NEW YORK, Feb 24 (Reuters) - Wachovia’s monthly U.S. housing cost index declined in January for the third time in a row, foreshadowing further price decreases for building materials, the bank’s analyst Carl Reichardt wrote on Tuesday.
The Wachovia Housing Cost Input Index, issued by Wachovia Capital Markets, LLC, fell to 123.6 in January, compared with 123.9 in December. October posted the index’ all-time high of 124.6.
Framing lumber prices fell 8.2 percent from December despite efforts by lumber mills to cut production and reduce inventory. The cost of roofing and sheathing materials fell as well.
The index, which contains data back to 1984 and is owned by Wells Fargo WFC.N, remains elevated in historical terms. That means it can fall further, Reichardt said.
“We maintain that U.S. housing starts and overall building product demand will likely remain very weak in 2009, forcing downward pressure on the index this year,” he said.
U.S. homebuilder shares were up about 8 percent as measured by the Standard & Poor's Homebuilding sub-industry index .GSPHOME, compared with a 4 percent rose in the broader market's Standard & Poor's 500 index .SPX in afternoon trade. (Reporting by Helen Chernikoff, editing by Leslie Gevirtz)
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