Shares of James Hardie (JHX) are nosediving after issuing fiscal Q1 results, warning about the ongoing impacts of the US housing slump. Yahoo Finance Senior Reporter Claire Boston explains all the things impacting US homebuilders, related retailers, and suppliers.

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Video Transcript

00:00 Speaker A

A gloomy outlook on the US housing market from building materials giant James Hardy. Those shares are plunging as the company warns that demand for repairs and new construction in North America remains challenging with economic uncertainty, elevated prices, low inventory, keeping the sector in neutral. Senior reporter Claire Boston is joining me now with a closer look at the sector. And obviously, Claire, this goes along with everything we've been talking about with Lowe's and Home Depot this week, and with some of the home builders, trying to figure out what's going on in the housing sector.

00:42 Claire Boston

Right. I mean, I think when you look at this overall, it's just a really tough time to be in the housing market. You have record bad affordability right now. Mortgage rates are very high. And now if you're a home builder, you're looking at tariffs that are going to drive up the cost of your building materials. Um, you know, labor costs are rising. Ice raids are potentially a concern that we are starting to see on some of these job sites. And all of that kind of paints a really gloomy picture for these home builders. Um, there's a sentiment index that comes out once a month. We got a reading on Monday. And uh the index is 32. And anything below 50 is negative. So 32 is quite negative. And um, you know, home builders are really saying, um, you know, what they have is not moving. They're having to cut prices in some cases. They are also having to offer bigger incentives, you know, to move these homes. And it's kind of a weird environment because uh we do have a housing shortage in this country, but um, you know, in some places right now we are essentially over supplied. The home builders cannot move these homes. And uh you know, that's really eating into their margins. You know, they're pulling back on new starts. And uh it's it's a, you know, it's a tough time right now for them.

02:47 Speaker A

Yeah, I mean, even just the anecdote from Scott Mushkin, who we just spoke to, saying in Florida they got plenty of houses and they can't move them there. So you see those James Hardy shares down 36% today. Uh that building material company, Toll Brothers also out, and it's supposed to be the the luxury end, right? So what do we, what kind of vibe are we getting from them?

03:20 Claire Boston

Yeah. I mean, so Toll had, they did beat earnings. They are up today and but, you know, Toll you have to kind of look at as its own category. They're going after that higher income consumer. You know, maybe they're a little bit less affordability stretched, you know, maybe they've sold a previous home. Um, but you know, that being said, the other thing about home builders right now is they are competing with more new supply on the market than they have in several years. This is the first year, pretty much since the end of 2022, that we really saw people listing new homes and, you know, putting their homes on the market. And so what I hear at least when I talk to realtors and home builders is, you know, the consumer has more choice now. And in some cases, you know, maybe they're not going to want that new construction because they want that older home that you know, is maybe a little bit closer to the downtown core where they work. And uh, you know, that's just putting more competition on home builders right now.

04:36 Speaker A

Yeah, not a great picture still. Thanks, Claire. Appreciate it.

04:42 Claire Boston

Absolutely.  Related Videos

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