Contrasting signals and horizons for the construction materials sector

While awaiting the formation of the Lecornu government and the outlines of the future 2026 Finance Act, the lack of institutional clarity is weighing on the confidence of agents and weakening the State's ability to curb its public deficits. In an already highly turbulent international geopolitical context, the financial markets' sanctions against the rise in public debt are resulting in a rise in long-term rates, which, in fact, raises the threat of an increase in housing interest rates. The gradual revival of the new real estate market and the recovery in construction activity, underway for several months thanks to the decline in bank credit rates and some support measures (PTZ, Action Habitat buybacks, etc.), could suffer from these political procrastinations in the coming months. For the time being, the materials sector continues to decline over the last twelve months, even though a clear moderation in the pace of decline is being observed. Aggregates, which are almost stabilizing, are benefiting somewhat from a positive dynamic in public works, which is however starting to run out of steam, while ready-to-use construction, still in sharp decline, is struggling to recover and emerge from the crisis.

Key figures

Over the first seven months of 2025, aggregates activity in volume stagnated over one year at +0,3% while that of BPE fell by a further -4,1%.

A slightly better-oriented July

According to the first available data, the materials sector recovered very slightly in July after a rather gloomy June. Thus, aggregate production increased by +1% compared to June, but remained -1,9% below its July 2024 level (CVS-CJO data). Over the last three known months (May to July), aggregate activity would show a decline of -1,1% compared to the same period a year ago but would be down -4,1% compared to the previous three months which, as a reminder, had benefited from a rebound in February-March. Overall, from January to July, aggregate production would be almost stable (+0,3%), as would its cumulative change over the last twelve months (-0,3%). On the ready-mixed concrete (BPE) side, deliveries also recovered slightly between June and July (+2,1%, SA-WDA) but still remain well below their July 2024 level (-5,4%). Admittedly, the rates of decline are moderating: as a reminder, in July 2024, deliveries were still down -12% year-on-year. Over the last known quarter (May to July), concrete production fell another 2,1% compared to the previous three months and -4,1% compared to the same period last year. The trend over the seven months of 2025 shows the same decline (-4,1% year-on-year) while the rolling twelve-month cumulative figure comes to -5,9%. The materials indicator, for its part, recorded a slight increase in June, by +1,5% to 81,9 (SA-WDA). It thus remains -0,7% below its level of a year ago but above all reflects activity that is still 18% lower than in 2021. In the second quarter, the index fell by -0,5% compared to the previous quarter and by -1,5% year-on-year. At the end of the first half, the decline reached -1,3% year-on-year compared to -2,4% for the rolling twelve-month cumulative.

Building: from “better” to fragile

Surveyed in September by INSEE, construction professionals judge the business climate to be relatively stable after a recovery observed this summer. Thus, in structural work, opinion on past activity has improved slightly, remaining well below its long-term average, while that on future activity has deteriorated slightly, standing just slightly above its average level over the last thirty years. The level of backlogs has changed little in this segment (around 8,6 months over the last half-year), even if the opinion on orders has fallen slightly. The economic situation remains very hesitant, as evidenced by the balance of opinion relating to expected activity in the housing sector, which, after increasing sharply between March and July, recorded a decline in September for the second consecutive month. The latest SITADEL data from the Ministry at the end of July does indeed confirm a continued improvement in new construction.

The recovery in housing, which is starting from a very low level, is taking place as much on the side of permits as on the side of construction starts. Thus, over the last three months (May to July), authorizations increased by +3,6% compared to the previous three months (CVS-CJO data) and by +22,7% compared to a year ago, with the dynamics of individual housing gradually taking over from that of collective housing, the effects of the Action Logement – ​​CDC Habitat recovery plan on this segment being reduced over the months. At the end of July, the number of permits issued over twelve months (360.200) showed an increase of +3,8%. In terms of construction starts, the increase over the last three months (May to July) reached +11,5% compared to the previous quarter (CVS-CJO) and +13,1% over one year. Despite this rebound, the cumulative number of housing starts over twelve months (294.500 units, or +6% at the end of September) remains very low compared to the past. It is 23% below the average level of housing starts over the last 25 years (384.000). While the strengthening of housing construction seems set to continue in the individual segment, driven largely by the PTZ support for first-time buyers, the future of collective housing is much more uncertain. The absence of a relay of support for rental investment (after the abandonment of Pinel in December 2024) combined with the backlash from the State Investment Plan for social housing (non-sustainable) will weigh on the dynamics of the collective in the coming months. The latest figures for the marketing of new housing tend to confirm these fears. According to data from the FPI (Federation of Real Estate Developers), sales of new homes to individual investors fell by nearly 52,2% year-on-year in the second quarter of 2025, while those to owner-occupiers increased by +2,1%. In the first half of the year, these rental investment purchases represented 4874 homes, or 81% less than the half-yearly average observed during the ten years of Pinel (25.540). As for the share of these reservations in total sales, it fell from 46,5% on average during the Pinel period to 18,5% in the first half of 2025, a segment which will therefore significantly compromise the recovery dynamics of the new-build market. The single-family home market, on the other hand, is more promising. Driven by the new PTZ scheme, by significant housing needs but also by interest rates still falling in the first half of the year (-25 basis points since December 2024*), sales of houses by builders remained vigorous this summer. According to Markemétron, they climbed by +37,5% year-on-year in July, bringing the change over the last three months to +41,9%. Here again, these strong increases constitute an encouraging signal but they are based on the foundations of a bled-dry market: with 61.800 cumulative house sales over twelve months to the end of July, the increase of +25,5% still leaves the market 48% below its average level over twenty years (i.e. approximately 120.000 annual sales). However, the recovery from the crisis in this sector is underway and should continue in the coming months... if household confidence continues to support their investment plans. The institutional and budgetary uncertainty at the start of autumn and the uncertainties in economic policy do not necessarily support this.

Public works: braking confirmed

After two years of growth, the public works sector has been experiencing a slowdown in activity since the summer. According to the survey conducted by the FNTP in July, work carried out has continued to increase compared to June (+1,9% in volume, CVS-CJO data) but is (for the second consecutive month) down, by 3,2% year-on-year and -1,2% over the last three rolling months. The decline in contracts concluded, in line with the approach of the municipal elections, is confirmed (-8% year-on-year, from January to July, in volume). The resilience of activity in the first half of the year should thus result in a gradual slowdown expected in the second half. The acceleration of work that might have been hoped for at the very end of the electoral cycle will therefore not take place, as budgetary prudence has overcome the latest decisions made by local authorities in terms of investment.

*Source: Housing Credit Observatory – fixed-rate loans in the competitive sector

Illustrative image of the article via Depositphotos.com.