The downturn in UK housebuilding accelerated in August as weak demand and a shortage of new projects continued to weigh on residential construction.
The latest S&P Global UK Construction PMI showed residential activity falling sharply during the month. The housing activity index dropped to 37.6, well below the 50.0 level that separates growth from contraction.
Housing was also the only major construction category to record a faster rate of decline than in July.
The contraction was considerably sharper than elsewhere in the industry. The commercial activity index stood at 47.8, while civil engineering registered 40.5.
Survey respondents frequently pointed to subdued demand and fewer new projects, particularly housebuilding starts.
The weakness in residential development contributed to another difficult month for the wider construction sector.
The headline S&P Global UK Construction PMI fell from 44.7 in July to 44.3 in August. It remained below the 50.0 threshold for the twentieth consecutive month.
New orders also declined, although the contraction was the weakest since September 2025. Firms cited greater risk aversion following the Middle East conflict and delays in client decision-making.
Construction employment fell again as companies struggled to replace completed projects with new work. However, the pace of job losses eased to its lowest since February.
Purchasing costs continued to rise amid higher fuel, transport and raw material prices. However, overall input cost inflation eased to a six-month low.
Confidence about the year ahead also weakened. Some 38% of construction companies expect output to increase, while 20% anticipate a decline.
Tim Moore, economics director at S&P Global Market Intelligence, said: “UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August. A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.
“Sluggish demand conditions and low client confidence, combined with anxiety about the impact of the Middle East conflict, were again factors contributing to lower workloads across the construction sector.”
He added: “Business optimism was still subdued, as growth projections for the year ahead eased since July and were much weaker than historic trends. Concerns about geopolitical tensions, lacklustre domestic economic prospects and elevated borrowing costs were all noted as holding back confidence.”
