Cheap(er) Copper = Less Expensive New Homes?

“U.S. Housing Starts Fall 11% in October.”

headline, WSJ (11/18/2015)

According to today’s Wall Street Journal, copper prices just fell to fresh six-year lows (about $2/lb.), in part due to softness in new home construction.

copperWhich begs the reciprocal question:  will falling copper prices reduce the cost of new homes?

Nah (unfortunately).

No Trickle-Down Effect

According to builders I work with regularly, even larger upper bracket new homes now use a minimal amount of copper, mostly for wiring.

What is supplanting copper plumbing?

PEX, a form of PVC.

P.S.:  A good analogy would be Starbucks’ prices and the cost of coffee beans.  My guess is that coffee is a relatively small expense relative to labor, marketing, rent, utilities, etc.

About the author

Ross Kaplan has 19+ years experience selling real estate all over the Twin Cities. He is also a 12-time consecutive "Super Real Estate Agent," as determined by Mpls. - St. Paul Magazine and Twin Cities Business Magazine. Prior to becoming a Realtor, Ross was an attorney (corporate law), CPA, and entrepreneur. He holds an economics degree from Stanford.

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