Building Materials Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 10,200 building materials distributors in the US purchase and resell a variety of products used in the construction of residential and commercial structures. Companies may offer a wide range of products or specialize in a category, such as roofing materials. Companies often offer related services, such as materials delivery, technical assistance, logistics, design, and fabrication. Customers include contractors, home builders, building owners, and resellers (dealers, home improvement stores).

Dependence on Construction Industry 

Demand for building materials is highly dependent on the health of the construction industry, which is cyclical and vulnerable to economic conditions.

Building Materials Cost and Supply

The cost of building materials can vary, depending on pricing trends for underlying commodities.

Industry size & Structure

The average building materials distributor operates out of a single location, employs 23-24 workers, and generates $16.5 million annually.

    • The building materials distribution industry consists of about 10,200 companies that employ 245,000 workers and generate about $170 billion annually.
    • The industry is concentrated; the top 50 firms account for about 47.5% of industry sales.
    • Many companies are small, independent operations and serve a local or regional geographical market.
    • Large companies include ABC Supply, Builders FirstSource, Allied Building Products, and Beacon Roofing Supply. Large home center chains, such as Home Depot and Lowes, are also major suppliers of building materials.
                                Industry Forecast
                                Building Materials Distributors Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Dec 7, 2022 - Tech Downturn Softens Office Construction Outlook
                                • Hiring freezes, headcount reductions, and slowing growth in the technology sector are contributing to weaker demand for office construction, according to a recent report by commercial real estate advisory firm Newmark. In the third quarter, office investment dropped 6% compared to Q3 2021, according to the report. A weakened tech sector could make matters worse as technology companies accounted for more than 40% of all leasing activity through the third quarter. While office occupancy has rebounded somewhat since pandemic conditions have improved, the office vacancy rate in Q3 was 17.6%, the highest in more than 10 years.
                                • On a seasonally adjusted basis, the total value of US construction put in place declined 0.3% in October 2022 compared to the prior month, according to the US Census Bureau. Unadjusted total US construction spending was up 10.8% year-over-year in October. Seasonally adjusted residential spending was down 0.3 in October compared to September but increased 16.4% over September 2021. Adjusted nonresidential spending in October dropped 0.3% compared to September but increased 5.3% year-over-year.
                                • High interest rates, elevated building materials prices, and a lack of affordable inventory pushed home builder sentiment lower in November, according to the National Association of Home Builders (NAHB). Homebuilder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), fell five points to 33 in November 2022 from 38 in October, marking the 11th consecutive monthly decline. Any HMI reading over 50 indicates more builders see conditions as good than poor. Amid weak buyer traffic, 37% of homebuilders reported cutting prices in November compared to 26% who reduced prices in September, according to the NAHB.
                                • The construction sector saw strong job growth in November, but a robust labor market makes it less likely that the Federal Reserve will ease its rate-hike strategy to tame inflation, which spells bad news for construction firms, according to Associated Builders and Contractors (ABC). The US added about 20,000 net construction jobs in November, according to ABC analysis for US Bureau of Labor Statistics data. In comments on the strong jobs data, ABC chief economist Anirban Basu said, “Those operating in real estate and construction are likely to be discouraged, as these segments are heavily influenced by interest rates, and rising borrowing costs make it more difficult to finance the next generation of construction projects.”
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