Private housebuilding fell sharply in the third quarter of 2026, dragging down construction output across Great Britain and raising further concerns about housing delivery.
New figures from the Office for National Statistics (ONS) show private new housing construction declined by 4.7% between July and September.
It was the largest contributor to a 0.7% fall in overall construction output during the quarter.
The figures underline the challenges facing housebuilders as higher borrowing costs and construction expenses continue to put pressure on development activity.
Across the construction industry, new work fell by 1.6% during the quarter. Repair and maintenance activity provided some support, increasing by 0.5%.
Five of the nine construction sectors recorded declines.
September recovery fails to reverse quarterly decline
Construction output recovered slightly in September, rising 0.8% after four consecutive monthly falls.
The increase followed declines of 0.5% in August and 0.2% in July.
New construction work increased 0.9% during September, while repair and maintenance rose 0.6%.
Infrastructure provided the biggest boost to new work, with output increasing 3.3% over the month.
However, the monthly improvement was not enough to offset the weakness recorded across the third quarter.
New orders rise but building costs remain under pressure
There was some improvement in the pipeline of future construction projects.
Total new orders increased 1.2%, equivalent to £107m, during the third quarter.
The rise came mainly from public sector projects outside housing and private commercial construction.
Meanwhile, construction output prices increased 3.2% in the 12 months to September 2026, adding to the financial pressures facing developers and contractors.
The combination of weaker private housebuilding activity and rising costs presents a challenge for efforts to increase housing supply.
‘Private new housing remains a particular concern’
Phil Hughes, deputy managing director of Paragon Bank SME Lending, said September’s improvement offered some relief but warned that the wider picture remained weak.
“September’s 0.8% rise in construction output offers some relief after four consecutive monthly falls, with growth across both new work and repair and maintenance.
“Infrastructure was the main contributor to the monthly increase in new work, which should support demand across the extensive network of SME contractors, equipment providers and specialist firms involved in delivering major projects.”
However, Hughes warned that the quarterly figures painted a less encouraging picture.
“A pragmatic outlook is necessary however because the quarterly picture is more subdued. Overall construction output fell by 0.7% during the third quarter. Private new housing remains a particular concern, having been the largest negative contribution to the decline.
“For smaller construction firms operating on tighter margins, a weak pipeline can affect confidence, recruitment and investment in new machinery and equipment.”
He added that the increase in new orders offered some encouragement, although converting those orders into construction activity would be critical.
“Turning those orders into activity will be crucial for the health of the wider economy, given the reach of construction supply chains into manufacturing, transport and specialist services.”
