What Happened?
Shares of building materials company Builders FirstSource (NYSE: BLDR) jumped 3.3% in the morning session after a government report showed a surprise increase in U.S. housing starts for July, signaling stronger-than-expected construction activity.
The U.S. Commerce Department reported that housing starts, a key measure of new residential construction, unexpectedly rose to an annual rate of 1.428 million in July, significantly beating economists' expectations of 1.30 million. The figure also represented a 12.9% increase from the prior year. This data suggests a resilient housing market, which is a positive signal for building material suppliers like Builders FirstSource, as more construction activity directly translates into higher demand for its products. Adding to the positive sentiment for the sector, home improvement retailer Home Depot also posted higher quarterly sales and reaffirmed its outlook for the year.
After the initial pop the shares cooled down to $138.64, up 1.5% from previous close.
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What Is The Market Telling Us
Builders FirstSource’s shares are quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 5 days ago when the stock dropped 4.5% on the news that an unexpectedly sharp rise in wholesale inflation fueled concerns about rising costs and their impact on corporate profits. The primary catalyst was the July 2025 Producer Price Index (PPI), a measure of inflation at the wholesale level, which jumped 0.9% against forecasts of a 0.2% rise. This represents the most significant monthly increase in over three years, pointing to mounting cost pressures for manufacturers, with tariffs cited as a key factor. This data complicates the Federal Reserve's upcoming interest rate decisions, as persistent inflation may prevent rate cuts, creating a headwind for cyclical sectors like Industrials.
Builders FirstSource is down 2.4% since the beginning of the year, and at $138.64 per share, it is trading 31.3% below its 52-week high of $201.83 from September 2024. Investors who bought $1,000 worth of Builders FirstSource’s shares 5 years ago would now be looking at an investment worth $4,812.
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