If you’re a building materials company heading into 2026 feeling like the ground keeps shifting under your feet, you’re not imagining it, and you’re not alone. Consolidation is rewriting the value chain, distributors (this now includes many channels) are massively consolidating and gaining leverage, contractors are getting bigger and diversifying (and buying smarter), and independent dealers are trying to find their place in all of this. Labor is still the industry’s biggest bottleneck. All customers are asking for fewer surprises—especially around pricing, performance and supply reliability. And homeowners are looking for turnkey solutions involving multiple products and services. This is a pivotal moment in this industry.
The winners going forward won’t be the companies with the loudest sustainability messaging or the biggest production lines. They’ll be the ones who make it easier for customers to build and install faster (with less labor), deliver more predictable pricing, better data, fewer failures and supply chains you can actually count on.
Here are our 2026 market predictions for building materials manufacturers, each with strategic takeaways on what you can do about it.
Vertical integration will happen in many parts of the outdated value chain. Both manufacturing and distribution acquisitions will continue, even as most recent acquisitions are struggling for profitability. There is a sense that you have to act fast and go acquire now, and then figure out later if you can actually make it work. We will see distributors getting more into the manufacturing space to diversify risk and opportunity and grow their footprint and leverage. Some manufacturers may also look for more leverage and profit by forward integrating into the channels they serve. Legal firms and bankers continue to reap the immediate financial benefits of all these interactions, while the largest and lasting impact of consolidation will come as the industry sorts out how these changes will affect the historically unchanged value chain.
While there is a frenzy to get in the acquisition game, take a breath and make sure it aligns with your long-term vision and mission for your company. And remember, according to Harvard Business Review, 70% to 90% of mergers and acquisitions (M&A) fail or underperform. This is often due to overstated adjacency expectations (usually trying to make the numbers work) and poor integration of cultures, systems and people – rather than a bad initial deal.
Larger contractors will consolidate into MUCH larger groups (similar to what happened with insulation contractors 30 years ago) leading to huge leverage and reduced brand loyalty both nationally and even locally. Manufacturers will continue to toy around with owning distribution all the way down to the pros, looking for ways to capture more of the profit that is currently lost within the complex channel.
Not only do we not have enough homes to meet demand (some say over 4 million short and counting), but there is no easy or quick solution to the affordability problem. Interest rates can’t and won’t come down quickly enough for most buyers. And the recently proposed 50-year mortgage will put us in a worse situation than we had in 2007-08. But one of the biggest issues we seem to be ignoring is the lack of labor. With interest in the trades still lagging, many experienced workers reaching retirement age, and thousands of people being pulled off jobs across America – we don’t have the experienced labor to build at the same level anymore.
While raw material price swings persist, buyers increasingly expect price stability mechanisms. The days of getting price each year or multiple times in a year are behind us (unless companies shutter more facilities). This price gain has made some companies lazy as they hit their number in dollars, but ignored the fact that their units continue to drop. Volume covers many sins as does price, but when volume is lower and pricing drops, bad times are ahead.
Improve internal forecasting and inventory controls to support commitments.
Find cost out opportunities assuming you won’t have the pricing safety net.
Codes and procurement increasingly prioritize durability, climate resilience and lifecycle performance, not just carbon reduction. This industry still struggles to get paid for “sustainability.” Rather, you get paid for higher performing products – products truly that last longer – all driving a higher value and higher mix.
Build performance data libraries that support resilience claims under extreme conditions.
Customers favor suppliers with shorter, more transparent supply chains, even at modest premiums. Local equates to more flexibility and confidence, especially in today’s turbulent and changing tariff dynamics.
While price increases become more difficult to sustain and the market softness continues, the path to profitability lies in driving mix in the market. Margin growth concentrates in highly relevant customer-centric offerings; highly engineered, code-critical, and system-based materials. Also important is style and design, not basic commodities.
Fewer skilled installers will push demand toward simpler, faster, mistake-proof products.
Acquisitions target technology, regional access and specialty capabilities more than volume.
Building materials companies that win in 2026 and beyond will look less like commodity product producers and more like risk-reduction partners—helping customers build faster, safer, more beautifully and with fewer surprises.
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