Mold Lawsuits Become New Headache for Homebuilders, D.R. Horton and Lennar Under Pressure

Mold-related lawsuits are adding to the financial pressure on major U.S. homebuilders, as homeowners claim construction defects led to mold growth and health problems.

The number of lawsuits against homebuilders is rising as homeowners blame moisture and mold for building issues, while builders dispute many of the claims and question how mold-related health complaints can be measured, according to a Wall Street Journal report Monday.

Mold Claims Target Builders

Homeowners claim builders installed improperly sized HVAC systems, installed windows incorrectly, or failed to properly vent attics, leading to moisture accumulation. Mold has been linked to worsened asthma and other respiratory problems, while some online communities and health practitioners attribute a broader range of symptoms to mold exposure.

"Construction activity is frequent, and everyone is in a hurry," Ernest Freeman, a Houston lawyer representing homeowners suing builders, told the newspaper.

But researchers and builders dispute some of the broader health claims. Mark Mendell, a former air pollution research specialist at the California Department of Public Health, said mold affects people differently and its health effects are not fully understood.

"People often attribute things they don't understand to moisture and mold," Mendell told the newspaper.

Lawsuits can also be expensive and unpredictable. "Mold lawsuits are not going away," said Tom Curran, a partner at law firm Duane Morris.

Builders Face Rising Costs

The largest U.S. homebuilder, D.R. Horton Inc., faces lawsuits involving thousands of Louisiana homeowners who claim improper construction led to widespread moisture and mold growth. Its legal claims reserve increased 57% from fiscal 2022 to fiscal 2025, reaching $1.1 billion.

Lennar Corporation faces a lawsuit from the Seminole Tribe of Florida involving more than 450 allegedly defective homes with improper roof installations and moldy walls. Its self-insurance reserve increased 21% in fiscal 2025 to $336.9 million.

Builders argue that contracts and warranties protect them from liability, and some mold issues stem from improper maintenance.

Homebuilder earnings are already under pressure from affordability issues, excess inventory, and higher construction costs, while the industry's average earnings per share estimate for 2026 has declined 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

According to the report, stricter energy efficiency standards could also make builders' mistakes more visible. More airtight and insulated homes may be harder to dry out when moisture enters, increasing the likelihood of mold if construction errors occur.

"The industry's standard of care needs to evolve and improve," Christine Williamson, a professor of architecture at Virginia Tech, told the newspaper. "We really need to pay attention to how windows are installed."

The housing market is already under pressure from high mortgage rates and weak construction activity. Total housing starts fell 12.4% month-over-month in July, while single-family starts fell 9.9% to the lowest level since November 2022.

Mold Testing Sparks Controversy

Defense attorneys say some plaintiffs rely on questionable testing methods and evaluators with limited qualifications. Ian Faria, a Texas construction defect defense lawyer handling about 20 mold lawsuits, said some claims "are really borderline at best."

"Such lawsuits are really making homes very unaffordable because builders have to spend a lot of money on experts and lawyers," Faria told the newspaper.

According to the report, mold spore testing can produce very different results depending on how it is conducted, with no agreed-upon standard for how many spores are too many. Experts hired by opposing parties can also produce wildly different remediation estimates.

"One will say it takes $1 million, another will say $50,000," Clay McCullough, a South Carolina attorney, told the newspaper.

Homeowners Claim Illness

Ashley Frazier sued Lennar over mold in a home she purchased in 2021, stating she began experiencing daily asthma attacks, headaches, dizziness, and rashes within two years of moving in.

According to the report, a mold assessment company later deemed the home uninhabitable and recorded mold levels as high as 2.2 million spores per cubic meter. Another assessment commissioned by Lennar days earlier recorded about 500 spores per cubic meter.

Frazier expects to spend about $75,000 on experts, while the home's assessed value has dropped from $318,700 to $117,000. "It's been a complete nightmare," she told the newspaper.

D.R. Horton has also been dealing with cautious buyers and affordability pressures. The company lowered its full-year sales and home delivery guidance due to the impact of mortgage rates and consumer sentiment on demand.

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