Watch the replay of our October Market Intelligence Webinar. Ali Wolf joins Mark Graham, Steve LaValley, and Jeff Rettig to bring the latest data on the housing market, such as the latest home sales data and projections for the near future.

Abridged Webinar Transcript

Mark Graham, VP of Sales, Central Decision, BFS: Welcome to the BFS market intelligence webinar. This is our third and final one of the year. So, before we get going, I would like to thank Jeanine and Jack for all their help putting these together. They've been unbelievable, a lot of great information that we’ve had from these, and thanks to Ali for putting these on and being our speaker.

Reminder: at the end of Ali’s presentation, there's a Q and A session. So, we're going to ask you to submit any of your questions using the chat feature. It's on the little control panel in the top right (at least it is on my screen). So, submit your questions and, at the end, we will have a Q&A.

So, I'm going to kick it over to Jeff Rettig, vice president of supply chain, and Steve LaValley, vice president of forest products and transportation, two of the best in the business. So, Jeff, you got it.

Jeff Rettig, VP, Supply Chain, BFS: Thanks, Mark. Hello everyone. As we've all seen lately, the media is very focused on the issues around supply chain and how that's impacting our daily lives. Let's get to the next slide.

News stories have covered how containers are sitting off the coast of California with containers of Halloween items and Christmas items, and how grocery store shelves are being impacted due to trucking shortages.

Unfortunately, these issues continue to have short-term and long-term impacts within the building supply industry, also. Two of the biggest impacts affecting building product manufacturers are rising transportation costs and labor shortages.

Trucking costs are rising at an alarming rate due to the lack of truck drivers with an estimated driver shortage of over 60,000 drivers nationwide and rising. The expectation is that trucking will continue to be a major concern well into next year.

Pulling product from overseas continues to have challenges also. Lead times are extended from a normal few weeks to four to six months on containers of fasteners. And freight has gone from an average rate of $2,500/container to well over $20,000/container, with some paying over $30,000/container to have it expedited. The demand on containers is expected to ease slightly after the Christmas season in Q1, but remain higher than normal through ‘22.

And as we’re all experiencing out there, labor shortages continue to limit production in the field as well as at the manufacturing level. To combat this, labor rates, signing bonuses and incentives are increasing at an aggressive rate. Here in Dallas, just yesterday, I heard Amazon advertising for job openings for warehouse positions starting at $22 an hour with a $3,000 signing bonus. And on the slide, you can see what is being offered in the trucking industry as they try to attract truck drivers.

The competition for existing labor is making it challenging for manufacturers to add additional shifts and to increase production, or to secure drivers to move products in and out of the mills. Putting together these rising transportation costs and labor costs, the expectation is that many manufacturers will be announcing price increases in ‘22. Some manufacturers, such as James Hardie, yesterday have already begun announcing price increases that will start to impact us in January.

In regards to supply outlook, the general thought is that most building product manufacturers will produce at the same level in ‘22 as they did in ’21, with some segments being able to add capacity throughout the year.

I'll touch on a few of the segments that are most asked about.

Engineered wood products should remain flat, and slightly up in’22. Builders FirstSource will be bringing on a couple new truss plants, as well as adding some additional lines to our existing facilities throughout next year, increasing our truss manufacturing capacity.

We'll also be increasing our READY-FRAME offering as a way of helping you build more efficiently.

Both James Hardie and LP SmartSide will be adding capacity throughout parts of ‘22. So, by the end of next year, we're hoping that this segment will be in a better position.

Anderson has brought on another plant, producing the 100 series that will help in the Midwestern U.S.A and MI windows is adding capacity that should hit mid-next year also. Both companies are signaling that they expect lead times to stay extended through mid-year.

Steve, I'll turn it over to you for the commodities outlook.

Steve LaValley, VP, Forest Products & Transportation, BFS: Thank you, Jeff. All the supply side trends that Jeff articulated for building materials, they also hold true for the commodity forest products. Commodity lumber and [unclear] have certainly seen quite a rollercoaster in 2021.

I get asked a lot about commodity prices or when commodity prices are going to get back to a quote unquote “normal”, or at least what we forecast the commodity prices are going to do in 2022. Forecasting is always a perilous business, and so, particularly when there's many puts and takes to consider, and often around the same topics.

For instance, when we look at something like the Western wildfires, at first these tend to be very inflationary and they're going to be disruptive to log supply, transportation and even the personnel that live in these communities, as many times these same personnel are also the volunteer fire departments in the community.

However, after the fires go out, there tends to be an accelerated effort to log this timber before Mother Nature runs its course and the logs are no longer merchantable. I guess we can call this a timber salvage sale.

The same can be said for prices. We've definitely seen our share of higher material costs in 2021, but these same market forces also incent manufacturers to invest in their businesses and increase their production. As well, higher home prices may be a headwind on new buyers, but these same higher real estate values also cause existing homeowners to be flush with equity to pursue home improvement products.

And so, in all these scenarios, there's demand for more wood and then there's cases for less wood.

But, let's keep digging in for 2022. One scenario at play is around the wood product exports from North America. In this slide from FEA, we see North American exports offshore for wood products, solid soft softwood lumber, around half of what they were just a couple of years ago.

There's multiple reasons for this, but the fact is that more of the manufacturing capacity in North America is staying in North America with generally higher market prices. North America remains the best place in the world for the producers to sell their lumber, which should continue to keep more lumber here and less export around the world, which should be a plus for supply in 2022.

The next slide, these two charts, these show the Random Lengths Framing Lumber Composite and the OSB composite dating back to 2019. I'm sure everybody on this call is well aware of the extreme volatility of the past 18 months. Certainly a ride for the ages, right? Something we're all finally glad to put behind us. But, next slide.

Let's take a closer look at what's happening more recently, though. While many of us are still focused on the lumber and OSB price collapse earlier this summer, something different transpired over the last six weeks.

Let's take the last year off the table, just for a minute. Going back a decade, we've had three other major bull markets. One in 2010, I guess that was the housing credits. And one in 2013. I think the terminology around that at the time was the polar vortex when all the rail cars were stuck in Canada. And then in 2018, certainly the market ran up a lot.

But while we're all currently there today looking at other things, over the last six weeks, the Random Lengths Framing Lumber Composite has risen $127 a thousand or 33%. So, aside from the past year, this is the largest and the fastest 30% rise in lumber prices of the last decade. It's just overshadowed by what's happened over the last, let’s call it 9 to 12 months.

