Is Buffett also betting on the Federal Reserve cutting interest rates?

Warren Buffett is sending a clear signal to the market that his company, Berkshire Hathaway, is investing in the U.S. residential construction industry, which is highly sensitive to interest rates. This move indicates that the legendary investor may be betting on a future decline in interest rates, believing that the housing market is about to experience favorable winds.

According to the latest 13F filing disclosed by Berkshire Hathaway, the company established a new position in the second quarter in D.R. Horton, one of the largest residential builders in the U.S. At the same time, the filing shows that Berkshire also increased its stake in another homebuilder, Lennar.

In the current market environment, Buffett's series of actions is significant. As one of the most closely watched investors globally, his moves are often seen as a "barometer" of market trends. Increasing positions in residential construction stocks undoubtedly adds important weight to the bullish outlook for the sector, reinforcing market expectations that the fundamentals of the housing industry may be improving.

Buffett's actions are not an isolated case. In fact, stocks of several companies across the housing sector and its supply chain have shown signs of strength. From technical patterns to capital flows, an increasing number of signals indicate that investors are reassessing this long-suppressed industry due to high interest rates and are seeking new investment opportunities.

Buffett's New Target: The Interest Rate-Sensitive Housing Industry

Berkshire's latest holdings report is the most direct evidence of its optimism about the housing market. The document shows that the company purchased shares of D.R. Horton in the second quarter. This move, along with the increased stake in Lennar, highlights its overall confidence in the industry.

The stock performance of D.R. Horton also supports this bullish view. Year-to-date, the company's stock price has risen by 19%, outperforming its peer Toll Brothers, which saw a 4% increase, and surpassing Lennar, whose stock price has dropped by 3% during the same period. From a technical perspective, D.R. Horton's stock price has recently broken through the bullish "inverse head and shoulders" neckline at $150, which is a key technical signal. Analysts believe that the stock is likely to challenge the $200 mark by the end of the year.

Other residential builders in the market are also showing strong momentum. Taylor Morrison Home is one of them, demonstrating remarkable relative strength. Among major homebuilders, its stock is the only one that has pulled back less than 10% from its 52-week high.

Technical charts indicate that Taylor Morrison Home's stock price surged 5% on August 13, decisively breaking through the "cup and handle" buy point at $68.33. The stock has recorded gains in 8 out of the past 10 weeks, showing sustained buying interest. Analysts suggest that the stock is likely to reach $75 by the end of the fourth quarter and may approach $100 in early 2026

"Potential Stocks" in the Industry Chain

Investors can also extend their focus to the upstream of the housing industry chain. As a supplier of building products and equipment, Masco is seen as a "potential stock" worth paying attention to. Although its stock price performance has been mediocre this year, rising only 1%, it has surged 13% in the past month.

Masco's daily chart shows that its stock price recently broke through a bullish "ascending triangle" pattern around the $70 mark. Notably, from August 12 to 13, the stock rose a cumulative 8%. Technical analysis suggests that after regaining upward momentum, the target price for this stock could point to $85 in early Q4.

As a giant in the global paint industry, Sherwin-Williams will also significantly benefit from any rebound in the housing market. The company's stock price has risen 7% so far this year, and its weekly chart has shown a significant technical breakthrough.

The chart indicates that Sherwin-Williams' stock price has broken through a "cup with handle" base that has formed over the past two and a half years, with the breakout point around $350. There is a saying in technical analysis: "The longer the base, the greater the upside potential." Analysts expect that with the confirmation of the technical pattern, the next important level to watch for this stock is the $400 round number, which is expected to be reached before the end of the year.