Total construction output is estimated to have grown by 0.2% in January 2026, following three consecutive monthly falls at the end of 2025.
January鈥檚 increase came solely from an increase in repair & maintenance, which grew by 3.3%, as new work fell by 2.0%.
For the three months to January 2026, however, total construction output is estimated to have fallen by 2.0%.
Over the three-month period, new work fell by 3.2% and repair & maintenance, fell by 0.4%.
Construction output from private new housing fell by 6.3% over the three-month period, making it the main negative contributor to the overall decrease.
Jo Streeten, managing director for buildings & places at construction consultancy Aecom, commented: 鈥淪eeing output edge upwards month-on-month is a welcome sign. Key infrastructure projects that had been paused are beginning to accelerate and contractors are telling us there is still a solid pipeline of work expected to reach site later this year.
鈥淒espite this, all eyes will be on the wider economic impact of ongoing geopolitical tensions in the months ahead, with inflation likely to rise and any cuts to interest rates held back.
鈥淐learer visibility of upcoming infrastructure work should help the industry plan with more confidence. The latest update to the UK Infrastructure Pipeline provides a much fuller picture of future projects and the skills needed to deliver 拢718bn of planned investment across the country.鈥�
Clive Docwra, managing director of property and construction consultancy McBains, said: 鈥淔ollowing 2025 ending in disappointment, January鈥檚 return at least shows some growth, albeit as a result of repair and maintenance. But it鈥檚 clear from today鈥檚 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.聽 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.
鈥淭he 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.鈥�
Neil Leitch, managing director of development finance at Hampshire Trust Bank, said: 鈥淎 fall in house-building 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.
鈥淭he 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.
鈥淔or 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.
鈥淒emand 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.
鈥淭hat 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.鈥