk-2F6h9Wkaes4RrjnT4pTaf8FTmMaMNs6EtA-3D-3DLpcj_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZlmyJXuYsIeDvUvHYdFdBWFZLwGftSDZWHDZbiAa3b4QbJMyZKx1ob-2Beehgb88DW4p-2BZMK0F3cuxX82uVhNHJDI5gN4rMmnSw6TvbUeWkJBQgnKhcRCAmz2qlAMYclHORJZx-2BS5xTvvMkmbl2sQ9bdk-3D), banker Chris Whalen (pundit) said: "in the housing sector, we're going to see death and destruction this year and next. Companies are going to go out of business." He noted that "more than half the houses in this country went down in price over the last 12 months" and expects "a significant correction in home prices between now and 2028." He also pointed to mortgage-industry veteran Stan Middleman, who has long predicted this, and who just put his own Florida house up for sale.
* **The Fed may be tightening into weakness.** On [Soar Financially (Sep 21)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgV3h26SZXwcsYB9EiNOQUbRHkbJoPiIK6GoBFYXdd4uQx-2BpuOYKhPU9XfsPxrLwDnW0mgTXJ9UazppIUoINKb0tDIwGqWC5VwFSiAGAgdolA-3D-3DMZZs_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZpUILfiWAl5z6Ztjhz1sQ4RlocPUy7cwkPXO-2BOhbpbhoLjefkpVZvcFVczMWM7U3Plcad3yq4trSh47jg5eJNEHe9CQtp85SCx-2FC0FYD65-2BufIlGjMGHIzRaKNljGgHIRoqXjuuux1YUDJUvBjxyEZw-3D), former Dallas Fed adviser Danielle DiMartino Booth pointed out that the builders' measure of expected future sales just fell to its lowest since 2023. She added that small-business bankruptcies are up 64% from a year ago, and that bond markets pricing in three more hikes "will slam the US economy."

**The bull case (patient, and now backed by real money).**

* **Rates may be close to their peak.** On [Goldman Sachs Exchanges (Sep 23)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOivS29reuEX2R0sfP4Qa8rINdMheGSWWZ28-2BpX244KZVDBkeojsesxNw3zL8pGFo2D0rNu8OoalkO2sKug0vayBI8RYj4wTgGgYCmqyiqbIaQ-3D-3DYfaO_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZrJMcK2YXZO5cebkDzTGzMVDL5JybpLmavjnCi3SWhIf80tTMaYiv6-2BNrNtK5X-2FHmdtgab7fxCPswIFpwQEFsGz2fQd7WQF77UWMkH7UE2luZLNvs7wTyeQEGOHcPwHyq47ehqZ-2B96sK-2FPZJ1vIAs9A-3D), former Dallas Fed President Robert Kaplan said markets are pricing in more hikes than are "likely." He would skip October, hike once more in December to 4%–4.25%, which he sees as roughly "neutral" (neither speeding up nor slowing the economy), and then reassess. His reason matters for housing: "autos, housing-related companies that sell to low-moderate income consumers" are already "sluggish or weak," so they don't need more cooling. On Unhedged, Rob Armstrong offered a calmer take on the bond sell-off: with the economy's total growth rate (including inflation) around 6%, a 5% 10-year "is actually a yield level that makes perfect sense." In other words, it's a normal level, not a sign that something is breaking.
* **Fannie and Freddie are defending the spread.** On the Sep 24 Chrisman episode, KBW analyst Bose George said Fannie Mae and Freddie Mac buying more mortgage bonds has been "policing spreads. So spreads don't really widen out and they sort of step in if that happens." He also said credit quality and home prices "remain relatively stable," so from a credit standpoint the housing market "looks pretty solid."
* **Apartment rents have bottomed.** See the rentals section below. It was the most clearly positive data of the week.

The honest read: nothing in this week's podcasts suggests relief before year-end. The bulls aren't saying the next quarter looks good. They're saying the price is already low enough.