So, with all the puts and takes we've seen to supply and demand over the last year, underlying demand can still severely pressure if not outpace the current supply.

So, going back to the initial piece, I was saying, if there's one answer I would give it's where commodity prices will hit in 2022. I’d point to the housing start still and the permits. If demand is going to trend between 1.6 and 1.7 million starts in 2022, I think we should all fully expect continued high volatility in the commodity prices.

So back to you, Mark.

Mark Graham, VP of Sales, Central Decision, BFS: Thank you, Steve. Thank you, Jeff.

A couple of bullet points I wanted to talk about here: capacity planning, substitutions and scheduling. These are things that will help navigate this crazy environment that we're dealing with today. You know, those are things that you should always strive to have better communication and flexibility, but it's even more important now.

We need to set reasonable expectations of each other so that we can ensure that delays are kept to a minimum on your job site. Please continue to plan ahead, reach out to your BFS team and get the ball rolling. You know, what we do now, it's going to pay big-time dividends next year.

So, we want to understand what your plans are next year. Are your starts going up? Are they going down? Are you going in any new markets? Can we help you get into those new markets? Can we introduce you to people, trades and our folks in those new markets? Basically, how can we help keep your projects on schedule?

Substitution is another big one. If you've been listening to these you’ve heard Jeff and Steve talk about being brand-agnostic. Look, we need to identify acceptable substitutions now, rather than when you actually see a backorder ticket on your job. You know, if we can substitute something while our guys are pulling your loads and save a trip, that's just added capacity for you. That’s one last trip for us. But if you think about it, that's one more delivery that we can do for your company.

And then scheduling. We want to deliver your materials the day you need them, maybe the day before, not weeks before or weeks after. If you don't understand the lead times or you're not sure, reach out to us and we'll let you know. And if there's a delay let us know, the earlier the better, specifically on value-add products that were manufactured. You know, it's the process to put wood through the saw and put it on a table and build a truss package and send it out, you know, it's days or weeks once it gets to the saws. So, if we can keep it out of the saw, that's just another truss package that we can build and deliver for somebody who needs it.

So, think about those kinds of things. Reach out to your BFS folks and let's start doing some capacity planning and get ahead of this thing. And I think we'll have a better year next year.

So, that is all I've got. One more thing don't forget Q and A at the end. Enter your questions in the chat thing now. I'll turn it over to Ali.

Ali Wolf, Chief Economist, Zonda: Awesome. Thank you, Mark. And thanks for the entire BFS team for having me back.

I love being able to watch the introductions from both Jeff and Steve. I feel like they give such good content and really just complement some of the things that I'm going to hit on in today's presentation.

So, we have a lot of things go through. I have about 30-35 minutes to go through all of it and I want to start, let me get my deck fully set up. I want to start just real quick, reminding many of you, if you're not familiar with me, who I am and why I'm here to talk about what's going on in the housing market and the economy. So as mentioned, I'm Ali Wolf, I'm the chief economist with Zonda.

If you're not familiar with Zonda, I imagine most of you are by now, but we're a housing data and consultancy firm. We track the entire building lifecycle from raw land all the way up to the closing out of new home communities.

So, throughout today's presentation, you're going to see me share some stats on what's going on with contract sales and what's going on with lots under development. All of that comes from within our database. And we use that to help guide our forecast forward of where we think the market will go. So that's where we'll ultimately finish the presentation is with our final thoughts and forecasts, but to get there, I'm actually going to skip the economic update today.

We were together I think two months ago or August, and we were talking about how there was a labor shortage and it was holding back the market's full potential. You heard from Jeff that's still happening on the ground. Our forecast just for the economy is that we do continue to grow. We continue to be in positive territory, though the rate of growth really falls into this decelerating pace a lot slower than what we're used to. So, that's your high-level economy. Of course, inflation is a concern and we'll talk about that in section four, when we talk about some of the risks, especially as it relates to affordability.

Instead, I'm going to start with the resale market. We haven't spent as much time talking about that through these series of presentations. So, we're going to go to resale, then we'll talk about the new home space and then go into a lot of the lot data that I mentioned earlier.

So, starting off, and I guess the question is why did I decide to cut out the economy and throw in resale activity? One of the main reasons is that when you look at total transactions — I spend so much of my time talking about the new home space, but of course, no one can understand the housing market without also looking at the existing home space.

In terms of total transactions, existing sales makeup, between 85 and 90%. That's the bulk of activity.

And when you look at existing home sales, this follows a trend that I'm sure I highlighted in August that we've been seeing, which is the housing market tanked, as we all remember. It came roaring back, and then it's fallen into this more normalized or more healthy pace where we are today. So, off a little bit from the peak. We are up 2% year over year in terms of total existing home sales and up 11% compared to two years ago. But as you look at those stats, it's really hard to draw basic conclusions on sales because of course sales: dependent on inventory.

So, I've shown you this chart. If you've been with us since the beginning of the year, when we were doing these presentations we talked about how inventory was down 50-60% at points compared to where we were a couple of years ago. Last year, we just saw that inventory continued to go down. This year, we're starting to see that seasonal pattern come back, which is perfect. That's what we want, a little bit more of a predictable market.

Now, with that being said, you can obviously look at the yellow line, which is 2019, and the orange line, which is 2021. We're still down about 50% compared to 2019 levels. It's just that we're starting to see that coming up from the bottom. And then the expectation is for the rest of this year we may actually see inventory trend a little bit back down like we've seen in prior years.

Active listings: overall, when you look at different top markets across the country, down between 10% and 60% compared to last year.

Raleigh, Nashville, Orlando, Jacksonville, Tampa, Dallas: what do these areas have in common? They have been so impacted by migration. So those areas that have been fundamentally transformed because of COVID, those are areas that you're seeing the most extreme drop in terms of overall active listings.

Now, when we look at listings, we're not calling for a snapback. We think that spring selling season next year we'll certainly see an increase in overall listing activity. We should be prepping for that. I think a little bit more inventory on the retail side is expected, at least in our forecasts. But what we know is that the market has continued a little bit of that shift.

So again, last time we met we talked about how the market just feels a little bit different and it's not really in an alarming way. It's in a way that we want it to be because at the rate that we were going out was, quite frankly, very unsustainable and very unhealthy.

