Industry Insights: Building Products & Services - Summer 2025
The building products & services industry is a diverse ecosystem that plays a critical role in the construction and renovation sectors. It spans the manufacturing, distribution, and sale of a wide array of materials essential to residential, commercial, and industrial projects. This industry supports numerous product categories, including:
•Structural materials: Concrete, steel, lumber, and bricks.
•Insulation: Materials that provide thermal or sound insulation.
•Roofing: Shingles, tiles, and membranes.
•Windows, Siding, and doors: Various types of doors, siding, and window frames.
•Finishes and fittings: Paints, tiles, flooring, countertops, and cabinetry, including related install services.
•Plumbing and electrical supplies: Pipes, fixtures, wiring, and related hardware.
The Mazzone & Associates building products & services industry report leverages our deep understanding, knowledge, and experience with various economic indicators and trends analysis to provide our current view on the U.S. market. Dom Mazzone, a former executive at The Home Depot, brings firsthand expertise that informs our perspective. Together, he and the Mazzone & Associates team remain deeply engaged in the industry, regularly advising company owners, CEOs, management teams, and private equity firms on strategic transactions and investment opportunities within the building products & services space.
Macroeconomic Perspective
The building products & services industry plays a critical role in supporting the construction of residential, commercial, and industrial buildings, as well as infrastructure projects like roads and bridges. It's essential for urban development, sustainability initiatives, and the overall economy.
The U.S. housing market seems to have mostly shrugged off immigration and tariff uncertainty as the housing market index, consumer confidence index, and unemployment remain relatively stable (see p. 6 for more details). Nevertheless, affordability remains a key challenge for the U.S. housing market as the 30-year fixed-rate mortgage rate and effective federal funds rate remain at relative 10-year highs (see p. 5 for more details). While continued softness in the U.S. economy may indicate signs of contraction in new construction, there continues to be region-specific growth in new construction in places like southeastern Florida, Arizona, and Texas. Furthermore, consumer spending on renovations is likely to grow as demand for housing continues to ease and supply builds. These macro drivers collectively underpin a general continued optimism for the industry, although we see some softness in the near term.
Industry Outlook
The building products & services industry-specific outlook notes continued softness in the industry in general. Higher interest rates and high prices causing softness in demand play a critical role in supporting the construction of residential, commercial, and industrial buildings, as well as infrastructure projects like roads and bridges. Housing and construction are essential for urban development, sustainability initiatives, and the overall economy.
Public Company Information & Analysis
Public companies in the building products & services industry have outpaced the S&P 500 over the past few years. The broad impact and volatility created by new tariffs will likely impact both the Building Products & Services Index and the broader 500 Index similarly, so the two indices will likely move closer in tandem with each other.
M&A Trends
The building products & services industry merger and acquisition deal counts have remained relatively constant for the past few years, as have valuations. However, the uncertainty around tariffs and softness in housing starts negatively impacted transaction numbers in the 2nd quarter of 2025 and are likely to continue to negatively impact the M&A marketplace. Nevertheless, at Mazzone & Associates, we’ve already closed three transactions in the first quarter of 2025 and are on track to do the same in the second quarter of 2025. We are continuing to build a pipeline of strong building products & services companies we will take to market over the next 3 to 12 months, which we expect to close at or above the expectations we have discussed with our seller clients.
Investment Considerations & Forecasts
The building products & services industry is navigating a complex landscape shaped by shifting market forces and evolving policy. While federal initiatives like the IIJA and CHIPS Act have recently supported construction demand, waning government support and high interest rates are slowing growth—conditions that could reverse if rate cuts materialize. Profit margins remain vulnerable to raw material volatility and newly imposed tariffs, favoring companies with efficient operations and strong supplier networks. Regionally, demand is uneven, with the Southern U.S. predicted to show more resilience. Meanwhile, AI adoption is transforming the industry, enhancing project efficiency and sustainability while offsetting margin pressures—making tech-savvy companies especially well-positioned. Construction is local so this section of this edition of Industry Insights includes local data and forecasts.