## The names in play

**Lennar and Taylor Morrison: a value investor versus a shrinking order book.** Berkshire's move gives the builders their first real bull signal in months. The bear side got sharper this week too. On [Telltales (Sep 20)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhZ-2FJ5Ok-2Fe5MZWr8Fddfoy7Q4SbetImquvFhIIDk2s-2B7KIvkE0p879W4Olb2E9MEMiGDHnSVtoK21Ay2A28VpWA22leNdV-2Ff5RaRnoOvVHzjA-3D-3DBEBB_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZu5AI-2Fkq2Tlmg-2FxsNC8-2FQV7H5IhFK4rl0GdRYnFMQPEpMoubzX-2Fc6BAeOcIWOJP-2F0ctH5HgG4HIyo-2F20Bnu7jTJlMPmFqxprvjaev2f3PGXGkCxkAN5iuRG0GSUApBl-2BVu2KdgkNfe2G-2FvbX3Zd8CiU-3D), the hosts summed up Lennar's quarter: orders down 9% to just under 21,000 homes, full-year delivery guidance cut to 80,000–81,000 from 82,000–83,000, and gross margins around 16% with incentives down to 12%. In the same week, Lennar paid $60 million for 444 lots next to TSMC's $265 billion chip-plant project in Phoenix. Marcus Graham's take: "A cheap-looking multiple bolted to a shrinking order book." His test for the next quarter: "If orders keep falling and they keep buying land, that's conviction. If they stop buying land, that's the signal."

**KB Home versus the buydown builders.** On [The Jon Sanchez Show (Sep 22)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOg2kAZ17QBOODNGVNccgqnuIfjealRwq0LxW5F08pkkDVrkwZnJ-2FHwQXGs1OVt9Xp6S6VyGgX6bPmCmTBIJ3VDVk0pg3u4sWdPBM70F3ZnSqw-3D-3DcYKd_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZl6L-2FtOBDXuutTmCPykJuPJZ9JT63fxKQeRNlBv969RpqG-2Bl-2BbGLeVefJEjdIGK4eikaS3CPYHy8QFzLoHJclScl06u10DR2-2BcMAwAgTg1NGEkjK4okMSWEpJVSBo6PY-2FMQs7DtT2g78aB1-2FnVR0h-2Fw-3D), Reno realtor Corey Edge described comments from KB's earnings call. This is his secondhand account, not a transcript. By his telling, KB said it rarely uses mortgage-rate buydowns except on unsold homes, and criticized Lennar and D.R. Horton for "artificially" funding 4.25% rates. KB's warning, as Edge put it: buyers of those homes may be "effectively overpaying" and could end up owing more than the house is worth when they resell. The same show cited Realtor.com research: in August, nearly one in seven new-construction listings advertised a reduced mortgage rate, and the average advertised rate was 3.92%. Edge said that in one Sparks, Nevada subdivision he checked, "30 or 40%" of homes were worth less than their mortgages compared with resale prices. That's one local sample, but it shows the risk KB is pointing at. KB's stock has been cut roughly in half from its high two years ago (per Fast Money), and it is down about 15% this year (per The Rundown).

**Toll Brothers: the relative safe haven.** On Fast Money, Olick put Toll "in a completely different category": its wealthier buyers "are not mortgage dependent." She also said PulteGroup CEO Ryan Marshall, whom she interviewed at Ivy Zelman's builder conference, used "almost the same words" as KB: "geopolitical uncertainty, higher mortgage rates, consumer confidence." Her reminder to anyone ready to call a bottom: builder sentiment is in the 30s today, compared with a low of 7 during the Great Recession.

## Rentals: the one real green shoot

On [The Rent Roll (Sep 24)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgsSER5uf5hW0bM-2Bx-2B3Su3wysdoqgyFgXhcn8p-2F8xCFwBcLkpmMgfGtf8rhbCOeABBVfzM8jcyxsLEG5LNteOxM1yiyx2xh-2BAkR5-2BdkGwMqxw-3D-3DR0Db_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZmqurtcH4hFcghPL3JWX3oXAbI-2FdmTIILMevsC-2Fm8NWVZhq9Rlu1G4RKF4DHk2h0StC1jfO-2BwLTI1SCEyTK-2F6aB4BCUUfASZ9sYYwBE2E63C82LpkE1BmREKnkAKVezOQWCkK7wQrzUCluvUIrQEhlg-3D), rental economist Jay Parsons made an eight-chart case for rental housing, then took questions from Joanna Zabriskie, CEO of apartment manager BH Management. The key numbers:

* The U.S. added **680,000 renter households** last year, and "absorption is outpacing supply again." (Absorption is how many new rentals get filled.)
* Vacancy has been falling since March, after rising for about five years.
* Apartment rents, including discounts, "bottomed this past winter" and are "nearing 1% growth, according to RealPage," on track to end the year "close to 2%." Single-family rents are expected to finish 2026 under 2%, per John Burns.
* New apartment construction starts have been falling for "three plus years," so the supply wave is fading. Nearly all renter-household growth over the last decade has come from households earning at least $75,000.