What we're seeing now, when you look at days on market. So, this is when a home is listed, how quickly is it sold. The way I read this, basically is if it's 30, it's telling you that the majority of homes are sold the day they're listed because then you look at the escrow period it's giving you 30. When you look at this, we were close to 30. We were at about 35 on a national level during the craziest of times. And that basically was telling us that homes were selling almost as quickly as they were listed. And, of course at the peak of times, 74% of them were going through a bidding war.

You've seen the days on market tick up. Still below any point that we've seen going back to 2017. I think if this data went back further, you would see a very similar trend. Homes are not selling the day they're listed, for the most part, unless there's something exceptional, they're in a good school district. That's a little bit different where maybe it takes two weekends of open houses to sell a home instead of one. Again, that's still not normal. That's still very abnormal compared to history, but it's up from where we were.

Like I said, during the craziest of times we had 74% of homes that were selling with a bidding war. Where we are today nationally, 60%. So that's good, too. That’s another sign of the market just stabilizing a little bit from 74% to 60%. Historical context: same time in 2019, it was 42% of homes sold for bidding war. So, still above. That kind of matches the pattern that you've seen pretty consistently so far in the presentation. So down from the peak, but elevated really still incredibly high. Again, think about those markets we've talked about with migration: Raleigh, Tucson, Salt Lake City. Those are the ones truly dominating. Midwest has just performed really well throughout COVID. You can see a couple of the top Midwest markets falling there. In Bay Area, I think Bay Area may surprise people, but that area is still fundamentally undersupplied, and so you still have homes that come on the market that are, as long as they're competitively priced, still facing multiple offers.

The final thing I want to hit on the existing home side is there's been so much discussion about investors and how prevalent, and how much are they impacting the market? And the true answer to that is it depends on which metro across the country are you talking about. So, for example, I'm flying out to Chicago this afternoon, and when you look at Chicago, that's one of the top markets across the country for the highest investor share. We've seen for the most part, investor activity has increased compared to what we've seen in the past. And in a lot of cases, this actually can work in the builder's favor because oftentimes investors are coming in at that lowest price point. Although we know it's difficult for builders to be able to fulfill it and meet the needs of entry level.

If you're thinking about how this relates to the new home market, investors can come in and they've been able to do those all cash offers, and they've been able to drive some of the activity and keep supply depressed on the existing home space. For the most part, builders are shunning investors. They don't want them. They saw what investors did to the communities last time. Sometimes, there's not as much integrity. And sometimes when the market slows, investors are the first ones to offload homes. So, I would say when you think about how this time is similar or different there's a lot of prudence that's happened on the builder side, where very, very small share of overall new home sales coming from investors. More so active in what we're seeing in the resale space.

So, as we transition to the new home market, and we look at the overall sales volume, I take comfort in the idea that a lot of these sales are coming from primary buyers for individuals that have just been looking to buy a home for a long time or have changed or moved homes because their lifestyle has changed.

When we look at Zonda’s New Home Pending Sales Index. Data is down 14%. Sales down 14% compared to last year. But if you've seen me present, you know that I will show you that stat because that's what we're always used to looking at. But I'm also going to add the caveat, which is if you're comparing this year to last year, you're really comparing apples to oranges. In my mind, last year, what we know from the data is that community count was significantly higher. Vacant, developed lots were available. Demand was absolutely frenzied. There was very little hesitation and we weren't in an environment where there were sales caps.

So, we've shown you on these different presentations the percent of builders that have been intentionally slowing their sales and it used to be in the 90%. Now we're in the 70%. So, we've seen a little bit of the market start to go back to free market and the builder will sell whoever wants to buy. There's not any caps on that. But overall, we're seeing that there are still those struggles with sales aligning up with overall production capacity. My expectation is over the next 12 months, this will be a thing of the past. In a lot of cases having these sales caps actually becomes a PR nightmare. It really makes the builder look like a villain where they're not selling and they're just trying to do it to increase the margins. But, ultimately we know, and you've heard from the presentations from Jeff and Steve, that there were just a lot of challenges that make it difficult to be able to build these homes and, in particular, complete these homes in a timely manner.

Looking at that two-year change, you could also argue the two-year change is apples to oranges. But to me, this is a time where the market was more stable. We had low interest rates. We had good demographics. The market was nowhere near as frenzied. And I just like to compare it to that because we were all happy with sales in 2019 before COVID happened.

And what we see is that compared to 2019 levels, we’re up 21% nationally. Then you look at some select markets. You have 70% over two years in Indianapolis. 60% in Miami, Jacksonville, Riverside, Stockton, Minneapolis. You're seeing again that cluster of some of your Midwest markets. You're certainly seeing a lot of growth in Florida, which I'm sure doesn't surprise anyone. But look at places like Riverside and Stockton. These are areas that are close to big employment hubs, but they offer relative affordability and really good for bang for buck. They have been positively transformed by what's happened because of COVID. Ultimately, you see the relationship between areas that have strong or easy access to overall jobs, areas that have felt the benefits of positive migration and areas that offer a little bit of affordability.

What I like, though. When we look at the data, I think it's really valuable to see which markets are growing the fastest, which ones are maybe performing a little bit slower than the national average. But I also always love to look at this data broken out by tier. I want to say, “Okay, well, where are we finding the most activity for entry-level product? Where are we finding the most activity for move-up products?” And so that's what I want to show you here.

This is the lower third. So, the bottom third of the market, where do we have the highest average sales rates? Probably doesn't surprise anyone when you look at — I'm going to skip over a couple as I go through — Las Vegas, Tampa, Riverside, Jacksonville, Phoenix, Sacramento, San Antonio, Dallas. All of those, again, come down to the discussion of what has happened with migration. When you look at Los Angeles and you look at San Francisco, if a builder's able to hit the bottom third of the market, that's gold. So that makes sense to me that those are going to be hitting a higher overall absorption rate. But remember here, the Y axis, remember that the highest Las Vegas is hitting about six sales per month per community.

You go to the middle third. So, this is your move-up market. I think this is where you're going to start to capture some of the relocation buyers, some of the move-up buyers, some of the second home buyers maybe playing in this space. You again, start to see a lot of commonalities of markets that have risen to the top. So, Riverside, you've consistently seen high in this list. Same with Las Vegas. Same with Phoenix. Same with Tampa. Highest here: 4.5 sales per month.

