The shockwaves of Donald Trump's return to power are still rippling! By choosing to wage a trade war against the rest of the world, the President of the United States has unleashed an international turmoil of unprecedented proportions, upsetting the balance of trade and destabilizing financial markets and the business community, which he claims to be the primary defender of!
The brutality, unpredictability, and versatility of its policy (a U-turn on customs surcharges the day after their implementation) will not be without consequences for the global economy, including the American one, even if the effects in Europe could be less harmful than in other continents. In France, growth could fall by -0,3 points according to the OFCE, with inflationary pressures remaining limited. But this context of uncertainty could weigh on interest rate trends and agent confidence, thus slowing the recovery process in the real estate and construction markets that began several months ago. On the materials side, activity is slowly reviving, even if it is still far from returning to a positive annual trend, especially in the ready-to-use building sector.
February is held
According to the still provisional data for February, the materials sector would continue to gradually "recover". Thus, aggregate production would have strengthened by +1,3% compared to January and by +0,5% compared to February 2024 (CVS-CJO data). Over the last three months, activity has gained +4,6% compared to the previous quarter and is up +1,7% compared to the same quarter last year. On a rolling twelve-month basis, volumes are still down (-2,7%), but over the first two months of 2025, they show an increase of +2,5% year-on-year. This recovery is also observed, to a lesser extent, in the ready-to-work (BPE) sector, with the timid improvement in the construction sector not providing the same support as public works, whose activity has been growing for more than two years. In February, deliveries fell slightly compared to the previous month (-0,8%) and were -7,4% below last year's levels (CVS-CJO data). However, over the three months from December to February, ready-mixed concrete production recovered compared to the previous quarter (+1,1%) but remained -6,3% lower than the same period a year ago. The rate of decline is therefore moderating and, at the start of 2025, cumulative volumes are only down -4,7% year-on-year at the end of February, while the cumulative decline over twelve rolling months reaches -10%.
In January, the UNICEM materials indicator (82,1) lost -3,6% compared to December but shows an increase of +2,7% over one year (CVS-CJO data). It also describes an improvement movement since over the last three months (November to January), the activity of the materials basket tends to stabilize compared to the previous quarter (-0,4%) but also compared to the same period a year ago (-0,7%). After a year 2024 in contraction of -6,8%, the index fell by -5,2% cumulatively over twelve rolling months at the end of January, the recovery concerning all the materials making up our basket.
New housing: better but...
While the economic climate in the construction industry has not yet shown any improvement, with the INSEE survey for March reflecting at best a stabilization of trends in structural work, the latest figures from the Ministry on construction activity reflect a recovery in activity. Thus, in the housing sector, over three months to the end of February, construction starts saw a significant rebound, up 17,2% year-on-year and up 14,2% compared to the previous three months (CVSCJO data), with the quarterly surge being more pronounced in the multi-family segment (+17,9%) than in the individual segment (+8,2%). Cumulatively over the twelve months to the end of February, 293.000 housing units were started, a level comparable to that of the previous twelve months (-0,3%). Regarding permits, we are also seeing a continued recovery, but on a lesser scale.
At the end of February, over the last three months, the number of housing starts increased by +4,5% compared to the previous quarter (SA-CJO data) but was still down -3% year-on-year. The quarterly increase concerns both the individual and collective housing segments (+1,1% and +6,5% respectively, SA-CJO data). Thus, in cumulative terms over twelve months to the end of February, 331.000 housing units were authorized, a level still -10,7% lower than that of the previous twelve months. The more gradual increase in permits is responding with delay to the improvement in transactions in new housing, both among developers and builders of individual homes. Among the latter, sales confirmed a positive trend in February, according to the latest Markemétron bulletin. Indeed, they jumped by +14,7% compared to February 2024, raising the change over the last three months to +26,5% over one year. In total over twelve months, 52.300 houses were sold by CMists; this is certainly still a level lower by -4,3% than that of the previous twelve months, but the decline was -40% a year ago. According to Markemétron, given strong demand from households, particularly in rural areas, and the implementation of support measures to support home ownership (PTZ, tax exemption for donations), professionals in the sector are rather confident for 2025 and anticipate an increase in sales of at least 15%, allowing them to exceed the level of 2023 (58.500 units), which is still a long way from that of 2021 (139.000) and the average sales observed over the last fifteen years (around 120.000)! On the real estate development side, sales of new homes recovered at the end of 2024 and the demand perceived by developers in the INSEE survey continued to improve at the beginning of 2025. But the recent deterioration in the economic and geopolitical climate could weigh on the momentum of the restart of sales. Rising uncertainties about growth, purchasing power, inflation, and unemployment could hamper households' purchasing decisions. However, the significant improvement in their solvency, with the 100 basis point drop in housing interest rates since December 2023 combined with a slight decline in new-build prices (-3,3% year-on-year to the end of 2024 for houses), should further encourage them to invest... especially since these conditions could be less favorable in the coming months! For now, the INSEE household survey conducted at the end of March reflects a pause in their home-buying intentions after the recovery observed since the beginning of 2024.
In the non-residential sector, while the areas started (19,9 million m² cumulatively for the twelve months to the end of February) are still showing a negative slope (-1,6% over the last three months and -10,6% over twelve months), the authorized areas, for their part, continue to recover (+12,4% and +1,7% respectively). The segments of industry, agriculture, commerce, but also public services to a lesser extent, contribute to fueling this increase in permits; a rather encouraging trend for the future activity of the construction of premises if however the authorizations ultimately translate into construction starts. Over the recent period in fact, and according to the ministry's statistics, nearly eight out of ten permits would not materialize, an abnormally high ratio compared to the housing sector (less than one in five, on average over 15 years)! This anomaly could be linked to recording or reporting errors and, according to the FFB, probably leads to an underestimation of the actual activity of building premises.
TP: the best is probably over
According to the FNTP's latest economic report, public works activity showed resilience in February and continued to grow, by +3% compared to January and +2,7% year-on-year (CVS-CJO data in volume). The better weather conditions in 2025 compared to 2024 undoubtedly contributed, according to the FNTP, to the good performance of construction sites. In cumulative terms over twelve months, the work completed thus increased by +2,7% in volume at the end of February. On the other hand, the slowdown in new orders (-9% cumulative over two months) and the decline in public calls for tenders are worrying the profession and predict a deterioration in demand in the coming months. With one year to go before the elections, an acceleration of projects should have occurred, but the context of budget consolidation is encouraging local authorities to exercise caution, particularly in departments with more fragile treasuries.
Illustrative image of the article via Depositphotos.com.
