Builders FirstSource expects weak housing conditions to continue through the second half of 2026 as affordability constraints limit demand for new homes. The company projects single-family housing starts in its markets will decline by a mid- to high-single-digit percentage, while multifamily starts will fall by a mid-single-digit percentage, according to Builders FirstSource.

The company expects repair and remodeling activity to decline 1% for the full year. Management described second-half demand as softer and adopted a more cautious outlook because housing affordability challenges remain in place.

Second-quarter net sales fell 9% from a year earlier to $3.9 billion. Core organic sales decreased 7%, while commodity deflation reduced sales by 2.7%. Acquisitions added 1% to sales.

Lower construction activity affected each of the company’s main end markets. Core organic sales declined 8% in single-family construction, 10% in multifamily construction and 2% in repair, remodeling and other operations.

Gross profit decreased 16% to $1.1 billion, and gross margin fell 260 basis points to 28%. Reduced sales also limited operating leverage, pushing adjusted EBITDA down 35% to $329 million and its margin down 350 basis points to 9%.

Selling, general and administrative expenses decreased 3% to $958 million through lower variable compensation and wages. Despite lower SG&A spending, reduced operating leverage increased SG&A as a percentage of sales by 150 basis points to 25%.

The company generated $28 million of productivity savings during the quarter and expects $50 million to $70 million for the full year.

Net income moved to a $4 million loss from income of $185 million a year earlier. Operating cash flow declined to $68 million from $341 million, while free cash flow fell 87% to $32 million.

Builders FirstSource expects full-year sales of $14 billion to $15 billion and adjusted EBITDA of $1 billion to $1.2 billion. The company forecasts a gross margin of 27.5% to 28.5%, an adjusted EBITDA margin of 7.1% to 8.1% and free cash flow of $400 million to $500 million.

The forecast assumes average commodity prices of $390 to $410 per thousand board feet. Acquisitions completed during the previous 12 months are expected to add about 1% to sales growth.