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
Sep 11, 2024 - Single-Family Home Sales Rise
- New single-family home sales rose 10.6% month-over-month and were up 5.9% year-over-year in July 2024, according to the US Department of Commerce. July’s rise in home sales marked the biggest gain in more than a year as interest rates moved lower. For the week ending September 5, the average fixed-rate 30-year mortgage rate was 6.35%, down from 7.12% a year earlier. Housing industry observers expect mortgage rates to continue trending downward amid anticipated interest rate cuts by the Federal Reserve, according to Reuters. However, high home prices remain an obstacle for many would-be buyers. The median new home sales price in July 2024 was $429,800, up 3.1% from June but down 1.4 compared to July 2023.
- High interest rates have increased the costs for new multifamily construction and reduced property values, prompting some developers to halt or delay projects, according to The Wall Street Journal. Multifamily housing starts involving five or more units fell 21.8% in July compared to July 2023 and were down 41% from their April 2022 peak. The drop in starts follows a boom in apartment building that began during the pandemic. This year, about 610,000 apartment units are expected to come online, the most in any year since the 1980s, according to data firm CoStar. However, as financing new projects has become costlier, CoStar expects new apartment supplies to slip to fewer than 350,000 units in 2025 and 275,000 in 2026. The influx of new apartment building has created an oversupply in some regions, leading to lower property values and weak rent growth, which has reduced developer and investor appetite for new projects.
- In the second quarter of 2024, there were about 23,000 single-family built-for-rent (SFBFR) housing starts in the US, up nearly 10% from the same period in 2023, according to National Association of Home Builders analysis of US Census Bureau data. During the four most recent quarters, 83,000 SFBFR homes began construction, which is up more than 20% compared to how many were built in the previous four-quarter period. While the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is about 8%. Single-family built-for-rent homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
- The market share of completed single-family homes framed with wood decreased in 2023, according to National Association of Home Builders analysis of Census Bureau housing data. Wood framing’s market share of single-family home completions dropped to 93% in 2023 from 94% in 2022. Wood framing held a 90% share in 2019. Concrete framing had a 7% share of single-family completions in 2023, up 1% from the year before. Steel framing for single-family homes is uncommon in the US, and its share of the market was less than a half a percent in 2023. Framing methods other than wood are primarily used in the South where homebuilding is more likely to be subject to housing resiliency requirements.
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