Building Products Q2 2026 Earnings Recap

As we wrap up the summer, we wanted to share what publicly traded building products companies reported over the past several weeks and how they are thinking about the rest of the year. Second-quarter earnings season ran from late July through mid-August and covered manufacturers, distributors, contractors and the largest home improvement retailer, which together provide a good picture of where demand is coming from—and where it isn’t.

The short version

The simplest way to describe the market right now is that there are two of them. Anything that depends on housing is stuck. Home Depot’s CFO called it “frozen housing conditions,” and the phrase fits the whole group: homes aren’t changing hands, builders are pulling back, and homeowners are doing the small jobs while putting off the big ones. Anything that depends on data centers, on the other hand, is having the best year in its history. Comfort Systems and EMCOR are booking work faster than they can staff it, and Ferguson’s commercial business is growing organically on the same wave, with acquisitions adding to it.

The quarter also looked better on paper than it felt on the ground. Almost every company received tariff refunds during the period, and those refunds flattered earnings. Management teams were candid that the money is already spoken for, since fuel, energy and metals costs are rising and are expected to get worse in the second half. Some of the volume strength, particularly at Mohawk, also came from retailers stocking new product lines rather than consumers buying more. Nobody expects the market to turn this year, and when the conversation moves to recovery, the year that comes up is 2027.

What the end markets look like

New residential construction is the weakest part of the market, and it got weaker over the spring. Builders FirstSource cut its outlook and now expects single-family starts to fall meaningfully this year. Fortune Brands and SiteOne said much the same in their own words, with the Sunbelt showing the slowdown first. The reassuring note is that builders appear to be matching starts to actual sales this time around, so nobody expects the kind of sudden air pocket the industry saw late last year. Less reassuring is that builders are stripping features to hit price points, which means suppliers are losing on mix as well as volume.

Multifamily is in worse shape and not close to bottoming. Higher rates have pushed out project starts, bidding is cutthroat, and developers are waiting for occupancy to recover before they commit. Builders FirstSource expects pressure through year-end and argues that the published numbers overstate the damage in the lower-rise wood-frame projects it serves, but even that is a “less bad” story rather than a growth story.

Home repair and remodel is flat, and what growth there is comes from share gains rather than from the market. Home Depot’s comps turned modestly positive and improved as the quarter went on, but the mix of what sold tells you where the consumer is: repairs, maintenance, tools, paint, plumbing parts, patio and grills are fine, while big financed projects like kitchens, flooring and additions are not.

That dynamic shows up all the way down the supply chain. Plumbing products are down at both Masco and Fortune Brands. Fortune’s problems are partly self-inflicted after a botched systems change hurt service levels, and its new CEO calls 2026 a trough. Ferguson’s residential business edged up on a reported basis, but acquisitions contributed to that growth; organically, the story is primarily one of share gains in a soft market. Cabinets are the weakest category of all, with MasterBrand seeing the market down mid-to-high single digits and no improvement this year.

Mohawk’s strong flooring quarter was about new collections getting onto retail floors rather than consumers buying more flooring, and it expects a seasonal drop in the third quarter along with rising input costs. HVAC is the one piece of the home that looks normal: Watsco’s message was “back to normal,” with the refrigerant transition finished and residential replacement demand stable, even as last year’s unusually fat margins reset. Every CEO recited the long-term case of record home equity, aging homes and years of deferred projects; none could say when it turns into demand.

Commercial construction splits the same way the overall market does. Technology work—meaning data centers and the labs and chip plants that surround them—is now the majority of Comfort Systems’ business and the engine behind EMCOR’s record backlog. Customers are pre-paying to reserve factory capacity, both companies are expanding their prefabrication plants on the strength of multi-year commitments, and both are at record margins. Each warned, though, that the second quarter is a ceiling rather than a base, as bigger projects take longer to convert.

Ferguson sees the same momentum in large capital projects, where its non-residential growth was strong even after setting aside acquisitions. Outside of technology, commercial is quiet: SiteOne sees new commercial flat, Watsco’s commercial HVAC declined, and QXO is feeling weak non-residential demand. Commercial repair work looks steady, with Mohawk’s commercial flooring continuing to outperform its residential side, though no one breaks it out cleanly.

