The Turkish Contractors Association, TCA, has published its Construction Sector Analysis Report for the second quarter of 2026. The report states that the construction sector continues to be one of the industries supporting economic growth, while the slowdown in growth has been attributed to tight monetary policy, high financing costs and difficulties in accessing credit. It emphasizes that public investments continue to support growth, while weakening private sector investments and high financing costs continue to place pressure on economic expansion.
Representing the leading organizations of the construction sector, which plays a locomotive role in the broader economy through the demand it generates for more than 200 subsectors and its employment capacity, the Turkish Contractors Association published the July 2026 issue of its Construction Sector Analysis Report, which is closely followed by economic circles and the industry. Titled “The Global Economy’s Resilience Test,” the analysis evaluates the global economic outlook, domestic economic developments and key indicators concerning the construction sector, while addressing the sector’s current position and expectations for the coming period.
The report states that the Turkish economy grew by 2.5 percent in the first quarter of 2026, while the construction sector expanded by 3.2 percent and real estate activities grew by 3.0 percent during the same period. The sector has therefore maintained the growth trend that began in the second half of 2022 for 14 consecutive quarters. However, the report draws attention to a clear loss of momentum compared with growth performances exceeding 8 percent in previous periods.
Tight monetary policy, high financing costs and difficulties in accessing credit were identified as the main factors behind the slowdown. Reconstruction activities in the earthquake-affected region and public infrastructure investments continued to support the sector, while weakening private sector investments limited the pace of growth.
The report also notes that sectoral investments accounted for 3.3 percent of gross fixed capital formation based on the chain-linked volume index in the first quarter of 2026, while the sector’s share of seasonally adjusted employment stood at 6.7 percent. It therefore emphasizes that the construction sector continues to maintain its importance in terms of economic activity and employment.
The report states that overseas contracting services, which remained below their performance in previous years with a total value of 2.7 billion US dollars in the first half of the year, were adversely affected by global financing conditions and geopolitical developments. The slowdown in international project volume was linked particularly to rising tensions in the Middle East and the postponement of investment decisions. However, the report underlines that the Turkish construction sector continues to preserve its competitiveness in global markets thanks to its technical capabilities and international experience.
The report, in which the Turkish Contractors Association evaluated the second quarter of 2026, included the following key findings concerning the construction sector:
GROWTH CONTINUES IN THE CONSTRUCTION SECTOR, BUT THE LOSS OF MOMENTUM STANDS OUT: In the first quarter of 2026, the Turkish economy grew by 2.5 percent, while the construction sector expanded by 3.2 percent and real estate activities grew by 3.0 percent. The sector has therefore maintained the growth trend it achieved beginning in the second half of 2022 for 14 consecutive quarters. However, tight monetary policy, high financing costs and difficulties in accessing credit have caused a marked slowdown in the pace of growth.
PRODUCTION INDICATORS SUGGEST THAT CAPACITY IS BEING MAINTAINED: Turnover index and building permit data indicate that the sector is maintaining its production capacity. The increase in building permits suggests that new projects may be launched in the coming period. However, the construction confidence index remaining below the threshold value of 100 throughout the second quarter indicates that sector representatives continue to take a cautious approach toward future expectations. Although the slowdown in the rate of increase in construction costs is a positive development, labor costs and financing expenses continue to place pressure on sector profitability.
SHORT-TERM RECOVERY IN HOUSING SALES: Across Türkiye, first-hand housing sales increased by 23.1 percent in June compared with the same month of the previous year, reaching 43,406 units. During the same period, second-hand housing sales rose by 12.5 percent to 86,573 units. First-hand sales therefore accounted for 33.4 percent of total housing sales, while second-hand sales represented 66.6 percent.
Following the weak sales performance observed in May, the increase recorded in both segments in June indicated a short-term recovery in the housing market. However, the limited recovery in first-hand sales during the first half of the year showed that demand conditions capable of supporting new housing production had not yet strengthened on a permanent basis and that financing conditions continued to have a decisive impact on housing demand.
FINANCING PRESSURE CONTINUES IN THE HOUSING MARKET: An examination of the financing structure of housing sales shows that mortgaged sales increased by 72.1 percent in June compared with the same month of the previous year, reaching 25,993 units. Other sales increased by 7.1 percent to 103,986 units. Mortgaged sales accounted for 20.0 percent of total sales, while other sales represented 80.0 percent.
Although a notable recovery was recorded in mortgaged sales in June, this increase followed a period in which credit use had remained at very low levels in previous months. The fact that mortgaged sales still accounted for only one-fifth of total sales points to a limited recovery rather than a permanent normalization in financing conditions. Housing loan costs continued to have a decisive influence on purchasing decisions.
INCREASE IN BUILDING PERMITS PROVIDES A POSITIVE SIGNAL FOR NEW INVESTMENTS: The increase recorded in building permits and occupancy permits during the first quarter of 2026 showed that the sector was maintaining its production capacity and that new projects could be launched in the coming period.
GEOPOLITICAL UNCERTAINTIES AFFECT OVERSEAS CONTRACTING SERVICES: During the January to June 2026 period, the Turkish construction sector undertook 57 projects abroad with a total value of 2.7 billion US dollars. Since entering the international market in Libya in 1972, the sector’s total overseas project portfolio has reached 566.1 billion US dollars through 12,931 projects. The performance of overseas contracting services remained weak in the first half of 2026 due in part to wars and global geopolitical tensions.
CONSTRUCTION SUMMIT TÜRKİYE 2026 PRESENTED THE SECTOR’S VISION FOR THE FUTURE: The report states that Construction Summit Türkiye, CST, 2026, organized by the Turkish Contractors Association with the support of the Ministry of Trade of the Republic of Türkiye, was one of the most comprehensive international platforms aimed at increasing the global competitiveness of the Turkish construction and building materials sectors.
The Summit addressed the effects of global technological transformation, new sustainability-focused regulations, changing financing models and geopolitical developments on the sector. It brought together public institutions, the private sector, international organizations and financial circles on a shared platform.
The report notes that approximately 1,400 sector representatives attended the Summit, 81 companies active in international markets opened stands and more than 350 bilateral business meetings were held over two days. Representatives of public institutions and the private sector from numerous countries participated in the event, particularly the United Kingdom, South Korea, Finland, Germany, Sweden, Japan, France and China.
The report also included comments from Turkish Contractors Association President M. Erdal Eren. It stated that in the global competitive environment, digitalization, sustainability, artificial intelligence and international cooperation had become key factors shaping the future of the sector alongside engineering and implementation capacity.
Considering current global conditions, Construction Summit Türkiye 2026 was assessed not only as an industry gathering, but also as a strategic platform presenting the future vision of the Turkish construction and building materials sectors.