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Greg Abel took over Berkshire Hathaway and immediately went shopping.

Warren Buffett’s former firm agreed to buy U.S. homebuilder Taylor Morrison in an all-cash transaction valued at $8.5 billion, of which $6.8 billion will be equity.

This is the first significant acquisition for the company under Abel’s leadership and shows the much-needed confidence in America’s housing market.

Berkshire Hathaway announced it will acquire Taylor Morrison at a 24% premium to its closing stock price on May 29. That’s $72.50 per share in cash. The transaction values the company’s equity at roughly $6.8 billion and its enterprise value at about $8.5 billion.

While Berkshire has continued making investments and smaller acquisitions in recent years, the Taylor Morrison purchase stands out because of both its size and the fact that it reflects a clear strategic direction under the company’s new leadership.

The move expands Berkshire’s already significant housing footprint. The conglomerate owns manufactured-home giant Clayton Homes as well as a range of building-materials businesses. So this is Abel’s grand plan to bring it all under one roof.

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The deal is important for three reasons.

First, it provides the clearest indication yet of how Greg Abel intends to run Berkshire Hathaway. It demonstrates his willingness to deploy Berkshire’s enormous cash reserves, which exceeded $380 billion earlier this year. Buffett maintained a hands-off approach over acquired businesses. While Abel has pledged to keep that going, it might be interesting to see if he will be ready to cut his losses, should the need arise.

The acquisition is a major endorsement of the U.S. housing market at a time when the sector faces elevated mortgage rates and affordability challenges. Berkshire appears to be betting that demographic demand and chronic under-building will support housing activity for years to come, hence the consolidation within the homebuilding industry.

Taylor Morrison operates across multiple states and markets, and its integration into Berkshire’s broader housing ecosystem means Berkshire provides everything from refinancing to roofing for the house.

The immediate focus will be securing shareholder and regulatory approvals before the deal closes later this year.

But for the business, this will be an early test of the post-Buffett era. If the housing market stabilizes and Berkshire successfully expands its homebuilding platform, the deal could become a defining example of Abel’s leadership style: using Berkshire’s balance sheet to make large, long-term bets on stable sectors.