Housebuilding activity falls at fastest pace this year: S&P – Mortgage Strategy

UK housebuilding activity fell at its fastest pace this year in October amid rising borrowing costs and weak consumer confidence, according to S&P Global.

The residential construction activity index dropped to 35.1, its lowest level since December 2025 and well below the 50 mark that separates growth from contraction.

Housing was the weakest-performing part of the construction sector during the month.

The overall S&P Global UK Construction Purchasing Managers’ Index fell to 43.6 in October from 46.1 in September.

This marked the twenty-second consecutive month of contraction and the sharpest decline in overall construction activity since June.

New work also fell at its fastest pace since June, with firms reporting subdued market conditions, fragile customer demand and more cautious spending by clients.

Meanwhile, input price inflation accelerated to a four-month high, driven by fuel surcharges, higher energy costs and rising prices for raw materials including aggregates, concrete, electrical items and steel.

Almost half of construction firms, at 48%, reported higher input costs in October, up from 25% in September.

Confidence about the year ahead also weakened, with 34% of firms expecting activity to increase compared with 27% forecasting a decline.

Separate construction figures reported by Glenigan today showed the value of residential starts fell by 29% in the three months to October, compared with the same period in 2025.

S&P Global Market Intelligence economics director Tim Moore says: “October data indicated a setback for the UK construction sector after some signs of stabilisation in the previous month.

“Business activity decreased at the fastest pace since June amid the steepest reduction in residential work so far this year.

“Construction companies commented on severe headwinds in the housebuilding sector from rising borrowing costs, weak consumer confidence and elevated economic uncertainty.

“Faced with rising input price inflation, higher borrowing costs and reduced order books, construction firms were unsurprisingly cautious about the year ahead business outlook.”