And then you go to your luxury. And to me, one of the most interesting things about telling you to watch that Y axis, how it went from 6 to 4.5 to 4, is seeing such a close range between the highest average sales rate for the luxury product versus the move-up product. And it goes to, I don't think the market is as uniform as it was. If you remember, probably about six months ago, I was saying you could throw a dart at a wall and it wouldn't matter where the dart fell. You would say, okay, that market's probably really strong. I think we've seen a little bit of a more nuanced approach start to develop by market and by price point, but generally speaking, luxury is still holding up I think a lot better than maybe initial expectations, where that spread between a luxury product and entry-level is fairly narrow.

So here, again, looking down the list, I'm sure you're not surprised. Very similar lists of markets. The only difference is seeing some of the higher income markets start to rise to this. You see Washington, D.C. You see a place like Denver that has really transformed and seen a lot of diversity entering into the overall market.

As we look at this, I always think it's important to show the different breakouts of the stats, but that data that I just showed you is for August. That's the best that we can have for hard data. And I know we're sitting in October, but that's really the way the data falls.

What we can do is supplement those stats with our real-time builder survey. I'm sure many of you are familiar with it. Zonda-conducts a division president survey, where we say, okay, we have all of the hard data from Zonda, but we're going to have to wait a month to get it. So, give us the fresh take on what's happening on the ground in terms of September activity.

So, September, the most recent month we closed, what we found is that 46% of builders said their sales were flat month over month and 32% said their sales were up. Now, remember we're talking, this is August compared to September. Historically, sales should be lower.

Historically, when you go back and look at non-seasonally adjusted new home sales, sales are down about 8% from August. So, we are seeing that return to some seasonality, though the extent that the market has slowed is still a lot different than what we've seen in the past.

In fact, when you talk to builders, we have over 70% that said demand is either stronger than they expected or on track with what they expected. And the reason I think that's important, as you think about a building, you think about the quotas that they've set out to hit, and if they're saying something like it's on track of what they expected, it probably means that they hit their goals that they were looking for.

And in some cases, you have almost about 30% of the market where they're saying, you know, demand was slower than we expected. For the most part, builders are saying it's not worrisome.

We're seeing things like demand has been okay, but it was stronger in July and August. Or normal September sales activity. September, like I said earlier, should be lower than August.

One of the most common things that we've seen in our survey, though, and this goes back to how much weight can you put on sales data? Because we saw with the inventory levels that inventory's down, that's going to impact sales. And we also saw that 70% of builders are still restricting sales. So, that number is still getting manipulated, but I think what's important is builders have a sense of the traffic. They have a sense of how many people are coming within their communities. And the fact that they still feel like overall levels are holding up makes me feel comfortable that this is really starting to fall more into that seasonal pattern, more so than anything else.

Now to wrap up this section, I always like to provide, so that, that was the data from our survey. We also do, every few weeks, a call with our experts across the country. And we have regional directors and we have advisors and we say, “Okay, what are you seeing on the ground?”

And it probably doesn't surprise anyone to hear things like cycle times are getting stretched out. Or, just like the data I showed you on the existing home side, sales are taking a few days longer. But generally if you're planning to sell X amount of homes per month, you're selling X homes per month.

I think one of the things that is a little bit surprising compared to some of the data that's out there is we've had a lot of our regional directors and advisors say that they're seeing prices are plateauing. And this is coming at the same time that Case-Shiller data is still showing that prices are up about 18% year over year.

I would look at this and some of the stuff that we're seeing on the new home space as kind of your leading edge of what's happening on the ground. In fact, we have seen some incentives come back and, read the second to last bullet, it's in select markets at select communities and with select builders. Incentives are not pervasive. It's not that there has been this slowdown in demand, but we were at a point for the past about 16 months where incentives weren't even in play whatsoever. So, it's just a sign of the times that things are just slightly, slightly different.

You see that here as you move into the pricing and supply picture, too. So, we had mentioned that we're seeing a little bit of plateauing in terms of new home sales. When we look at this, this is a chart that we saw early on last time we met, but there was a little bit of a shift. And now that shift has firmly placed itself, which is when we look at the percent of builders who raised prices, it was consistently 90%. Now we're seeing it's consistently 60% of builders that raised prices month over month.

And for a while, we were talking about price increases between $10,000 and $20,000, either every release or every month or every week in some cases. Now we're hearing that the price increases falling more in that $3,000 to $7,000 price point. When we're seeing this, I think part of it is because we have seen the runaway price inputs of the building materials not be as crazy as it was, though it sounds like the volatility is here to stick with us and we have to plan for that. So, part of it is that there's just been a little bit of a stabilizing at high levels for costs.

Part of it, too, is that we continue to see that hesitancy from buyers. We're hearing from builders, especially from on the ground, the sales teams, saying that people will come in and yeah, they're interested, and yeah, they know interest rates are low, but they're afraid of buying at the top. And that's really kind of stuck in a lot of our minds. I think the scars of the Great Financial Crisis are so fresh that people just get nervous when they do see a general run-up in prices.

What can help? Well, right now we have this point where there are some people that are still very active, like we talked about, but there are a lot of individuals that have chosen to step aside. Maybe the market got too frustrating, too crazy, prices rose too fast, they were uncomfortable, whatever their reason is. Also, school’s back, and maybe they don't want to move right now. Or, maybe they are distracted. There's a whole bunch of different reasons.

What we know is to see more inventory on the ground will help get some of those people on the sidelines to come back. And I’d honestly rather have them be on the sidelines than to have oversold everything because now at least we do know there is some pent-up demand in the market.

Community count: I've showed this, I'm sure, every time I've done a presentation here, because I think it's important to track and wait for it to start to tick up:

We're still at the point that overall community counts down between 10% and 40% compared to where we were last year. So, our expectation remains that we expect community count to start to turn up towards the end of this year and going into next year.

Which is where I want to pivot the discussion is start to look at some of the supply numbers and then take those supply numbers into our forecast to wrap up the presentation in about the next 10 to 15 minutes.

So, as we look at this, I want to step back and maybe this is talking down to some of you and that's not my intention. I just want to give some definitions and some timelines before I go into the next few slides.

So, we have different data that I mentioned that we track: the raw land, and we track lots through different stages of development. When I talk to you and I show you data that says equipment on site, that's going to be a lot where you do see, okay, they're getting ready to start moving dirt. Maybe haven't done so yet. When a lot is in that stage of development, that's the furthest from a home being built and the home being closed.

