Now, Wedbush Is Also Wary About the Housing Market

Investment bank Wedbush came around yesterday to share our concerns about the state of the housing market with its downgrade of Builders FirstSource BLDR shares. Adding to those worries was a revision to engineered wood products and plywood company Boise Cascade's (BCC) current quarterly earnings forecast before interest, taxes, depreciation, and amortization. In response, we will continue to evaluate potential housing plays, balancing Fed rate-cut prospects with indications of demand discussed in our recent alert.

Now let’s break down Wedbush’s downgrade and Boise’s revised EBITDA outlook for the current quarter.

Wedbush on Builders FirstSource

Yesterday, Wedbush cut BLDR shares to Neutral from Outperform. Wedbush sees a subdued housing backdrop characterized by the weakening single-family housing market, elevated home inventories, and falling lumber prices. In its note, the firm said it expects the single-family housing market to contract 7% this year, which implies a much weaker second half, given single-family housing starts were down 5% year-to-date through July.

Tomorrow’s August housing starts and building permits report will give us more information to compare with that 2025 forecast. Per Wedbush, single-family housing starts are only expected to rebound 2% next year.

Also, we'll closely watch order and backlog data when homebuilder Lennar LEN reports later this week and KB Home KBH reports next week. We’ll also be interested in comments about the use of incentives and the impact on margins for the second half of 2025. With an eye toward 2026, comments about expected community counts will be a potential indicator.

Boise Cascade cuts EBITDA outlook

When Boise Cascade reported its second-quarter 2025 results on Aug. 4, it stated the following when describing its outlook:

During the past quarter, the operating environment reflected adjustments by large public homebuilders, who moderated their building pace to align with a demand environment shaped by affordability considerations, cautious consumer sentiment, and broader economic conditions. Evolving market conditions have led to reduced home turnover and households delaying big projects, impacting repair-and-remodeling spending. Near-term end market demand has eased and will continue to be influenced by factors such as mortgage rates, home affordability, home equity levels, home sizes, new and existing home inventory levels, unemployment rates, and consumer confidence… For the balance of 2025, our rates of production and inventory stocking positions will be influenced by end-market demand signals and channel inventory decisions of our customer base.

That set the stage for the company to forecast current quarter EBITDA between $80 million-$100 million, down from $119 million posted in Q2 2025 and the $154.5 million achieved in Q3 2024.

In the company’s newly published September Investor, when we turn to page 34, we see it now expects total company adjusted EBITDA between $60 million-$80 million. The downward revisions reflect

Wood Products (engineered wood products and plywood) EBITDA is now seen to be $5 million-$15 million, down from $20 million-$30 million in early August, with engineered wood product volume down sequentially in the mid-teens and pricing down sequentially in the mid-single digits. Back in early August, Boise expected a high single-digit volume decline and a low to mid-single-digit price decline. Plywood volumes are tracking as expected, but quarter-to-date pricing has softened compared to early August expectations. We talked about falling lumber prices as a key indicator to watch for housing demand in our recent alert.

Building Materials Distribution (BMD) adjusted EBITDA is now expected to be $65 million-$75 million from $70 million-$80 million. Management said the daily sales pace quarter-to-date softened to 5% below the Q2 average of $25.2 million/day, vs. July’s 3% below the Q2 average of $25.2 million/day.

Pro Portfolio has no position in any security mentioned.