The industry has seen another disappointing statistical output from the Office of National Statistics
ONS stats January 2026 show the fourth consecutive quarterly decline in construction output, with the three months to January seeing a drop of 2.0%.
The fall is driven mostly by a decline of 3.2% in new construction activity, negating the relative stability found in maintenance work with a drop of 0.4%.
Repair & maintenance grew but not enough to offset
The repair & maintenance sector saw a rise of 3.3%, leading to an overall rise of 0.2% in January.
But this was not enough to make up for the seven of nine sectors that declined in the last three months, including private new housing which saw the largest fall of 6.3%, painting a negative picture for the government’s new housing targets.
These stats follow on from another disappointing month in December, which recorded a fall of 2.1% from Q3 2025, with new work falling by 2.6% and repair & maintenance falling by 1.5%.
The latest ONS report can be read in full here.
Industry disappointed but not surprised
Below are some reactions from industry leaders:
Neil Leitch, managing director of development finance, Hampshire Trust Bank, said: “A fall in housebuilding output will disappoint policymakers, but it will not surprise anyone working in the sector. Developers have been operating in very challenging conditions and the industry is still struggling to regain momentum.
“The deeper issue is viability. Planning delays remain a major constraint, but the pressure is broader than that. Policy costs have increased, inflation uncertainty has returned and funding conditions are less predictable than many expected coming into the year. At the same time, land expectations have not always adjusted to reflect tighter margins, leaving schemes with far less flexibility to absorb additional cost pressure or programme delays once delivery begins. Wider geopolitical instability, particularly the recent volatility in energy markets linked to tensions in the Middle East, is another reminder of how quickly input costs can shift and why margins across the sector remain under pressure.
“For SME developers in particular, those pressures can quickly become decisive. Delays and cost uncertainty affect cash flow, site turnover and the ability to recycle capital into future projects, meaning delivery capacity can quietly drop out of the market.
“Demand for new homes is not the issue. The challenge is creating the conditions that allow developers to move from approval to start with confidence. Decisions delayed today, or schemes that no longer work commercially, will feed through into weaker housing output in the years ahead.
“That said, well-structured projects with realistic assumptions and strong funding support are still progressing. Developers who plan conservatively and work with experienced lenders are better placed to navigate the uncertainty and keep delivery moving.”
Clive Docwra, managing director of property and construction consultancy McBains, said: “Following 2025 ending in disappointment, January’s return at least shows some growth, albeit as a result of repair and maintenance.
“But it’s clear from today’s figures that investor appetite for major projects remains weak, with new work falling by two per cent in January, and the longer-term picture over the three months to January showing a similar fall in output. Particularly concerning is the work in seven in nine work sectors going backwards, and especially the 6.3% fall in new housing, which is one of the sharpest drops in recent years.
“The worry, of course, is that along with an already fragile economic climate, the Middle East crisis will impact construction by driving up material costs and disrupting global supply chains, so the outlook for 2026 is already looking bleaker than expected.”
Brian Berry, chief executive of the FMB, said: “Alarm bells should be ringing loudly after another fall in overall construction output, marking the fourth consecutive drop in the three‑month figures. The steep decline in private new housing is especially worrying, as this is where we need momentum if we’re to even get close to the Government’s target of 1.5 million new homes. Taken alongside a stagnating wider economy, with 0% growth this month, these figures suggest that confidence is draining away from the sector at a critical moment.”
“It is telling that the only area showing growth at the start of the year was repair, maintenance and improvement work, which is largely carried out by micro companies, although this output has dropped overall in the last 3 months. This shows that the nation’s small builders are propping up construction output as a whole, but they cannot shoulder the burden alone. If the Government wants to get construction back on its feet, it must push forward with its changes to the National Planning Policy Framework (NPPF) quickly and ensure local authority planning teams are adequately staffed to ensure other areas like housing can push on with delivery.”
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