BLDR

Contracts to buy US homes fell to a record low in September as mortgage rates topped 7%. Homebuilders lose orders and start fewer houses, which hurts building-materials supplier Builders FirstSource.

Home sellers are starting to cut asking prices, a sign of weaker demand. Homebuilders such as D.R. Horton and Lennar feel it first through thinner margins. If builders then start fewer homes, their supplier Builders FirstSource could sell less.

Lennar reported homebuilding revenue of $7.76B, down 6.0% from a year earlier, and new orders down 9% to 20,879 homes. Builders FirstSource's annual report names Lennar as a top customer. Fewer Lennar starts and closings mean Builders FirstSource sells less building material, and its shares have not yet reacted.