Titanium Lens

The building products industry sits at the heart of construction, supplying the materials that shape homes, offices, and factories. It is a massive ecosystem made up of roofing, windows, siding, flooring, fixtures, and more. The sector is organized into two main segments, exteriors and interiors, each with six smaller verticals serving residential, industrial, and commercial projects.

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Across the United States, more than 3,000 privately owned companies compete alongside about 50 that are publicly listed. In categories such as roofing, siding, and windows and doors, hundreds of firms operate while only a few are public. Interiors follow the same pattern. Bathroom fixtures and fittings, for example, are supplied by more than 500 private firms and only one public company.

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This imbalance has created a fiercely competitive landscape and limited large-scale consolidation. It has also widened the gap between top performers and the rest of the field, a pattern that became even clearer once growth began to slow.

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When the Cycle Slowed  

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After strong gains through 2021, the building products sector lost momentum. From 2021 to 2024, total shareholder returns averaged about 4 percent, well below the broader industrial market. Revenue growth hovered near 1 percent compared with more than 7 percent for other industrials. EBITDA margins fell sharply, and investor confidence weakened as valuations flattened near 1.8 times sales.

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The slowdown followed a difficult post-COVID period marked by high interest rates, inflation, and uneven demand. Thirty-year mortgage rates moved above 7 percent in 2023 and stayed high through 2024. New commercial construction dropped roughly 70 to 80 percent from its 2021 peak. Home remodeling slowed as households faced higher borrowing costs and fewer refinancing options. Material costs for steel, lumber, and other inputs rose by 40 percent or more, squeezing margins and delaying capital investment.

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The expected recovery in 2023 never came. Instead, most companies faced another year and a half of tight conditions. That delay, lasting 12 to 18 months longer than anticipated, has forced leaders to manage costs carefully and rethink where growth will come from next.

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The Winners’ Playbook

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Even through a slow cycle, some companies outperformed. The top quartile of building products firms delivered shareholder returns about 27 percentage points higher than the sector average. Their success was not driven by size or by the type of product they sold. They performed better because they focused on execution and discipline.

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Across both interior and exterior markets, these leaders shared five habits:

• Product portfolio innovation that balanced performance with sustainability.
• Digital investments that improved transparency and customer reach.
• Customer centricity through reliable supply, fast delivery, and consistent service.
• Programmatic M&A that expanded portfolios and geography while staying close to the core business.
• Strong investor engagement built on clear communication and steady results.

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As Joe Peilert, President and CEO of VEKA North America, explained in our conversation with him, companies gain resilience when they “stay close to the customer, engage, and listen,” noting that flexibility comes from aligning operations with what customers need most. He also pointed out that long-term success depends on investing through the cycle in people, capabilities, and faster decision-making.

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Bob Merrill, CEO of LIXIL North America, emphasized that leaders should “focus on execution, productivity, and customer service,” because mastering the fundamentals is what drives gains even in a weak market. He added that discipline separates winners from the rest. Companies that prioritize clearly and communicate consistently, inside and out, are the ones that stay ahead.

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These companies stayed focused when conditions were toughest, protecting margins and customer trust while continuing to invest in technology and service.

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A Slow but Steady Turnaround

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The building products sector is beginning to show signs of recovery, but the rebound has taken longer than expected. After the post-COVID slowdown, many expected momentum to return by 2023. Instead, the recovery has been delayed another 12 to 18 months as high interest rates, tight credit, and uneven housing demand have kept pressure on the market.

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Even so, several indicators point to improvement. Inflation has eased, and household incomes are rising again after years of stagnation. Mortgage rates remain elevated but have stabilized near 6 percent, helping buyers and builders plan with more confidence. The National Association of Home Builders projects growth in remodeling of about 5 percent in 2025 and a further gain in 2026. Construction activity is also picking up in smaller counties and suburban areas as affordability pushes people outward from major cities.

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Manufacturing and infrastructure investment are supporting the industrial side. Factory construction has grown steadily since 2021, driven by reshoring and funding from the CHIPS and Infrastructure Investment and Jobs Acts. Spending on data centers has surged, now accounting for nearly a third of nonresidential construction.

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In our discussion with John Geary, former chief marketing officer of Nations Roof, he described how the market shift has forced companies to become more efficient. He said contractors have adopted a “just-in-time” mindset, moving materials directly to job sites and using technology to manage everything from estimating to billing. He also pointed to new digital tools that let teams measure roofs and plan projects remotely, which improves both safety and speed.

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Geary also sees stronger fundamentals taking shape. He said the industry has moved from a seller’s market to a buyer’s market, which is “putting pressure on pricing but also driving smarter operations.” Looking ahead, he expects growth of roughly 5 percent annually by 2026 or 2027 as housing demand releases and rates ease.

The current cycle may be taking longer to turn, but the underlying drivers are strengthening. When demand returns, companies that have improved efficiency, embraced technology, and kept close to their customers will be first to benefit.

How Companies Can Capture the Next Cycle

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The next growth phase will favor companies that use this slow period to strengthen operations and refine strategy. The lessons from the top performers are clear:

• Product innovation should align with both performance and sustainability goals. Customers want materials that last longer and use less energy.

• Digital platforms can improve transparency and make the buying process easier for distributors and end users.

• Customer focus must translate to faster delivery and reliable service. Meeting deadlines and providing accurate information are competitive advantages.

• Acquisitions should target specific capability or geographic gaps rather than size for its own sake.

• Investor communication needs to be steady and specific. Companies that maintain clear dialogue during a down cycle will gain confidence when the market turns.

• Cost and operational discipline remain central. Margins will recover faster for those that manage materials, freight, and labor costs without cutting into service quality.

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Geary noted that reliability and innovation define the leaders across the value chain. Manufacturers that reduce labor costs and offer more sustainable products will strengthen relationships with contractors, while distributors that simplify logistics and improve service will be first to benefit when demand rebounds.

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A Reset Moment

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The building products sector remains fragmented and cyclical, yet the conditions for recovery are forming. Long-term drivers such as housing shortages, aging homes, and demand for sustainable materials continue to build momentum. The same factors that once carried the industry through earlier cycles are beginning to reappear.

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The expected rebound after the pandemic has taken longer to arrive, delayed by high interest rates and affordability pressures through 2024. Even so, the market is stabilizing. Supply chains have improved, inflation is easing, and investment in manufacturing and infrastructure continues to rise. These trends suggest a slower but sturdier path forward.