President Donald Trump’s administration is reportedly considering banning large institutional investors from buying single-family homes to help ease the housing affordability crisis. The proposal is titled “Trump Homes” and could involve a million homes.

With that proposal in sight, shares of homebuilders Lennar ( LEN ) and Taylor Morrison Home ( TMHC ) rose more than 3% on Feb. 3 after a Bloomberg The report mentioned that the two companies were part of the group working on the “Trump Homes” proposal. The plan is to have a large-scale program to sell entry-level homes, which would then be transformed into a home ownership program funded by private investors. In one version of the plan, investors would lease the homes to tenants, with a portion of the rent applied as a down payment credit. Tenants can choose to buy the property after three years using the accumulated funds.

Against this backdrop, homebuilding stocks Lennar and Taylor Morrison Home could be ones to watch.

Lennar is among the leading homebuilders in the United States, specializing in the construction and marketing of single-family residences, townhomes and condominiums aimed at entry-level, upgrader, retirement and high-end buyers. Active in several states in home construction, financial services, multifamily businesses and technology investments, it is headquartered in Miami, Florida, with a market capitalization of $29.4 billion.

The stock has been seeing headwinds from high mortgage rates, slowing demand and margin pressures. LEN shares are down 9% over the past 52 weeks, while they have declined 4% over the past six months. Lennar shares hit a 52-week high of $144.24 in September 2025, but have fallen about 20% since that level.

Lennar’s stock sale has resulted in a modest valuation. Its forward price-to-earnings (P/E) ratio of 17.4 times is lower than the industry average of about 18.2 times.

In the fourth quarter of fiscal 2025, total revenue declined 5.8% year-over-year (YOY) to $9.37 billion, beating Wall Street analysts’ estimate of $9.13 billion. The top line decline was attributed to a 6.9% drop in homebuilding revenue as the company continues to face a challenging environment despite lower interest rates in the fourth quarter. This, in turn, was dependent on a 10% decline in the average sale price of homes delivered (despite the number of homes delivered growing) due to market weakness and sales incentives for homebuyers. The situation is also squeezing Lennar’s margins. Adjusted EPS fell to $2.03 from $4.03, missing the Street estimate of $2.23.

Lennar recently sold a majority stake in its struggling multifamily business Quarterra to TPG Real Estate (TRTX). The company continues to hold a minority stake, while TPG has made an additional strategic commitment of $1 billion in connection with the acquisition.

For the current quarter, analysts expect Lennar’s profit to fall 55% year over year to $0.96 per diluted share. Meanwhile, for the current fiscal year, EPS is expected to decline 20% to $6.44 per diluted share.

Wall Street is currently taking a cautious stance on LEN stock, with analysts giving it an overall “Hold” consensus rating. Out of 19 analysts rating the stock, two analysts have a “Strong Buy” rating, nine analysts offer a “Hold” rating, one analyst suggests a “Moderate Sell” and seven analysts recommend a “Strong Sell”.

Despite the selloff over the past year, the consensus price target of $107.15 represents a potential 7% downside from current levels. However, the high street price target of $140 indicates a 21% potential upside from here.

Taylor Morrison Home is a leading U.S. homebuilder that designs, builds and sells single family homes, townhomes and communities in several states. It offers mortgage, title and financial services to speed up the home buying process. Based in Scottsdale, Arizona, the company has a market capitalization of $6.4 billion.

High mortgage rates and tight homebuilder margins have also weighed on TMHC stock. Over the past 52 weeks, the stock has gained a modest 1.5%. Over the past six months, the stock is up 1.6%. TMHC hit a 52-week high of $72.50 in September 2025, but the stock is now down 9% from that level.

TMHC shares trade at an attractive valuation. The forward P/E ratio of about 9.4x is cheaper than the industry average of 18.2x.

In the third quarter of fiscal 2025, based on a challenging home buying environment, total revenue declined 1.2% year-over-year to $2.1 billion, beating the forecast figure of $2.04 billion. The top line decline was driven by a modest decline in net income from home closings and a significant decline in income from land closings.

Net sales orders in the homebuilding segment fell 13% due to a decrease in monthly absorption to 2.4 from 2.8 a year ago. At the end of the quarter, the portfolio was 3,605 homes with a sales value of $2.3 billion.

Margins have also decreased for Taylor Morrison. Its adjusted gross margin from home closings (as a percentage of revenue from home closings) fell 25% to 22.4%, while adjusted EPS fell 12.1% year-over-year to $2.11. However, that beat the $1.93 that analysts were expecting for the period.

For the fourth quarter of fiscal 2025 (reported on February 11), analysts expect Taylor Morrison Home’s profit to decline 34% year over year to $1.73 per diluted share. For fiscal 2025, EPS is expected to drop 7% to $8.11 per diluted share, followed by a 17% decline to $6.74.

Wall Street analysts are still moderately bullish on TMHC stock, with analysts giving it an overall “Moderate Buy” consensus rating. Of the 10 analysts rating the stock, six offer a “Strong Buy” rating, two analysts suggest a “Moderate Buy”, one analyst has a “Hold” rating and one analyst recommends a “Strong Sell”.

The consensus price target of $73.11 represents an 11% potential upside from current levels. However, the high street price target of $95 indicates a 44% potential upside from here.

As of the date of publication, Anushka Dutta had no positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com