May Wholesale Lumber Sales: In-Line 2Q for BLDR, But 2H Guide Out of Reach

Research evidence excerpt

May Wholesale Lumber Sales: In-Line 2Q for BLDR, But 2H Guide Out of Reach

rical seasonality, points to BLDR's sales at the low-end of its guidance. We YOYLumber% Change& Other Construction Materials Wholesale Sales

take the average of both methods to arrive at the mid-point of BLDR's guidance. This lines up with .Source: US Census Bureau, Jefferies

recent checks [read here] of demand remaining soft, but relatively stable.

Estimates remain too high for 2H. SF starts have remained weak, but SAAR have been in a tight

range the last 9 months. With mortgage rates hovering at 6.4-6.6% since May, 40-60bps higher

than pre-war levels and consumer confidence under pressure, we see no imminent catalyst for an

inflection in 2H26. Our contacts have not seen a material slowdown in activity in April/May, but

visibility remains low in 2H26 and price competition remains fierce, especially with the smaller /

regional LBMs. With BLDR's guidance assuming HSD increase in not-seasonally-adjusted SF starts

in 2H26, we see downside risk to estimates, but this shouldn't be a surprise to the buy-side, and

shares have lagged.

Lumber price rise, but OSB remains under pressure. Lumber prices have moved higher to

$520/mbf (the highest level since September 2022), but our contacts note it's been largely

competed away. Supply has been curtailed in response to prices previously being below cash costs,

transportation/logistic disruptions in the US south have further constrained supply, and generally

lean inventory levels throughout the channel have all contributed to the rally. Demand has been

described as "nothing spectacular", but with transportation issues and lean inventories creating a

sense of urgency from buyers, prices have been able to push higher. 2Q prices are averaging $490/