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 25-26 workers, and generates $15.6 million annually.

    • The building materials distribution industry consists of about 10,200 companies that employ 256,000 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, 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

                                Mar 14, 2024 - Producer Prices Rise, Wages Flat
                                • Producer prices charged by building materials distributors declined moderately in the fourth quarter of 2023 compared to the same period a year earlier. Meanwhile, industry wages saw a modest increase. Weaker prices, while wage growth strengthens, could signal cost pressure on building materials distributor margins. Industry employment increased slightly in Q4 2023 over the fourth quarter of 2022.
                                • Home sizes increased during the pandemic as families sought more space, and interest rates were near record lows. As interest rates have risen and homes have become less affordable, the trend is reversing, and homes are getting smaller, according to National Association of Home Builders (NAHB) analysis of Census Bureau data. In the fourth quarter of 2023, the median single-family home square footage was 2,156, which is the lowest since 2010. The NAHB suggests that smaller home sizes will likely persist amid continued affordability issues.
                                • The Dodge Momentum Index (DMI) decreased by 1.4% in February 2024 to 180.5 (2000=100), down from the revised January reading of 180.5. 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 commercial planning component dropped by 2.3%, and institutional rose by 0.1%. Dodge’s associate director of forecasting, Sarah Martin, said, “Weaker office and healthcare planning constrained nonresidential planning in February. However, the Index remains 25% higher than where it was just two years ago. Most other categories showed growth over the month and Dodge remains optimistic that nonresidential planning will stay elevated throughout 2024 alongside rising confidence in 2025 market conditions.”
                                • Apartment buildings are getting taller amid sustained demand for rentals, scarcity of land, and some cities’ willingness to change zoning rules to attract development, according to The Wall Street Journal. Between 2021 and 2023, US cities added more than 2,900 buildings with more than 200 units, a 17% increase of the number built between 2018 and 2020, according to property data firm Yardi. High interest rates and single-family home prices continue to prop up demand for rentals, even among those with relatively high incomes. Some cities are easing some zoning rules, such as minimums for parking. The economics of multifamily development have also changed. Higher construction costs mean buildings need to have more units to be profitable.
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