Builders FirstSource, one of the hottest stocks of the past year, was hammered after reporting a 22.5% decline in first-quarter profit, a sign that high borrowing costs are beginning to slow residential construction.
Shares of the building products supplier have stood out among chip makers and tech firms atop the S&P 500 despite the highest interest rates in a generation.
They dropped 19% today, their worst day since the March 2020 Covid crash.
JELD-WEN Holding shares fared even worse after the window and door maker swung to a quarterly loss and cut its financial outlook. Its shares lost 25%.
“As we expected, a weakening multi-family market and higher mortgage rates driving affordability challenges were headwinds to start the year," said Builders FirstSource Chief Executive Dave Rush.
The firm, which has been consolidating the building-supply sector, told investors that it expects profits to decline this quarter by a percentage in the high teens as the apartment building-boom winds down.
The construction market has been surprisingly resilient during the Fed's rate hike cycle, which was launched to cool inflation by slowing the red-hot housing market and the consumption that accompanies booming property values.
Building products stocks have surged under the reasoning that if they were profitable with 7% mortgages, they would make even more when the Fed cut rates. Results from Builders FirstSource and JELD-WEN show that the construction business might finally be buckling under high borrowing costs.
Our library of marketing materials is tailored to help construction firms like yours. Use it to benchmark your performance, identify opportunities, stay up-to-date on trends, and make strategic business decisions.
Join Our CommunityBuilders FirstSource, one of the hottest stocks of the past year, was hammered after reporting a 22.5% decline in first-quarter profit, a sign that high borrowing costs are beginning to slow residential construction.
Shares of the building products supplier have stood out among chip makers and tech firms atop the S&P 500 despite the highest interest rates in a generation.
They dropped 19% today, their worst day since the March 2020 Covid crash.
JELD-WEN Holding shares fared even worse after the window and door maker swung to a quarterly loss and cut its financial outlook. Its shares lost 25%.
“As we expected, a weakening multi-family market and higher mortgage rates driving affordability challenges were headwinds to start the year," said Builders FirstSource Chief Executive Dave Rush.
The firm, which has been consolidating the building-supply sector, told investors that it expects profits to decline this quarter by a percentage in the high teens as the apartment building-boom winds down.
The construction market has been surprisingly resilient during the Fed's rate hike cycle, which was launched to cool inflation by slowing the red-hot housing market and the consumption that accompanies booming property values.
Building products stocks have surged under the reasoning that if they were profitable with 7% mortgages, they would make even more when the Fed cut rates. Results from Builders FirstSource and JELD-WEN show that the construction business might finally be buckling under high borrowing costs.
Our library of marketing materials is tailored to help construction firms like yours. Use it to benchmark your performance, identify opportunities, stay up-to-date on trends, and make strategic business decisions.
Join Our Community