ENC&BP MARKET INSIGHTS
- Total construction grows, led by residential construction
- Supply chain disruptions and uncertainty lead to increased costs
- Building products M&A remains active
Residential Construction done in the U.S. in 2020 saw Year-over-Year(“YoY”) growth of 20%+ in August, September, and October. While many other construction categories saw growth, Residential Construction is leading the post-COVID recovery with continued optimism heading into 2021.
On the supply chain side, Construction Costs, most notably Materials Costs, have increased significantly, ending December up 7.7% YoY. The rise in costs is partly attributable to suppliers cutting production due to COVID-19 safety measures and supply shortages in the lumber market throughout 2020.
While overall M&A activity in the ENC&BP space dropped YoY in 2020, Q4 was a significant quarter for M&A for Companies operating in the Building Products Distribution sector, as three of the industry’s leaders and a Pacific Northwest leader announced acquisitions.