It’s not just Berkshire Hathaway putting money to work in homebuilder stocks like D.R. Horton (DHI). The SPDR S&P Homebuilders ETF (XHB) is up over 30% from its April 9 lows and has gained more than 11% since the start of August. Enthusiasm in the sector stems from expectations for Federal Reserve rate cuts in the back half of this year, along with hopes for accelerated cuts in 2026. Lower mortgage rates could spark renewed demand from homebuyers and entice current homeowners to sell and “trade up” to new properties.

Homebuilders encompass a wide range of companies—from D.R. Horton, which focuses on constructing homes for first-time buyers, to WIlliams-Sonoma (WSM), a retail company specializing in interior home décor for both new and existing homes. Next week, investors will hear from several homebuilder-related companies.

On Tuesday morning, Home Depot (HD) will report results. While the company has seen decelerating top-line sales growth, management remains optimistic about a rebound in certain segments later this year. They expect that lower interest rates will drive more financed purchases of large durable goods—such as furnaces and refrigerators—which typically carry wider profit margins.

Toll Brothers (TOL) will report after the market closes on Tuesday. As a pure-play homebuilder serving a more affluent customer base, the company is generally less sensitive to interest rate fluctuations. However, it has recently accepted some margin compression in order to stimulate demand.

The sustained strength in homebuilder stocks suggests that investors are positioning for a favorable interest rate environment and a housing market revival. With a mix of companies catering to both high-end and entry-level markets, the sector appears poised to benefit from any easing in borrowing costs. Upcoming earnings reports will provide critical insight into whether this optimism is grounded in improving fundamentals or if it is simply riding the momentum of rate-cut speculation.

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