James Hardie Plunges 13%: MSCI Removal and US Housing Woes

James Hardie Industries (ASX: JHX) plunged up to 17% on Thursday before closing down 13%, capping off what’s been a disastrous year for one of Australia’s most recognisable building materials companies. The stock is now down 49% year-to-date, trading at levels not seen since mid-2020. Two forces converged this week to accelerate the selloff: removal from the MSCI Australia Index and fresh warnings about the struggling US housing repair market. For long-suffering shareholders who’ve watched nearly half their investment evaporate, the question is no longer whether things can get worse, but when they might finally stabilise.

What are the Best Real Estate stocks to invest in right now?

Check our buy/sell tips

US Housing Weakness Matters More Than Index Removal

MSCI’s decision to remove James Hardie from its Australia Index, effective November 24, triggered mechanical selling from passive funds, but that’s not the real story here. The index removal is simply the market’s way of acknowledging what’s already happened: James Hardie has fundamentally deteriorated as an investment this year.
The company generates roughly 80 per cent of its revenue from North America, where it manufactures fibre cement siding used primarily in residential construction and home renovation projects. When US peer Trex warned on Wednesday of continued weakness in the repair and remodel segment, it sent shockwaves through the entire sector. Trex slashed its full-year sales guidance from US$1.21-1.23 billion down to US$1.15-1.16 billion, missing expectations badly.
That matters because James Hardie operates in the same market. With US mortgage rates still hovering around 7 per cent and housing affordability near historic lows, homeowners simply aren’t spending on major renovation projects. When people can’t afford to move or refinance, they typically delay big-ticket home improvements, which directly hits James Hardie’s core business.

Shareholder Revolt Signals Deeper Problems

Beyond market challenges, James Hardie is dealing with a full-blown governance crisis. At the company’s recent Annual General Meeting, investors delivered a stunning rebuke to management and the board:

• Chair Anne Lloyd ousted, along with directors Rada Rodriguez and Peter-John Davis
• Remuneration report rejected by shareholders, angry over executive bonuses despite the stock’s collapse
• Director fee pool increase voted down, sending a clear message about accountability

Shareholder anger centres on two controversial moves: the high-priced Azek acquisition and executive bonuses despite poor performance.

The Azek acquisition: James Hardie paid US$8.4 billion in July 2025 to acquire Azek, a US decking and outdoor products manufacturer. Critics argue management overpaid at 22 times EBITDA, particularly given deteriorating market conditions. The deal increased James Hardie’s debt to 2.8 times net debt-to-EBITDA, nearly triple pre-acquisition levels.

Executive bonuses: Despite the stock plunging 49 per cent, management still collected incentive payments, infuriating shareholders who’ve seen their holdings decimated.
Management expects the Azek deal to be dilutive to earnings by roughly 8 per cent in FY27, meaning shareholders face near-term pain while waiting for promised synergies of US$350 million to materialise.

The Investor’s Takeaway for JHX

James Hardie’s future hinges on broader economic forces, especially US interest rates and housing market recovery. If mortgage costs ease, demand for renovations could rebound.
The company’s fibre cement products remain best-in-class for durability and fire resistance, making them especially valuable in bushfire-prone areas of Australia and the US. The brand is strong, and historically, it performs well when housing markets recover.
Still, near-term headwinds are significant. The Azek acquisition must deliver real value, new leadership needs to rebuild trust, and earnings won’t stabilise until market conditions improve.
With the stock trading near $25, down nearly 50% this year, it may appeal to long-term contrarians who believe in a US housing recovery. More cautious investors might prefer to wait for clearer signs of execution and market stability before stepping in.