Who’s buying: low, middle and high end

Trade-down is happening at the bottom of the market, and companies are saying so explicitly. MasterBrand describes cabinet buyers choosing value lines and stripping options from custom orders, Masco’s DIY paint customer is pulling back while the pro customer grows, and Mohawk notes that excess capacity in laminate and vinyl is capping prices.

The middle of the market is where the stability is. Home Depot’s core aisles and Watsco’s replacement HVAC business both look like a normal, unexciting year.

The high end is holding up best, but the dividing line is financing rather than income. Cash buyers of premium faucets, tile and big single-ticket items are still spending, while buyers who need a loan for a project have stepped back. That is why Fortune Brands and Mohawk both pointed to luxury and premium mix as bright spots.

Where in the country

The most important regional trend of the quarter is a reversal: the North and Midwest are now outperforming while the Sunbelt has rolled over.

Home Depot’s Northern and Western divisions posted positive comps. Watsco described its Northern states as very strong, while Florida, Texas and the West Coast weakened. SiteOne’s Central region grew double digits organically, while California, Arizona and Texas fell. Pool Corporation’s seasonal markets grew, while its year-round California and Texas markets shrank.

Roofing was the one exception. Home Depot’s SRS returned to positive comparable-branch growth across every vertical after an unusually quiet storm season last year, and Home Depot still expects SRS to grow organically at a mid-single-digit pace for the year.

How companies are responding

With the market flat, growth means taking share from someone, and that is how Home Depot, Ferguson, Mohawk, SiteOne, Watsco and Masco all framed their quarters. At the same time, nearly everyone expanded a cost program: Builders FirstSource is consolidating facilities, Mohawk launched a new restructuring, Fortune Brands is reviewing its Fiberon decking business, and Pool Corporation has shifted from expansion to what it calls “productivity first.” Rising copper and metals costs are the shared worry for the second half, especially in plumbing and electrical.

The most striking response, though, is on the deal front, where distributors are consolidating aggressively while manufacturers pull back. QXO closed Kodiak and TopBuild within a few months of each other and is now the second-largest distributor in North America. Ferguson closed five deals and signed a sixth. Home Depot is pushing cross-selling across SRS and GMS and adding branches. Watsco, EMCOR, Comfort Systems and SiteOne all bought companies as well, while cabinets consolidated through the MasterBrand–American Woodmark merger.

Manufacturers, by contrast, are paying down debt first. Fortune Brands has parked M&A until leverage comes down, and Builders FirstSource is interested but constrained. The read-through is that the scale players are using the downturn to buy at trough prices.

Outlook and timing

When the question is “when does this get better,” the consensus answer is 2027, and the honest subtext is that nobody really knows.

Fortune Brands and MasterBrand both call 2026 the trough, with MasterBrand adding that a scheduled tariff increase in January could push its recovery out further. Watsco thinks the HVAC market has bottomed, and Home Depot notes that housing has historically come back quickly when rates step down. Still, Home Depot sees no inflection yet, and rates have recently moved the wrong way.

The contractors are the one group with real visibility, and they see strength through 2027 on work already booked.

The risks to that timeline are the ones the calls kept circling back to: higher-for-longer rates, second-half cost inflation, tariff churn, local pushback on data centers, and the possibility that the Sunbelt slowdown spreads into the repair-and-remodel base that has kept this group afloat.

TwinShore Advisors

TwinShore Advisors is actively engaged across the building products and services landscape, working with founders, family-owned businesses, and management teams as they evaluate growth strategies, acquisitions, and long-term exit planning.

As a trusted advisor to owners and executives in the space, we leverage our industry knowledge and M&A expertise to achieve best-in-class outcomes. We welcome confidential conversations with owners considering their next chapter.

Please reach out to Chobun Hieblinger (chieblinger@twinshoreadvisors.com) or Wade Bennett (wbennett@twinshoreadvisors.com) to discuss these themes further or explore strategic opportunities.