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New Housing Market is Painting a Bright Future for Building Products Suppliers Despite Q2 Results

DuckerFrontier, September 1, 2020

DuckerFrontier, with its over 60 years of professional expertise in the construction industry, has made building, construction and related end markets and applications a core focus. The onset of Covid-19 provided no distraction from DuckerFrontier’s focus as the company continued to monitor and analyze the impact on the industry to assist manufacturers and suppliers, distributors, contractors and other industry participants to further understand current forecasts, sales and market trends for strategic business decisions.


Financial reporting for the second quarter reveals the severe but also varied impact of Covid-19 on industry revenues, as building product suppliers recorded year-on-year revenue declines across residential and non-residential sectors, averaging between 10 and 15 percent.

Q2 Decline

Building Supplier Revenue Change ChartBig ticket, value-added items such as windows & doors and cabinets were particularly hard hit, although volumes declines were somewhat offset by stronger pricing:  Jeld-Wen’s North American window and door business fell by 9% (14% volume decline), and Fortune Security’s Cabinets business was 15% lower. Masonite’s North American door revenues were flat, but volumes were down 8%, while PGT Innovations core revenue fell 9% (excluding acquisitions). There were mixed results across other product categories: Insulation revenues at Owens Corning were down 10% while roofing division revenues fell 13%. Masco’s plumbing sales in North America fell by 11%, while this category was flat for Fortune Security.

Businesses with a non-residential focus saw some of the largest declines: Armstrong World Industries’ mineral fiber business declined 26%, while Carlisle Construction Materials revenues were down by 20%, and Tecnoglass US sales of architectural glass also fell 20%.

Bright Future Ahead

The few bright spots included decorative architectural products at Masco which increased by 8%, and also pro distributors such as Builders FirstSource who saw revenues grow by 2% reflecting regional new housing strength, and BMC, who reported a 4% overall increase although a 2% decline in organic volume.

While the industry saw a major and immediate hit from the pandemic in Q2 impacting both supply and demand, month-to-month tracking showed improvement throughout the quarter across the board, and recovery is forecast to continue, albeit with different trajectories for different sectors. The new housing market in particular is enjoying a strong short-term rebound with pent-up demand, low inventories, and low interest rates driving demand – housing starts jumped by 23% in July, compared to both prior year and prior month. Residential remodeling indicators have improved – NAHB RMI is up from 58 at the beginning to 77 at the end of Q2, and is particularly strong for small remodel projects (83). Indicators and Ducker forecasts suggest a slower recovery for non-residential building. The AIA Architecture Billings Index has shown increasing activity and positive sentiment for future construction and major remodeling since hitting bottom in mid-May, but expectations are for a slow build back to overall pre-Covid levels over the next couple of years.

DuckerFrontier’s Building and Construction team continues to follow and analyze the key trends and impacting the hospitality and travel industry, both during and post Covid-19 disruptions. Visit our Covid-19 Resource Hub for the latest insights and implications for global business, or contact us to connect with a team member.

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