The UK private housing sector is expected to face a sharper downturn in 2026, according to the latest Spring Forecast from the Construction Products Association. The CPA now predicts that private housing output could decline by 7% during the year, while overall UK construction activity is forecast to contract by 2.5%.
The latest outlook, released on May 1, represents a significant downward revision compared with the association’s previous expectations. The weaker forecast reflects continuing economic uncertainty, rising energy costs and broader inflationary pressures linked to the Middle East conflict.
The CPA noted that higher inflation across the wider economy is expected to affect confidence, spending and investment decisions among homebuyers, homeowners, businesses, clients and investors. As a result, the strongest construction impacts over the next 12 to 18 months are expected to be felt in private housing and private housing repair, maintenance and improvement.
Recovery expectations pushed further back
At the start of the year, the second half of 2026 had been seen as a possible turning point for the housing sector. However, the latest CPA commentary suggests that recovery may take longer than previously hoped. This aligns with concerns already felt by merchants, manufacturers, importers and distributors across the timber and building products sectors.
The CPA said it now appears increasingly likely that the second half of the year will bring both weaker construction demand and sharp cost increases, particularly in the two largest sectors: private housing and private housing RMI.
Construction output is now forecast to fall by 2.5% in 2026. Although the CPA still expects output to grow by 1.2% in 2027, it warned that risks remain heavily tilted to the downside.
CPA Head of Construction Research Rebecca Larkin said the direct impact on construction would include double-digit construction product price inflation, especially for oil-based and energy-intensive products.
Private housing and RMI under pressure
The CPA said private housing activity improved among housebuilders in March and April, and this stronger activity could continue until July. However, the key concern is what happens afterward as higher mortgage rates increasingly influence purchasing decisions.
Housebuilders are also expected to face sharp cost increases, which could worsen site viability challenges.
The private housing RMI market is also expected to remain subdued over the next 12 to 18 months. The CPA said homeowners are likely to adopt a “wait-and-see” approach as household bills and home improvement costs continue to rise. Overall, private housing RMI output is forecast to fall by 8% in 2026 and remain flat in 2027.
Infrastructure remains a relative bright spot
Despite the uncertain cost environment, infrastructure is still expected to deliver significant growth. As the third-largest construction sector, infrastructure benefits from longer-term contracts, existing project pipelines and secured funding for future activity.
Growth is expected to be particularly visible in energy generation and distribution projects, as well as in the water sub-sector.
Potential upside could come from government stimulus for housebuilding and home improvement. The CPA also suggested that the government could support construction by reducing the growing list of cost burdens on the industry. These burdens are set to increase further in the near term, with a new 50% import tariff on steel products due in July, the Building Safety Levy in October and the Future Homes and Building Standards from March 2027.
Outlook depends on global disruption and energy prices
The CPA said its latest forecasts depend heavily on how long global disruption and elevated oil and energy prices caused by the Middle East conflict continue.
The association noted that even if the disruption ended immediately, some damage has already been done due to spikes in oil, industrial energy and product manufacturing costs. The CPA’s forecast assumes four months of disruption, with delayed effects over the next 12 to 18 months, culminating in an overall decline in construction activity.
