Washington's Shocking Move! Are Builder Buybacks Behind a 5-Year Low in Home Starts? Find Out Now!

Could an end to homebuilders' stock buybacks be the key to alleviating the nation's housing affordability crisis? The White House seems to think so. Recently, Federal Housing Finance Agency Director Bill Pulte indicated to The Wall Street Journal that the administration is investigating the substantial amounts homebuilders are spending on repurchasing their own shares, asserting that this practice is intentionally keeping home prices elevated. This trend significantly impacts consumer purchasing power, especially given that housing costs are the largest living expense for many Americans. As of December, the median sales price for existing homes was $405,400, up 0.4% from the previous year and significantly higher than the $309,800 median in 2020.

Low Supply, High Demand

“They’re making, in some cases, more money than they’ve ever made, and they’re buying back stock like never before,” Pulte said. Stock buybacks are a strategy companies use to reward shareholders or when they believe their stock is undervalued. Despite ongoing scrutiny from policymakers, homebuilders continue this trend aggressively. In fiscal 2025, companies like D.R. Horton and Lennar allocated $4.3 billion and $1.7 billion, respectively, towards stock buybacks. Furthermore, PulteGroup, founded by Bill Pulte’s grandfather, spent $900 million on buybacks within the first nine months of 2025. Meanwhile, KB Home reported total repurchases amounting to $538.5 million for the fiscal year ending November 30, 2025, and approved a buyback program of up to $1 billion in October of that year.

The surge in homebuilders’ stock prices underscores this trend; as of last Friday's market close, the iShares US Home Construction ETF was up an impressive 11% for the year, significantly outpacing the S&P 500’s modest increase of 1.2%. Yet, amidst this financial buoyancy, one fundamental issue persists: the lack of new home construction. Data from the Census Bureau indicates that housing starts plummeted by 4.6% in October, reaching an annual rate of 1.25 million, the lowest level since May 2020. Buddy Hughes, Chairman of the National Association of Home Builders, noted that builders are grappling with rising material and labor costs, exacerbated by tariffs that are impacting construction expenses. While this supply shortage remains a pressing concern, demand continues to soar.

• Existing-home sales rose by 5.1% in December, reaching a seasonally adjusted annual rate of 4.35 million—marking the strongest sales pace in nearly three years, according to the National Association of Realtors.
• Moreover, refinance demand surged by 40% for the week ending January 9, following a decrease in mortgage rates after President Trump announced intentions to direct “representatives” to purchase $200 billion in mortgage bonds to help reduce housing costs.

Reward System? In light of an escalating affordability crisis—and with Trump’s recent pledge to implement “some of the most aggressive housing reform plans in American history”—Pulte revealed to Barron’s that the administration is exploring ways to incentivize builders who are collaborating constructively on pricing. He remarked that officials are also assessing builders who might not be engaging positively, evaluating their pricing strategies as well.

As the White House navigates this complex landscape, the potential impacts of curtailing stock buybacks could lead to a significant shift in how the housing market operates. If homebuilders are encouraged to invest more in construction rather than stock repurchases, it could help alleviate the tight supply and rising costs that are currently challenging American families. With housing affordability being a critical issue, the administration's approach to this sector may very well shape the housing market for years to come.