Then you go to excavation. So, now you see dirt moving. Then you go to streets paved, streets in, vacant developed lot, permits (the only section I'm not going to discuss today). And then we'll go to start. So, starts is obviously you're closest to being closed.

As we look at this, you can see the timeline from furthest to closest. I'm going to present it closest to furthest.

So, I wanted to show that because I'm taking at it in a way that means to me, seems more logical, saying, “Okay, what do we know to be true today? What has already started? And then what can we expect in the future?” Which is why I want to work backwards.

Starting with starts. Now, this is data I showed you last time. We're going to have an update for the third quarter data really in the next couple of weeks. So, pay attention, watch out for that. But what we see for total starts is that the areas that you would expect have had the highest level of growth. So, Dallas, Houston, central Florida, Phoenix, Atlanta. Probably no surprise to anyone that areas with a large population, with a growing population base, with relatively easy regulation and kind of government overstep, and the developable land are the areas that have and are posting the highest number of total annual starts. You can see this list ranks from 1 to 25. Now, when we show this data, I like to cut it in a different way.

Cut it by annual change. Total annual starts makes sense. If you look at this over time, you're almost always going to find the top five on that left-hand side chart be somewhere in the top 5, 6, 7. So those just kind of move around each other.

When you look at the annual change, you still see Dallas and Houston number one, number two. To me, what becomes interesting is going down the list and find some of the markets that are maybe batting outside of their league, places like San Antonio, Tucson, Sarasota. These are areas that you don't normally expect to see in the top 10, but you're seeing just really high levels of overall growth as these markets have been, arguably for the better, I think some could say for the worse, transformed by what has happened with COVID. So, we know those to be true. Those are starts. Those are documented.

Where then is there available vacant, developed lots? And remember I had said that's one of the reasons I think this year to last year is apples to oranges because we've seen vacant developed lots just fall off a cliff.

Our new home lot supply index is at the lowest level it's ever been. And if you look at basically every top market across the country that we monitor, these markets are considered significantly undersupplied. What this means: two different things.

Number one, it's telling you that these lots have been absorbed, which means these should be turning into new homes, which is good. But, it also means that the pace at which we are absorbing these lots is quicker than how long it takes to replace them, which is then why it's really important to step back and say, “Well, what do we know about lots that are under development?” And, so we can track this.

Remember equipment on site is the furthest from being closed. That's the bottom part, that's the purple. And then you have Excavation and then Roadwork. I had said Streets In, Streets Paved — that gets bundled into Roadwork, just to put it in context.

When we look back at upcoming lots, we look at the third quarter of 2019 going through the first quarter of 2021, we were more or less flat. You can see a little bit of an increase, but pretty, pretty flat levels of activity until second quarter: 14% increase in upcoming lots. And what's important is to break that out.

So, we know that so many builders were so active, developers so active since we realized that the growth from COVID wasn't a head fake. After those initial, a couple months of fear, we really saw a lot of the land activity take off.

How those lots now come to the market will happen in a staggered point of time. So, for example, when you look at that 14% increase, 7% of those lots would have, assuming they were done on time, should have hit the market in the third quarter, the one we just finished.

You have 26% of the lots that are expected to hit in fourth quarter. So, the one that we're living in right now.

And then we have 67% of the lots that are in that Excavation stage. Given the timeline, we tried to stretch out the timeline a little bit because of the COVID delays that we know are very pervasive. We're seeing that those are likely to hit in the first and second quarter of 2022.

So again, thinking back to forecasts, you're not going to see my forecast say a 14% increase in starts because we know that there are going to be delays. We know that they're going to be challenges. But, we also believe that this lot data is telling us that we should be expecting to see some more starts going into the future.

When we look at this, you can look down this lists, see if one of the markets you're interested is showing up here. This is showing you the lots by stage of development by market.

So, you can see Streets In — again, those are the ones that are likely to have already just hit very, very recently. When I say hit, I mean they become a vacant, developed lot available to a builder. So, when you look at Dallas, the highest, where you have 10,000 that fall on the Streets In, that 21% is not saying 21% growth over the past year, it's saying 21% of all of the lots that are development fell in that Streets In category for them.

Then you can look into the Streets Paved, you can look to the Excavation, and again start to look at the different markets that maybe you're operating in, and look at what does the timeline most likely look like in your market based on what we're seeing for that stage.

This, again, feeds into our forecast that we do expect to see more homes hit the market in the next 24 months, but we don't want to be blind to the endless challenges that we're seeing on the development side and on the building side.

So, we know 62% of builders are running into government service challenges. I've shown you this before, but I think what's frustrating about it is how a lot of these numbers have become sticky, how we continue to see supply disruptions in the 90%s. And in fact, we've seen the labor shortage, which for a while was a low. I remember when the labor shortage was about 40 or 50% of builders saying it was an issue. Now we have 82%. And those challenges are for people at the office, but also framers and carpenters. You can see the different trades that are listed in the top. And I think those are some of the things that we have to watch, because those are very, very difficult to fix over time.

These different challenges make it take longer to be able to build homes and get lots developed. And it also makes it costlier. I think that's one of the things that's often overlooked is how much when we miss target, when we miss something on a timeline, that does ultimately end up costing money.

As we look at the different issues that are the biggest challenges, you heard the gentlemen earlier say that costs may have to go a little bit higher in 2022 given the labor shortages and the challenges with getting items shipped. Again, it all goes to these costs are going up. Even companies outside of our industry are saying — I think it was Kraft foods came out and they said worldwide they have to raise prices because they're just running into all of the supply chain challenges.

On our front, what we see: windows and doors number one by a long shot. But the challenges are spread across. You have windows and doors, garage doors, HVAC appliances, trusses, cabinets. And when any of these things get delivered off schedule, that goes back to the time cost, not only the frustration and the stress, but it's also trying to find a new way to make the timeline work and make sense.

So, as we wrap things up, for my final thoughts, I think one of the most important things — and I would say the thing that keeps me up the most at night — is just watching what happens with the Federal Reserve and what happens with policy.

We saw that the Federal Reserve came out and they said, “Hey, we are under the belief that the economy has significantly improved.” And when that's the case, you don't need to continue to give the economy so much stimulus. You need to let markets be markets. And so, we have seen that there's this talk that maybe the raising of interest rates is going to happen a little bit sooner than expected. Originally said 2023, now there's some talks that raising rates would come in 2022. Remember, that is short-term rates, that is not mortgage rates. Though, oftentimes you see the two go up.

