No Broad-Based Recovery Yet for Suppliers

Building products suppliers reported median organic revenue growth of just under 2% in 2Q26, accelerating from a 1% decline in the first quarter of the year. However, the better result was not driven by an underlying improvement in residential demand, but rather, a step-up in price realization following oil-spike driven cost increases. Additionally, a number of suppliers did benefit from market share gains in the quarter.

Also supporting the revenue acceleration was continued momentum in the non-residential end channel. FERG continues to benefit from large capital projects – particularly data centers – with visibility extending into 2027 and beyond. AWI saw solid volume trends supported by both data center and transportation projects. IBP recorded a fourth straight quarter of double-digit organic growth in its non-residential business, and SHW and OC also reported relatively stronger trends within their non-residential operations. All together, results suggest that non-residential and infrastructure activity remains far healthier than most other areas of building products demand. 

International demand was a selective, rather than universal bright spot, with MAS and MHK both reporting stronger international results relative to their domestic businesses. Residential activity remains a laggard, particularly within new construction and most discretionary big-ticket home improvement categories. However, there were a few notable exceptions, with TREX reporting strong composite decking demand and SWK seeing growth across its major tool brands. On the other hand, BLDR and FBIN reduced their volume outlooks for the back half of this year and MBC is braced for continued weakness.

In our opinion, while revenue growth did accelerate in the second quarter, the takeaway was not that end demand has improved. Instead, some suppliers were able to grow through a soft backdrop by taking market share, leaning into non-residential strength and stepping up investments into marketing and product innovation. With our macro forecasts reflect continued caution on the residential channels through 2028, company-specific initiatives will be key to driving growth in the near-term, rather than waiting for a broad-based residential recovery.