His own caveat: "it's green shoots, not green fields." Concessions (move-in discounts) are "pretty sticky" because "we've conditioned renters today to expect discounts."

The owner's view is less rosy. On [Street Smart Success (Sep 23)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOhPc0K7DRT9Aqy-2FvX7dcF7RzGnvpc73mXX8t8s3KGqM1NORN9wk-2FznqoOxyr36twB9t-2B3o-2BWY9BJAVKVri7lDmE6vLskXDcTTM1SGHeHoRulQ-3D-3DGICf_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZjhvdoGolLbBVHdVMl1kWeESjrVW-2B0OSU66Yfa-2Fhg-2BBEvJKY0dWzUqubo9-2FgbDd9WMRv89oncVD6-2FEexVnGkwVTJE3evY8Uo0S630tR27VssglJ-2FsGTB-2BTr2O2ovj7MUYh5WwZE2MQ0hsCEe6Xr4rAI-3D), a Boston-area apartment owner (operator) said the market "turned on a dime." Some local markets are seeing negative rent growth. New buildings are offering one to three months free to fill units, and that pressure trickles down to older buildings. Painting a 700-square-foot two-bedroom now costs "two grand, probably more," and that's before any other repairs. His firm is "more in sell mode than buy mode." On [Real Estate Pros Show (Sep 21)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOij8HkIFrORoP7qLZZGoolFMf7R65it-2BFMWRkoRNMstosDLTd2-2FLrcabwltbqbGLAtzOhH5Ay80XBStMr4veoeBJaP5MzPkvWMVBS9eMU6rnQ-3D-3DZ1N4_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZk6BJT73ZllIW9HWzHvEvSowke5uL4eBLz-2BbGWmVY42acOzny66ANXcE3SPI-2F-2FuRA9DuneS2RrVn6ZM-2F-2FsjoTYrQXJZBOTyyBkGnlsnfSJVjGwlFaFQle8iQp0QEQ4tNuAUsUgOjhL0Lk8fFpL-2BPdOA-3D), investor Eran Reizer said apartment loans taken out in 2020–2022 at 0%–4% floating rates are resetting to 6.5%–7.5%, "causing foreclosures already underway."

The read for apartment and single-family rental landlords like Invitation Homes and American Homes 4 Rent: demand is healthy and new supply is fading. Operating costs and move-in discounts are the drag.