What's more important to me is the immediate change that we expect to see with the bond buying purchases. So, the Federal Reserve is planning to taper buying bonds and mortgage-backed securities, which in theory should cause some volatility in the mortgage market. And, more likely than not, we expect that to put some upward pressure on mortgage rates.

Well, we've already seen that the 10-year Treasury has gone up. What you're looking at the bottom — you can check this every single day, I think this is one of the most important numbers to be looking at all the time — is the 10-year Treasury Note. And just taking a look at what level is it at? So, we were operating at very low levels, at a below 1 for a while. We're now at 1.6. Not abnormally high. This is only a one-year view, so you see that we've been at 1.6 before, but this is so important when you're trying to forecast out rates.

So, historically when you're at between 1.6 and 1.8, that corresponds with a mortgage interest rate of 3.5%. We don't see that right now. The last real-time indicator I saw was interest rates around 3.2 at 1.6. So, it looks like the spread has maybe widened a little bit, but I think these are important benchmarks to keep in the back of your mind. When the 10-year gets to between 2 and 2.4, that's generally when you're looking for interest rates to be around 4%. So, to me, a 2% 10-year is something I want to avoid, I don't want to see.

For what it's worth, Bloomberg has a team of past traders that are now in-house, and they're creating forecasts. Their base case for the 10-year is that it's between 1.5 and 1.8 in 2022. So, they maybe see a little bit from here, but they're calling for things to pretty much flatten out from where we are right now.

The way we look at it, rolling together all the information that we know, our expectation is that interest rates will be around 3.5 for the end of 2022. So, we think there will be volatility. We don't think it will be a straight line up. We think there could be months or periods of time where it's above the 3.5% range. But our expectation is rates will go up, but not shoot up and not hit 5% in 2022. Or 4% even for that. Again, based on what we know today.

What I’ll say, and I'm not going to go through this, but this is just showing you the impact of rising interest rates and rising home prices on affordability. And we know that a combination of rapidly rising home prices and rapidly rising interest rates is really the worst thing we could see. If we see a little bit of rate increase, but home price appreciation’s slow, or home price appreciation stays good, but interest rates stay low, I think that's more manageable.

I'm sure I've mentioned this to you before that the number that really makes me nervous is a 4% interest rate. I do think a 4% interest rate is the new 5, where the monthly payment is very similar to what we've seen in 2018.

For what it's worth, of the other major forecasters, I think Freddie Mac is the highest and they're calling for interest rates to be 3.8 at the end of next year. So, they are calling for a little bit higher, but again, staying below that 4% level.

Final thing is as we look at our forecasts… I did a presentation recently where I followed a gentleman who went on stage and he said, "Well, we're done. You know, housing has peaked and we're going to come down from here."

And I showed you earlier we had that point where we had peaked in terms of home sales. And we had come down. We have seen that in home sales, but we're now trying to forecast forward and I showed you all of that lot data. And the reason I did that was to back up our expectation that we believe single family starts will continue to rise going into next year.

So, our forecast is about a 13% increase to finish off this year compared to last, and then an additional 3% growth going into 2022. So, as you can tell, there are some people that are saying 2022, we'll go down. There are some people that will look at my number and say, “Wow, that's low.” I've seen someone say 20% growth. We're trying to be realistic by weighing the land data and then a lot of the challenges that we've had. But again, we're still calling for higher levels of activity in single family housing starts going into 2022. Multifamily, most certainly we’re expecting growth on that front as well.

When we look at new home sales, we have new home sales basically flat this year over last year:

Going into 2022, our forecast is for 8.4% growth. The reason those are flipped. It's a lot of just the changing in strategies. We've seen more starts last year. And then some of the sales that are going to get hit into next year. Sales to me become very, very dependent on supply. And then of course, you know, where our mortgage rate forecast stands, our price appreciation forecast is about 5%. So, assuming we are correct on those or within a margin of error, we expect that home sales can continue to go up from where we are as well.

Final thoughts here. I would just leave you with when the supply chain troubles go away — let's say we wake up tomorrow and all of a sudden we have no supply chain troubles.

Remember that we do still have some of our legacy issues, namely finding the right amount of workers and skilled workers and finding land.

And as the frenzy slowed, which we've shown has already started to happen, we still have underlying demographics. We still have pent-up demand. We still have — sure, some demand has been pulled forward, but a lot of demand has been sitting on the sidelines, hasn't been able to get into the market. That can continue to support home building for the near term.

So, with that remark, I will stop sharing and I believe I'm turning it back to you.

Mark Graham, VP of Sales, Central Decision, BFS: Thank you, Ali. First-class, as usual. That's great news on the community count, and looks like our friends in Dallas need to buckle up next year. That's a big number on that start.

Okay, we've come to the Q and A section, so I'm going to turn it over to Jack. I think we have a number of questions. So, Jack, you’re up.

Jack Mannon, Director of Marketing Communications, BFS: Yep, we do. We've got about 13 minutes here. Hi guys, this is Jack Mannon, director of marketing and communications for Builders FirstSource. Let’s jump right into it.

Most of these questions are for Ali. So, Ali, I’m going to hit you with one the longer questions first here. So be sure you take a sip of water because I know you just spent half an hour talking.

So, Ali, home prices in our area rose faster than the material increases. With higher new construction costs, we are seeing a higher percentage of resale homes that feel like it may eventually lead to new construction price softening. What do you anticipate nationwide in terms of home prices overall?

Ali Wolf, Chief Economist, Zonda: So, I threw that in, this probably came in right before my final statements, but let me give you some context actually to give a wider answer. So, some of you may have seen, I think Zillow came out with their forecast for next year, and they're saying home prices are going to go up 12% 2022 over 2021.

Goldman Sachs came out with their forecast. They said, home prices are going to go up 16% in 2022 over 2021.

I don't know how that happens. I could be wrong. I could be here next year being like, “Remember when I was making fun of people for being wrong?” You should always have humility in forecasts, but I don't believe that is going to play out. I don't know how it can. I think we've already seen resistance from consumers on the new home side. We've already seen resistance from consumers on the resale side. We've already seen that homes are selling for price cuts. And we've seen, I actually started to notice a lot of data saying that… what I like to do is go on Redfin. And I like to just heart a whole bunch of random houses across the country, because I just like to see, like pick out my own homes and be able to see what happens as they sell and when they go under contract. I started notice a lot of homes getting delisted. And actually, one of the houses across the street from me happened to be one of those. And I saw the neighbor and I ran over and I said, “Why did you delist?” And he said, “Well, I wasn't getting any bites on my price point. I'm not willing to drop my price. My realtor said, ‘Just wait until spring selling season.’” And that she's advising a lot of people to wait until next year.

