Soft Housing Market, Falling Commodities Prices Are Lowering Developer Costs

Includes: ASD, GFF, ITW, LII, TEX
by: Mick Weinstein

Excerpt from our One-Page Annotated News Summary:

Why Slowing Housing Sales May Be Good News For Developers: Falling Prices in Commodities (Wall Street Journal)

Summary: The recent fall in commodities prices, led by oil, has been a relief for developers and government builders struggling under construction inflation that has outpaced overall inflation by up to 30% in the past two years. The vibrant home construction market largely offset these costs over the period, with construction spending rising over 10% annually, but many municipal and business projects have been canceled or cut back due to runaway material costs. With petroleum a key component in building materials, metals prices falling, and a softer home construction market lessening demand, many analysts expect construction costs to fall to a level that permits development to return to more cost-efficient levels.
Related links: Full article • More on the housing marketForget about a Soft Landing for HousingNAR Housing Report: Declining Home Prices Induces Heavy Spin
Potentially impacted stocks and ETFs: Building materials companies who should be able to expand margins and control costs more efficiently if the trend continues -- American Standard (ASD), Illinois Tool Works (NYSE:ITW), Griffon (NYSE:GFF), Lennox Intl. (NYSE:LII), Terex (NYSE:TEX)

Seeking Alpha's One-Page Annotated News Summary summarizes all today's major stock-related news. Receive it by email every weekday morning (free/no spam).

Seeking Alpha is not affiliated with Wall Street Journal.