In this article, we will discuss 7 Best Building Materials Stocks to Buy for the Residential Recovery.

The next housing boom may not be built on cheap land or low rates; it may be built on supply. That’s the increasingly compelling thesis behind building materials stocks, a sector drawing renewed interest from institutional investors and long-term funds positioning ahead of what could be one of the most significant residential construction cycles in a generation. And unlike the frothy corners of the market, this is not yet a consensus of trade. It’s a structural opportunity where the fundamentals are quietly aligning, but only for those willing to look past near-term rate noise.

The investment case is being driven by arithmetic. Decades of underbuilding, a persistent shortage of entry-level housing, and an aging existing home stock are creating durable demand for new residential construction. Controlled-cost building materials, from engineered lumber and insulation to roofing systems and specialty aggregates, are the backbone of any recovery. Data from Grand View Research projects the global building materials market to grow from approximately $1.3 trillion in 2024 at a CAGR of around 5% to 7% through 2030, underpinned by rising homeownership demand across emerging and developed economies alike. An analysis highlighted by PR Newswire points to accelerating momentum in prefabricated and manufactured materials driven by labor shortages, faster build timelines, and a decisive shift toward energy-efficient construction standards.

At the same time, academic and industry research underscores how automation and next-generation material science are reshaping the cost structure of homebuilding and improving margins for best-in-class manufacturers while raising the barrier to entry for competitors. From fiber cement siding to spray foam insulation and smart roofing systems, innovation is compressing construction timelines and expanding the addressable market, reinforcing the long-term durability of the sector’s growth trajectory.

With this context in mind, here are the building materials stocks to buy for the residential recovery.

Our Methodology

We used stock screeners to identify building materials stocks with a short percentage of shares outstanding, less than 4%. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. These stocks are also popular among analysts and elite hedge funds. To make the list easier to navigate, we ranked the stocks in descending order of their short percentage of shares outstanding as of May 29, 2026.

“Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).”

7 Best Building Materials Stocks to Buy for the Residential Recovery

7. Installed Building Products, Inc. (NYSE:IBP)

Short Percentage of Shares Outstanding: 3.97% 

On June 1, DA Davidson analyst Kurt Yinger maintained a Neutral rating and $242 price target on Installed Building Products, Inc. (NYSE:IBP) while adding the stock to the firm’s “Best-of-Breed Bison List,” which highlights companies with attractive business opportunities, durable competitive advantages, strong financial performance, and compelling risk-reward profiles. The analyst cited the company’s ability to manage material costs effectively, generate value from its bundled labor-intensive services, and execute a successful acquisition strategy. DA Davidson also noted that Installed Building Products has consistently delivered organic sales growth above housing completion rates while maintaining strong profitability even during periods of residential market weakness.

On May 19, Installed Building Products, Inc. (NYSE:IBP) announced the acquisition of Diamond Energy Systems, a Minnesota-based provider of mechanical insulation services focused primarily on industrial and commercial retrofit projects. Management stated that the acquisition adds approximately $12 million in annual revenue and strengthens the company’s presence across the Upper Midwest. Chief Executive Officer Jeff Edwards noted that the company has acquired approximately $40 million in annual revenue so far in 2026 and continues to view acquisitions as a key component of its long-term growth strategy.

Founded in 1977 and headquartered in Columbus, Ohio, Installed Building Products, Inc. (NYSE:IBP) is one of the largest installers of insulation and complementary building products in the United States. The company provides insulation, garage doors, rain gutters, shower doors, closet shelving, and other products for residential and commercial construction projects.

6. The Sherwin-Williams Company (NYSE:SHW)

Short Percentage of Shares Outstanding: 2.58% 

On June 3, Citi reinstated coverage of The Sherwin-Williams Company (NYSE:SHW) with a Buy rating and a $355 price target. The firm views the current share price as an attractive entry opportunity despite potential near-term volume pressures stemming from a challenging housing market environment. Citi noted that the stock offers meaningful upside potential in the event of a cyclical recovery and believes that any stabilization in housing activity and construction spending could serve as a catalyst for improved operating performance and shareholder returns.

On June 2, UBS downgraded The Sherwin-Williams Company (NYSE:SHW) to Neutral from Buy and reduced its price target to $330 from $385. The revised rating reflects a more balanced risk-reward outlook, although the updated price target still suggests confidence in the company’s ability to maintain its market leadership position within the paints and coatings industry.

Founded in 1866 and headquartered in Cleveland, Ohio, The Sherwin-Williams Company (NYSE:SHW) manufactures, distributes, and sells paints, coatings, and related products globally.

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