So, my expectation is we do actually see, again, probably not getting back to the 2019 levels, but we do expect to see some increase in overall inventory. We think that there could still be some overall prices going up. That's why our forecast is for 5% growth. But I've been told by some people that I'm too high, and obviously by Goldman standards I'm way too low. But to me, 5% feels right when you're looking at a national picture.

Jack Mannon, Director of Marketing Communications, BFS: Excellent. Thank you very much. Next question. What are your thoughts on the growth plans of national builders? How much market share are they taking and is there land data by market to support this year?

Ali Wolf, Chief Economist, Zonda: Yes. So, I have data that shows the overall market share of sales for public builders versus private. And I'm sure no one's surprised to hear that, over time, especially over the past five years, we've seen a pretty significant rise in the share of total transactions that go to public builders. And public builders have been really kind of in growth mode and acquisition mode and gobbling up some of the private guys, too, or the smaller guys.

So given our conversations, I expect that public market share — and to be competitive in today's market to get into secure land at a reasonable price, and to have your trades that are working with you and to be able to move forward — the publics do, I hate to say it, but they do have a bit of an advantage over the private and I think in some cases we'll see them prevail and be a little bit more successful.

Jack Mannon, Director of Marketing Communications, BFS: We're seeing a major change in our market for our builders’ go-to-market model. Most seem to be going to spec homes, to help capture the escalating prices on building materials. Is this a new trend nationwide?

Ali Wolf, Chief Economist, Zonda: Completely agree with this individual. We are seeing it as well. And yes, I would say it's not just in your market. For the most part, I'm hearing this happen across the country. And it started with the price escalation. A hundred percent of the builders were saying, "I can't price this home ’cause I don't know what it will cost to build it."

I think there's, and maybe I'm wrong and feel free to correct me, anyone on this call, I think there's a little bit more visibility into some of the costs, but I think at this point it just makes sense. It's efficient. Maybe the costs are maybe a little bit easier to understand, but the availability of products still isn't. So, we're seeing builders move to spec homes. That's going to allow them to… One of the things that Mark had said was kind of those lists of things to do to be successful that allows them to buy more in bulk, maybe get better pricing on some of the products. Maybe they have a better handle of what products are going to come. They know how to better price the home. And I think in a lot of cases, they're trying to find themselves competitive against the resale market. “Oh, you don't want to wait nine months to get a home? Well, that's fine. We have some spec homes that we can offer you as well.” But, I think it's a little bit of both.

Jack Mannon, Director of Marketing Communications, BFS: Excellent. I'm going to ask you a question now, and this could be for Jeff, too. With capacity increases, do we expect demand to suck all the capacity resulting in equal supply chain challenges we are facing currently? If not, are we looking at worse supply chain challenges?

Jeff Rettig, VP, Supply Chain, BFS: So, I think on the building product side, I see continued pressure back and forth between as the housing demand increases, it's going to continue to push supply chain issues out there, even as manufacturers are able to increase. So, I think we're, I think ‘22, as we've kind of talked about, is going to be almost a Groundhog Day with supply chain issues around building products, as it has been in ‘21.

Jack Mannon, Director of Marketing Communications, BFS: That leads me into my next question on supply chain. Will the backlog of windows end up changing most of your models, Ali, through the long lead times and all the builders are way, way, way in advance?

Jeff Rettig, VP, Supply Chain, BFS: You want me to try to jump on that?

Ali Wolf, Chief Economist, Zonda: I can add it once you're done.

Jeff Rettig, VP, Supply Chain, BFS: I was going to say we're working with a lot of the window manufacturers. And as we kind of noted in the slides today that some of them are trying to increase their production around windows and their transportation issues. We're going to continue to work on that. In fact, our CEO is up with one of the vendors today. So, we're going to continue to work and try to see if we can't bring the lead times down to a little more normal capacity with our partners out there.

Jack Mannon, Director of Marketing Communications, BFS: Excellent. The next question is for Steve. What do you believe is the cause of the lumber increases over the last year?

Steve LaValley, VP, Forest Products & Transportation, BFS: I think with a lot of these things, there's always a lot of variables involved. You know, I'd say one, if you're a holder of inventory in the marketplace and when you see prices come down a thousand dollars, like, you know, lumber and OSB did earlier in the summer, you probably tend to get very conservative on your purchasing until you think you can reset your average costs back down to a current market. And as soon as that buy-side of the market returns, I think it reinvigorates, you know, the prices. And so, I think it's a little bit of buy-side dynamics there.

But, I also think that the same scenario probably holds true to some degree on the building side. So, when you get prices — again, if you have price that goes to, let's just pick a number: $2,000 $1,000 — and, you know, the marketplace goes to $500. I think there's probably some aspect of the building community also that taps the brakes for a while. And then as soon as prices are a bit more suitable, they reenter the market. So, I think it's a little bit of purchasing trends.

Jack Mannon, Director of Marketing Communications, BFS: Next question. Ali, do you have thoughts on home size for any other shifts that will help with the affordability issue?

Ali Wolf, Chief Economist, Zonda: Yeah, and I think this is, I love this question because there was this assumption for a while in the pandemic that homes were just going to get bigger. And there were a lot of people that were going out and saying, “Oh, just wait for all these homes to get bigger.” And I fought it. And by the way, it's happening in some parts of the market. But I really fought it as an overall trend cause, you realize that we were fighting affordability in 2019 before this level of run-up in prices. And of course, mortgage rates have offset that, but we shouldn't be banking on interest rates being this low forever. And I think from talking to my friend… One of my friends works at an architecture firm and I was talking to her about what they're seeing. And she said a lot of their deals are still trying to focus on attainability, still trying to focus on shifting. And what she said, and maybe it's not necessarily new, but she said she's relied so heavily on landscape architects, too, and trying to figure out how can you make that inside/outside space, make the house feel better.

