Housing Turn Around

Housing affordability is a huge topic of discussion in Australia. The price of a unit in Brisbane increased by 13% over the last year and in some areas (like Mount Lofty) average prices rose nearly 30%.  

If affordability was a problem it is obviously a bigger problem after that because wages didn’t rise anywhere near as much and now, rates are on the rise. 

Affordability however isn’t just an Australian problem though. It remains a problem in much of the Western World and Governments alike continue to grapple with the problem. 

In the US it is now being reported that the Trump Government has reached out to the largest builders in the US to help build affordable homes for First Homebuyers which they can purchase through a rent-to-buy scheme. It’s ambitious but I wouldn’t call it novel. 

And unlike Australia, the US is staring down the possibility of further rate cuts.  

All this makes US Housing an area of interest for a turn-around story and Australia has a few companies sitting at the coal face. So, are they worth considering? Lets take a look. 

James Hardie (JHX) 

JHX released its 3^rd Quarter results this morning (Feb 11). 

The first line shows net sales up 30%, but that is from acquisitions the true number is the Organic 1%.

But the response today shows expectations were set lower, much lower.

To be precise, it equates to a 4% beat on quarterly Earnings Per Share (EPS).

To scratch a bit further, it shows signs of stability (something CSL might need to learn but that is another discussion).

As you can see expectations for JHX in 2026 were for negative earnings before a return to growth in 2027.

And the report today indicates that green shoots are showing. Trump Houses could certainly help those shoots.

Reece Ltd (REH)

REH has followed a similar path. The plumbing supplies business has struggled as US (and Australian) new-housing slowed. The US accounts for approximately 55% of REH’s income.

As the chart below shows, it’s been a solid decline before a bottom was found in December, around the time Trump Homes made a first appearance in headlines.

You’d also note similarities with REH’s EPS growth expectations to that of JHX. A decline in 2026 before a strong recover in 2027 and here we are, confirming 2026 and staring at 2027 with positive signs.

It’s hard not to think that the market is beginning to take notice that the US housing sector is staring at a turnaround and Government intervention and support (as we’ve seen) can help drive that sentiment higher still.

US homebuilder Lennar has indicated it is happy to support the Trump Homes plan and increase production, with a caveat of “when the market improves”. The US Federal Reserve lowering interest rates would support this and will act as a key catalyst for the sector and with Kevin Warsh to step into the breach, rates are expected to fall and the ducks continue to align.

We lean towards REH but only because of JHXs takeover of AZEK, which we should note has shown positive early outcomes but we remain cautious.