## Read-throughs

* **Mortgage lenders: the recovery keeps getting pushed back.** Bose George on Chrisman (Sep 24): "every year we're waiting for the recovery, it just keeps getting pushed out another year." He expects 2026 lending volume to be roughly flat, with the second half down from last year. His math on how the market eventually heals: about $2 trillion of the roughly $14 trillion in outstanding mortgages resets to current rates each year, so buyers slowly adjust. But "if it's stabilized" at 6.25%–6.5%, "the market would eventually adjust." At 6.75%–7% that takes longer. On specific companies: UWM's recent capital deal with Oaktree has the market "curious whether the growth there might slow," while Rocket "can really crush it on direct-to-consumer" refinancing. The growth area is non-QM lending, loans for borrowers who don't have a standard W-2 paycheck, such as self-employed people and property investors. Insurance-company money is pouring into it.
* **Mortgage bonds and servicing.** On [Chrisman Commentary (Sep 18)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOjNtzz9kWG8pPFER1Y23TULHvTtrkCPEugs8h76CiRN-2ByS3LQeRTTl-2B81mqnwn7D0bu56EvvlWAMb1tMx2yTZK6J47NKt3BtnApZ7PQ5Uz-2Flw-3D-3DN9wv_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZiTCZIyeRIGOgOeBEpjKRa9A-2BQFRS534It0KqNs5wzeZXYrr-2BAPT-2BYvBxo3HNZPBlQL0-2FNuMztcqNlq-2F27Okd30elHlhAsXU4Mc9dJDUnBvb9f1nR4qXPt-2BUqyIHQln4qG2QUQ-2FVa4Jtrr97-2F1nslJQ-3D), Chrisman estimated that roughly 98% of 30-year borrowers now have no reason to refinance. That's good for investors who own the rights to service existing mortgages, and bad for refinancing volume. On the [Sep 22 episode](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiRHsDMHNlndTON7jMMcizzi3Rn55VKwLz6XtejPshxE1-2BSaiM78Xk3Taba0VQ4mRxvKbosnGXmUieZc7IptvGODJ2NGnpEC8AJXgX-2BjsmgAg-3D-3DmYva_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZjCuxu3Gt7jPcatiNrS7WVMWjd3TuSMzbxdwJCvbaHfH2MZcYCauDMgRpoDnLCXEUqXTSUQm18ETODSWVktJbgkHaYx0l-2FFzF2-2BxRJDzXSwpYAwmnOX656v-2FXGRE8ax644-2FrACzSq28omZ9o779Ff-2Bg-3D), BSI Financial's Larry Goldstone (operator) named the big buyers of servicing rights: "Rocket, Cooper, Bayview, Lakeview, Freedom Mortgage, Carrington."
* **Home improvement: stuck on maintenance.** On [Morning Brew Daily (Sep 25)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOiFhygN4yTOfw-2B2oNPPC5YX7hZzg35W1YFOxWxqMxgvyGjB4rU79PjTTdsbGoeI-2BOdy9kLL-2BzGmqQSRVOYW8n-2FXu-2BUm653ZrcJmo-2Bn-2BWJe8JQ-3D-3DqJk__7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZuII2waIM580eGIwuuyp1IRKMKPVsMXqFbLFjcij4NOBN7WL8sh9eOHPU3WqXh1XEHR7VSt6X3LfJl7REOzaSmr-2Fv6RqwuHfoeozvL2FBF-2FOVuxbAL3IiviG1N5MfTyVUW6dNZE63J3OeGKQ6C65DNU-3D), the hosts noted Home Depot's comparable-store sales rose only 1.7% last quarter, driven by "plumbing, electrical, hardware," with little from big renovations. Their point: without people moving, "there's just diminishing returns on how many times you can remodel your own house." Their best line on 7% mortgages: most buyers today "have never seen a 7% mortgage because before 2022, mortgage rates hadn't hit 7% since 2001."
* **Commercial real estate and regional banks.** On [TreppWire #424 (Sep 25)](http://url7324.matterfact.com/ls/click?upn=u001.idHmPrr2Geh7KYLAsTy7NkrIVb-2FgA4pmf2rMXQwGcOgUCmripi52opyYJk9xCwg-2BQec-2Brlws9YFMWzgA0WDNkffT6qPX6h4itkDhMG-2BtyAyiEBVWSbZONqk-2BqQ9ey1Q3ujOH6U7igKlCgWPjToXYhw-3D-3DLwGR_7mLGwmUci-2BLaXswv9WX1yTgqn3Wad-2FotHhzHgSNAZbXqLObmVghxu4mssBtecd-2BG0cJeyo1LbW3PDqUFbsYhZh9aiUJqmRD-2Fgay4WvhuUCWvQSdNrLEltC2mL3wZl7l0eUqa0f-2Fvvrs-2FpuNz2v989hL31maXR-2BbIdPU3BDQLsJcy9w1CCCW7wXgf2wryt07EkZRmx8wqpptDf3y0ADhS5Rzm42Bz39H4sf3lnuoqPgg-3D), Trepp's Stephen Bushbaum said 5% was supposed to be the ceiling for the 10-year, and "now... maybe 5.25 is that next resistance point." Lonnie Hendry argued that diesel and gas prices hurt more than the Fed hike did (diesel is at $6.52, up 16% in a month), yet he's "still feeling pretty bullish relative, all things considered."

## What changed from last week

* **The spread flipped.** Last week, mortgage spreads were the hero, getting tighter even as rates rose. This week they widened for several sessions in a row, and the new line of defense is Fannie and Freddie stepping in to buy.
* **The 10-year moved past 5%.** It went from roughly 5.00% to 5.08%–5.15%, and Trepp now sees 5.25% as the next level to watch.
* **October is now in play.** Last week, the market expected December for the next hike. This week, October odds rose to about 64%–70%, pushed along by at least seven Fed officials.
* **The first big contrarian buyer showed up.** Last week's builder story was only bad news. This week Berkshire put real money behind the long-term shortage thesis.
* **Rentals turned up.** Last week, single-family rental operators were describing a slowdown. This week, Parsons laid out evidence that apartment rents have bottomed and vacancy is falling.

---

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