Industry Trends
Activity in the Building Products & Services industry picked up slightly in Q2, supported by stabilizing interest rates and improving construction confidence. This growth is especially notable given the continued pressure from labor and wage challenges.
Commercial Construction and Building Products Manufacturing led transaction activity, with buyers targeting capabilities in prefabrication, automation, and commercial-scale project delivery.
Market Dynamics
- Building Products Distribution firms are leveraging AI and digital tools to streamline logistics as tariff risk and sectoral demand shifts persist. While input cost volatility has eased, strategic inventory management remains critical to balance uneven trends between residential and commercial activity.
- Building Products Manufacturing benefit from stable input costs and automation adoption, helping offset labor constraints. Demand is shifting toward infrastructure and commercial projects, as single-family residential activity continues to underperform.
- Repair & Retail spending on home improvements remains strong, with remodeling projected to reach $526B by Q1 2026.1 Retailers are expanding e-commerce, while service providers adjust pricing to manage labor shortages and wage growth.
- Residential Construction Q2 2025 data shows single-family starts fell 14% YoY to 940K units due to high mortgage rates, while multi-family starts held at 371K,2 supported by rental demand. Building permits rose 2% MoM, with multi-family permits up 10%,3 pointing to ongoing strength in the rental market despite homeownership headwinds.
- Commercial Construction momentum from Q1 continues, driven by infrastructure investment. Confidence in sales and staffing remains high, while ESG and smart-building tech are key to securing contracts in industrial and mixed-use developments.
Sources: Capital IQ as of 06/30/2025, Joint Center for Housing Studies of Harvard1, FRED2, Lesprom3
Learn More
Reach out to Dinan Capital Advisors Managing Director Will Downing for more report insights.