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 10,300 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 25-26 workers, and generates $15.6 million annually.
- The building materials distribution industry consists of about 10,300 companies that employ 266,000 workers and generate about $160 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, 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
Recent Developments
Oct 11, 2024 - Nonresidential Building Planning Drops
- The Dodge Momentum Index (DMI) decreased by 4.2% in September 2024 to 208.6 (2000=100), down from the revised August reading of 217.7. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the institutional planning component improved by 5.2% in September, but commercial planning declined by 7.8%. Dodge’s associate director of forecasting, Sarah Martin, said, “Despite this month’s decline, the Dodge Momentum Index remains at very robust levels. A surge in data center activity drove much of the recent rapid growth in the DMI – so as planning for that sector moderated over the month, overall commercial planning fell back. By mid-2025, the Fed’s rate cuts should spur planning projects to reach groundbreaking more quickly – leading to stronger nonresidential activity as 2025 progresses.”
- North American construction and engineering spending in 2024 is expected to grow by about 5%, according to FMI’s fourth-quarter 2024 North American Engineering and Construction Outlook. With growth of 29%, public safety will lead 2024 nonresidential building construction, followed by manufacturing (21%), amusement and recreation (10%), transportation (5%), educational (4%), and religious (2%). Commercial construction spending is expected to decline 8% in 2024 amid weaker demand for warehousing space. Lodging construction spending is forecast to drop 6%, and stubbornly high office vacancies will continue to weigh on new office construction, which is projected to see spending rise 1% in 2024. Despite favorable demographic trends, project delays for some private hospital developments will cap healthcare construction spending growth at 1% in 2024. Amid moderating interest rates, single-family construction spending is forecast to rise 5% in 2024 as new home affordability remains competitive with existing home prices. Spending for multifamily is expected to decline by 4% in 2024 amid a recent wave of fresh inventory. The rise in available apartment units has contributed to flat or falling rents in some metros, prompting developers to pause new projects.
- The total value of US construction put in place fell 0.1% in August 2024 compared to the prior month, according to the US Census Bureau. Residential spending declined 0.3% and nonresidential spending increased 0.1%. Nonresidential spending was mostly supported by public infrastructure projects. Conservation and development spending increased by 2.2% in August. In the nonresidential buildings segment, growth was led by communication, which grew 1.3%. Amusement and recreation spending increased 0.9%, and lodging spending rose 0.8%. Spending on public safety projects grew by 0.6%, and healthcare spending rose by 0.1%. Construction spending for office, manufacturing, and transportation each rose 0.1%. Commercial spending fell 0.5% in August, while educational and office spending fell 0.2% and 0.1%, respectively.
- New single-family home sales fell 4.7% month-over-month but were up 9.8% year-over-year in August 2024, according to the US Department of Commerce. Some potential home buyers stayed on the sidelines ahead of an anticipated interest rate cut, according to the National Association of Home Builders (NAHB). In mid-September 2024, the Federal Reserve announced a half-percentage point rate cut. The NAHB suggests home builder sentiment is improving amid expectations that the Fed’s credit-easing cycle will continue. However, falling interest rates may increase competition between home builders and existing home owners who’d previously felt locked in by their low interest rates.
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