Homebuilding supplies giant predicts market downturn

One of the nation’s biggest home building-supply companies is pulling back production as a looming recession threatens to sink buyer demand.

Dallas-based Builders FirstSource saw its earnings double year over year in the second quarter — reporting $1 billion in revenue and a 24 percent increase in sales to $6.9 billion. As a top supplier of raw materials and prefabricated housing components, the company enjoyed a windfall from skyrocketing demand during the housing boom.

But despite the impressive start to the year, the building materials giant has signaled a slowdown in its operations and has projected its annual sales to be considerably less than it predicted the end of last year, according to the Dallas Morning News.

“Our industry is clearly experiencing pockets of deceleration; we’ve all seen mortgage rates rising, single-family starts forecasts coming down in the back half of this year and cancellation rates increasing,” said Builders FirstSource CEO Dave Flitman in an earnings call Monday morning.

The earnings call wasn’t all doom and gloom, as Flitman told investors, “we remain very optimistic on the prospects for our industry over the long term.” He also said the downturn would not resemble that of 2007 because of the steadily growing demand from millennials.

Flitman also indicated that the company would shift its focus to acquisitions during the market downturn. The company has spent $230 million of the $500 million it plans to invest on acquisitions in 2022, including the $180.5 million acquisition of two building component manufacturers earlier this year. In its earnings release, the company said it purchased HomCo, a lumber and hardware supplier in Arizona. In 2021, Builders FirstSource acquired its rival firm, North Carolina-based BMC Stock Holdings, for $2.5 billion.

— Maddy Sperling