Bloomberg News
Investors are worried about builders’ profit margins as home-price growth slows and costs rise.
As if there isn’t enough to fret about in the new-home market, home builders have provided investors with another concern: the potential for declining profit margins.
Roughly half way through earnings season for home builders, margins have become the new focal point of investor angst. The concern is that builders’ profit margins might start to dwindle as early as next year if, as many expect, price appreciation for new homes loses more momentum than the rising cost of building homes.
Such jitters can reverberate for investors because the home-building industry is quite cyclical. Investors constantly scan for the latest sign that the market is gaining steam, plateauing or starting to decline.