Obviously, Molly Carmichael on our team does so much on right-sizing. But the bulk of the market doesn't have to have a 3,000-square-foot home or even a 25,000-square-foot home if it's done correctly. The one thing I'll say is we we've seen in parts of Arizona, I've heard that the further-out suburbs, which historically are, it's kind of a drive to qualify go further away, you can find a smaller home. In parts of that market, we are seeing that the further-out areas are becoming larger homes to accommodate for the work from home. So, you're certainly going to find that, but I'd say generally speaking, it's trying to fit something in that your city will approve, that people will approve, that you worked with the architects, you thought of a really good way to do something that's between 1,500 and 2,300. And I do think there's a buyer group out there that would be very happy as long as it was done right.

Jack Mannon, Director of Marketing Communications, BFS: Excellent. Next question for you, Ali. And this may be a yes or no question, but if it's a, yes, you may want to elaborate. You, Ali, track delays in permitting by city to see the approval times, and if there are any differences pre-COVID versus post-COVID.

Ali Wolf, Chief Economist, Zonda: No, we have builders tell us about their stories on the ground. I have a lot of anecdotes from people that will call and tell me, “Oh my gosh, the city has become so hard to deal with. It used to be this, now it's that.” But I don't have a hard dataset.

Jack Mannon, Director of Marketing Communications, BFS: Another question about the metrics that you track here. Do you have metrics for lots converted to starts over time?

Ali Wolf, Chief Economist, Zonda: Lots converted to starts? Yes. Yes, we do. I don't have anything with me, but yes.

Jack Mannon, Director of Marketing Communications, BFS: And just going through the questions here one last time, I think we've covered almost all of them. I've got one question specific to Chicago. Let’s ask that one. How do you see your overall trends reflecting in the Chicago market? Do you see us much more below the averages, close to the national trends? We're still lagging a little bit in the recovery.

Ali Wolf, Chief Economist, Zonda: I will say, and I'm going to have to parrot this from Danielle Leech. If you want her contact information, please email me. She is our regional director and I believe she lives in Chicago. But what I have heard from her is that the market does just continue to underperform the national average on a fairly regular basis by some of the stats, not necessarily, I don't know how to phrase that right. I would just say, reach out to me. What I know is that there have been a lot of people. When you look at the out migration, Chicago has been one of the areas that has fueled some of the other markets, oftentimes for lifestyle reasons. But I think the durability, sustainability of Chicago is still there based on my conversations with Danielle, given some of the employment hubs and being one of the big cities and kind of desirable parts of the Midwest.

Jack Mannon, Director of Marketing Communications, BFS: And the last question I'm going to ask will be a question for myself because people have been tagging us in, saying "Great job in the presentation, all of the information is very valuable as usual."

The question is: will a copy of this presentation be sent out? And the answer is yes, I've been recording this presentation, and I'm going to convert it into an .mp4 and I'm going to send it out first thing tomorrow morning to everyone, along with the PDF version of the presentation that will include Ali's contact information. So if you have questions like that Chicago one, to point you in the right direction.

So, with that said, I just want to thank everyone so much for your participation and engagement today on this call. And, just thank you, everyone, for joining us for all three of our sessions throughout the 2021 year for the Market Intelligence webinars. And we look forward to continuing to grow ideas and thought leadership and insight into the market as we turn the page and start looking towards 2022. So anyway, thanks everyone, again. Have a wonderful rest of your day. Stay in touch.

This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this document may include, without limitation, statements regarding sales growth, price changes, earnings performance, strategic direction and the demand for our products as a result of national and international economic and other conditions. Forward-looking statements are typically identified by words or phrases such as “may,” “might,” “predict,” “future,” “seek to,” “assume,” “goal,” “objective,” “continue,” “will,” “could,” “should,” “would,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “prospects,” “guidance,” “possible,” “predict,” “propose,” “potential” and “forecast,” or the negative of such terms and other words, terms and phrases of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties, many of which are outside Builders FirstSource, Inc., Inc.'s control. Builders FirstSource, Inc. cautions readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement; therefore, investors and shareholders should not place undue reliance on such statement. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements included in this communication.

A number of important factors could cause actual results to differ materially from those indicated by the forward-looking statements. These factors include without limitation: the impact of the global outbreak of COVID-19; the state of the homebuilding industry and repair and remodeling activity; the economy and the credit markets; fluctuation of commodity prices and prices of our products as a result of national and international economic and other conditions; the impact of potential changes in our customer or product sales mix; our concentration of business in the Texas, California and Georgia markets; the potential loss of significant customers or a reduction in the quantity of products they purchase; seasonality and cyclicality of the building products supply and services industry; competitive industry pressures and competitive pricing pressure from our customers and competitors; our exposure to product liability, warranty, casualty, construction defect, contract, tort, employment and other claims and legal proceedings; our ability to maintain profitability and positive cash flows; our ability to retain our key employees and to attract and retain new qualified employees, while controlling our labor costs; product shortages, loss of key suppliers or failure to develop relationships with qualified suppliers, and our dependence on third-party suppliers and manufacturers; the implementation of our supply chain and technology initiatives; the impact of long-term non-cancelable leases at our facilities; our ability to effectively manage inventory and working capital; the credit risk from our customers; our ability to identify or respond effectively to consumer needs, expectations, market conditions or trends; our ability to successfully implement our growth strategy; the impact of federal, state, local and other laws and regulations; the impact of changes in legislation and government policy; the impact of unexpected changes in our tax provisions and adoption of new tax legislation; our ability to utilize our net operating loss carryforwards; natural or man-made disruptions to our distribution and manufacturing facilities; our exposure to environmental liabilities and subjection to environmental laws and regulation; the impact of health and safety laws and regulations; the impact of disruptions to our information technology systems; cybersecurity risks; our exposure to losses if our insurance coverage is insufficient; our ability to operate on multiple Enterprise Resource Planning (“ERP”) information systems and convert multiple systems to a single system; the impact of our indebtedness; the impact of the various financial covenants in our secured credit agreement and senior secured notes indenture; and other factors discussed or referred to in the “Risk Factors” section of Builders FirstSource, Inc.'s most recent Annual Report on Form 10-K filed with the SEC as supplemented in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

All such factors are difficult to predict and are beyond Builders FirstSource, Inc.'s control. All toward-looking statements attributable to Builders FirstSource, Inc. or persons acting on Builders FirstSource, Inc.’s behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and Builders FirstSource, Inc. undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by law.

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