D.R. Horton, Lennar face rising mold litigation costs

Mold-related lawsuits are adding to the financial pressure on major U.S. home builders as homeowners allege construction defects caused mold growth and health problems.

The number of lawsuits against home builders has been rising as homeowners blame construction problems for moisture and mold, while builders dispute many of the allegations and question how mold-related health claims are measured, The Wall Street Journal reported Monday.

Mold Claims Target Builders Homeowners have alleged that builders installed improperly sized HVAC systems, windows incorrectly or failed to ventilate attics properly, allowing moisture to build up.

Mold has been linked with worsening asthma and other respiratory problems, while some online communities and wellness practitioners have attributed a much wider range of symptoms to mold exposure. "There’s a frenzy of building activity, and everyone is in a hurry," Ernest Freeman, a Houston-based lawyer representing homeowners suing builders, told the Journal.

But researchers and builders dispute some of the broader health claims.

Mark Mendell, a former California Department of Public Health air-pollution research specialist, said mold can affect people differently and that its health effects are not fully understood. "People will often attribute things they don’t understand to dampness and mold," Mendell told the Journal.

The lawsuits can also be expensive and unpredictable.

Tom Curran, a partner at Duane Morris, said, "The mold litigation isn’t going away." Builders Face Rising Costs D.R.

Horton Inc. (NYSE: DHI ), the largest U.S. home builder, faces litigation involving thousands of Louisiana homeowners who allege poor construction allowed moisture and widespread mold growth.

Its reserves for legal claims rose 57% to $1.1 billion from fiscal 2022 through fiscal 2025.

Lennar Corporation (NYSE: LEN ) is facing litigation from the Seminole Tribe of Florida involving more than 450 allegedly defective homes with improperly installed roofs and mold-ridden walls.

Its self-insurance reserve rose 21% in fiscal 2025 to $336.9 million.

The builders have argued that contracts and warranties can protect them from liability and that some mold problems stem from poor maintenance.

Homebuilder earnings were already under pressure from affordability problems, elevated inventory and higher construction costs, while average 2026 earnings-per-share estimates for the sector had fallen about 18% since the start of the year.

D.R.

Horton and Lennar did not immediately respond to requests for comment.

Energy Rules Add Moisture Risk Tighter energy-efficiency standards may also be making builder mistakes more noticeable.

More tightly sealed and insulated homes can be harder to dry when moisture gets inside, increasing the potential for mold if construction mistakes occur. "The industry standard of care needs to evolve to be better," Christine Williamson, an architecture professor at Virginia Tech, told the Journal. "We really need to be attentive about how we’re installing windows." The housing market is already facing pressure from elevated mortgage rates and weak construction activity.

Total residential starts fell 12.4% in July from June, while single-family starts dropped 9.9% to the weakest level since November 2022.

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Here’s How He’d Do It Mold Tests Fuel Disputes Defense lawyers say some plaintiffs rely on questionable testing methods and assessors with limited qualifications.

Ian Faria, a Texas construction-defect defense attorney handling about 20 mold lawsuits, said some claims are "really tangential at best." "Litigation like this is making [houses] really unaffordable because builders are having to spend a lot of money on experts and on lawyers," Faria told the Journal.

Mold-spore tests can produce very different results depending on how they are performed, and there is no agreed standard for how many spores are too many.

Experts hired by opposing sides can also produce sharply different remediation estimates. "One will say it will cost a million dollars, the other will say it costs $50,000," South Carolina lawyer Clay McCullough told the Journal.

Homeowners Cite Illnesses Ashley Frazier, who is suing Lennar over mold in a home she purchased in 2021, said she began experiencing daily asthma attacks, headaches, dizziness and rashes less than two years after moving in.

A mold assessment company later deemed the home uninhabitable and recorded mold levels as high as 2.2 million spores per cubic meter.

A separate assessment commissioned by Lennar days earlier recorded about 500 spores per cubic meter.

Frazier is expected to spend about $75,000 on experts, while the home’s assessed value fell to $117,000 from $318,700. "It’s a total nightmare," she told the Journal.

D.R.

Horton has also been dealing with cautious buyers and affordability pressure.

The company lowered its full-year sales and home-closing guidance as mortgage rates and consumer sentiment weighed on demand.

The combination of legal expenses, construction costs and weaker housing demand is adding another financial challenge for builders already operating in a difficult market.

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