Homebuilder sector to make up Irma losses quickly, but building products future unclear: Credit Suisse’s Maklari – CNBC

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Susan Maklari, Credit Suisse homebuilder analyst, told CNBC on Wednesday that although Hurricane Irma has pulled homebuilder order growth down, the sector can expect to quickly make up losses. Building products, however, have a murkier future, she said.

Hurricane Irma was one of the most powerful storms to hit the U.S. in years. Irma not only left a path of devastation through the Caribbean and up the coast of Florida, but it was also the first Category 5 storm on the Saffir-Simpson Hurricane Scale to make landfall in Cuba since 1924.

Over the course of two weeks, hurricanes Harvey and Irma will have impacted at least 6 of the top 15 housing markets in the U.S. This, in turn, will affect the homebuilding and building product sectors.

“For the builders specifically, we expect that you will see some lower rates of order growth just because communities were closed,” Maklari said on CNBC’s “Power Lunch.”

Third-quarter closings will also be delayed in Houston and now in Florida, as local communities recover and builders face heightened labor constraints.

Despite this, Maklari said, “We expect that the builders will largely make those up in the fourth quarter as well as into early 2018.”

Building products hold a different, more unclear future, in Maklari’s opinion. While Irma could potentially help the industry, we will not see effects for some time. She said:

“It does take about four to six months before we see that coming through in results, though. Homeowners certainly have to go through an insurance process and kind of get their arms around the damage, and so therefore we’ll wait until next year to see how exactly it comes through. But something to note is that part of this is dependent on capacity — how much industry decides to bring on — and that will really kind of help in terms of volume versus price and how that all comes together next year.”

Following the last six major storms to hit since 2004, the homebuilder stocks rose an average of 7.2 percent in the 18 months after, and the building products stocks were up an average 10.3 percent in the same time. Although effects may not be immediate, if trends continue, the sectors will eventually see gains.

— CNBC’s Robert Ferris contributed to this story.

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