He’s correct

I’m not even sure it’s actually flashed otherwise you’d see the edge of it in the channel on top of window, and even then what would prevent water from filling the channel and running back under it and into the house. Normally there’s a drip cap the runs across the entire top of window that gets sealed to the sheathing. If water gets thru siding it will run down wall come out over drip cap and down the face of the window.

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I have seen this before and it was the nailing fin cracked from the top of window probably from the window being nailed balls tight to the wall and had no give for the house flexing. This allows water to sit in integrated channel and seep into the house. Builder should have used protecto-wrap on the nailing fins to prevent this from happening if the fin cracks. That and not nail to window so tight.