Lumber price pattern suggests the commodity in short supply with higher future price – a devastation for home builder – higher input prices lower new homes sales
Sue Brown
Jul. 4, 2007

The lumber is ready to rise sharply again. It is in a consolidating pattern collecting the potential energy for next rise up. At the same time the real estate sector especially the new homes prices are declining steadily. That spells a very nasty scenario for the new home builders.

Lamar, Hovnanian and others are declining steadily. But what can really create a crash in this sector is the higher input prices in the new homes and inability to raise prices of the new homes. The real estate price decline have taken away the pricing ability of the builders. At the same time prices of lumber, copper and other materials are increasing rapidly.

The operating margin will badly affected. That calls for caution on this sector. The stock prices of the new homebuilders are depressed but it can get further depressed in the next several months unless the economy recovers from the doldrums of mortgage defaults, sub prime problems, real estate price decline and manufacturing slump.

Lumber price pattern suggests the commodity in short supply with higher future price – a devastation for home builder – higher input prices lower new homes sales
Sue Brown
Lamar, Hovnanian and others are declining steadily. But what can really create a crash in this sector is the higher input prices in the new homes and inability to raise prices of the new homes.
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