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Jim Cramer Talks Housing With Builders FirstSource

CEO of building supplier says it's still seeing supply chain challenges.

Despite supply shortages and wild cost fluctuations, the stock of Builders FirstSource  (BLDR) - Get Builders FirstSource, Inc. Report has been rising steadily over the past 12 months.

On a recent episode of the Mad Money TV show, Real Money's Jim Cramer discussed the home building market with David Flitman, president and CEO of the building materials supplier with 550 locations in 39 states. Find out more about the Real Money team’s investing ideas here.

Flitman told Cramer that Builders FirstSource operates in 84 of the top 100 markets in the U.S., with the majority of their revenues stemming from single family home construction. Some 12% of msales come from multifamily units, he said, and another 12% from the professional repair and remodeling markets. There is a push to increase multifamily housing, led by California’s effort to ease zoning restrictions on multi-family housing, recently signed into law by Gov. Gavin Newsom.

When asked about the state of the housing market, Flitman said that the U.S. had been under-building for years, but in 2020, the home builders began to pick up the pace. Then, as the pandemic hit and housing demand heated up even more, suppliers simply weren't ready to cope, especially once COVID shutdowns began. This has led to shortages and cost inflation across many categories from lumber to doors and windows and beyond.

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The home building business continues to be plagued by the supply chain problems that hit the building industry as a result of the pandemic.

Lennar Corp  (LEN) - Get Lennar Corporation Class A Report (a homebuilder) reported in their latest results they had missed delivery guidelines because of supply chain problems. They said the problems are expected to continue.

There are still opportunities to be had, however. Flitman said that Builders FirstSource is going digital, moving its 700 designers and engineers to all-digital workflows that could be a $1 billion opportunity for the company. 

On Sept. 9, Builders FirstSource announced it acquired Apollo software assets from construction technology startup Katerra in an approximately $4.5 million transaction. The Apollo platform provides design collaboration and workflow, construction budgeting and scheduling, and field task assignment with mobile functionality.

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