EU construction sector to remain weak in 2025 – EUROFER

Despite public investment and cheaper loans, the EU housing market is not yet ready for growth

The EU construction sector, one of the main steel consumers, will remain weak in 2025. According to EUROFER’s Economic and Steel Market Outlook 2025-2026, Q2, after falling by 2% in 2024, growth is expected to reach +1.1% in 2025, while in 2026 it is forecast to slow slightly to +0.8%.

The main reason for this inertia is the prolonged decline in housing construction, which has been going on for the ninth quarter in a row. Even the fact that the European Central Bank made seven consecutive key policy rate cuts in 2024-2025 did not help the situation. The impact of monetary easing has been delayed: mortgage rates remain high and housing demand is sluggish.

At the same time, public construction is showing more robust results. Thanks to the NextGenerationEU program, which is due to be implemented by 2026, there has been an increase in investment in civil infrastructure. In the fourth quarter of 2024, this segment showed an increase of 1.5%. Public investment is expected to continue to support the sector.

Nevertheless, the overall construction activity index has been declining for four consecutive quarters, and the industry confidence index has remained in the negative zone since March 2022. The decline in construction activity is not only due to high interest rates, but also to rising construction material costs and labor shortages in some EU countries.

EUROFER expects that a real market recovery will only be possible from 2026. This will be influenced by both the cumulative effect of lower rates and the final acceleration of public infrastructure projects.

As a reminder, in March 2025, production in the EU construction sector increased by 0.1% compared to the previous month. Compared to March 2024, the seasonally adjusted figure decreased by 0.7%. Earlier, EUROFER expected construction growth in the EU this year at 2%.