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The co-CEO and chairman of Lennar, one of the country’s largest homebuilders with a $30 billion valuation, just delivered a stark message: the combination of steep home prices and elevated mortgage rates is putting a major drag on housing demand.“Mortgage rates have stayed elevated for longer than expected, and that’s kept the housing market subdued for an extended period,” Stuart Miller said during Friday’s earnings call. “We’ve seen a significant pullback in qualified demand.”The news rattled investors, sending Lennar’s stock down 4%. Yet, Miller pointed out that the underlying need for housing hasn’t gone away—many people still want homes, but fewer can afford them right now. Since early 2020, home prices have jumped by 45%, according to Zillow, while the average 30-year fixed mortgage rate currently sits at 6.67%. That’s lower than recent peaks but still far above the ultra-low rates seen during the pandemic years. On top of that, economic uncertainty is making people nervous about their financial futures, which Miller hinted at, possibly referencing concerns like government layoffs.“People have generally felt secure in their jobs and earnings—but even that sense of stability is starting to erode,” Miller noted. With confidence slipping, buyers are less eager to make big decisions like purchasing a home.That trend is visible in the numbers: sales of existing homes dropped 1.2% in February compared to the year before. Sales of newly built homes also dipped 1.1% in January, even though builders have been sweetening deals with mortgage buydowns and other incentives to lure buyers back. Still, Miller struck a cautiously optimistic tone: “The near-term may continue to feel uncertain,” he said, “but we remain positive on the long-term outlook.” A real rebound, however, hinges on mortgage rates coming down—and there’s no clear timeline for when that might happen.Other potential challenges lie ahead as well. Lennar's other co-CEO, Jon Jaffe, said the company hasn't yet felt any impact from tariffs, but they’re keeping an eye on trade policies and maintaining open communication with their partners. As for the risk of labor shortages due to immigration crackdowns or deportations, Jaffe said there’s been no disruption to operations so far.