Q3 2025 – the story behind the numbers

The Q3 2025 edition of the Builders Merchants Building Index was published last week. Find out what leading industry experts have to say about the performance of their sectors.

Most of the BMBI experts agree that quarter three was particularly difficult. But some product categories and companies are bucking the trend:

Andy Simpson, Heidelberg Materials: Quarter three has been turbulent for cement and aggregate sales. And unfortunately, there’s very little sign of things getting any better as infrastructure projects and new housebuilding stall. The latest Mineral Products Association report shows that demand fell over the summer, leaving volumes for aggregates, ready mixed concrete and asphalt trailing last year’s figures. Compared to Q2, Q3 ready-mixed concrete volumes were down -0.8%, dropping further from the previous historic low.

James Davenport, Metsä Wood: Record high log prices combined with stagnant sawn timber prices, driven by low demand across Europe, are continuing to put the industry under significant pressure. Production curtailments in the third quarter have taken place and will limit the growth of stocks entering the fourth quarter, which is traditionally a quiet period for sawmills. The general sentiment in the sawmilling industry remains poor, and this is not expected to change in the foreseeable future.

Ian Doherty, Hexstone and Owlett-Jaton: With ironmongery one of the worst performing categories, the market for fasteners and fixings has remained subdued.

Derrick McFarland, Keystone: Quarter three followed the same downward trajectory as the previous quarter, and while better weather in the autumn delivered steady demand from new build customers, it was Repair Maintenance and Improvement (RMI) where the steel lintels market was feeling the pinch. The delayed budget has done little to improve things.

Jim Blanthorne, Keylite Roof Windows: There was some upturn in demand in Quarter Three compared to Quarter Two, but this is mainly normal seasonality, boosted somewhat by particularly dry and mild weather, conditions conducive to roofing projects staying on track.

Krystal Williams, Pavestone: Q3 was a rollercoaster quarter for paving sales. July and August, which are notoriously slow for landscapers, were very quiet and sales were well below last year’s. September, however, saw a 20% increase in volume that more than made up for the shortfall. Overall, we are up on last year as we move into the final quarter of 2025, and while we are bucking the trend in the paving sector, it has been a year of peaks and troughs.

Chris Dawson, Brett Martin: The reality of the third quarter failing to provide the usual Autumn lift has finally knocked the wind out of any aspirations for 2025 to recover the sort of growth that most of us had hoped we would see. Certainly, for those producers in the heavy side category there is little comfort when viewing like-for-like sales volumes in the third quarter. Be it RMI or new build, the consumer needs confidence to borrow and spend. This is simply not happening at the levels required to kick start the market back to growth.

Jamie Barber, Dulux Trade: The UK Trade Paint Market has demonstrated resilience in 2025, achieving a year-to-date (YTD) growth of 1.5% compared to 2024. This positive performance is particularly notable given the broader economic context, where construction output has remained largely flat compared with the previous year. The primary contributors to the market’s expansion have been Premium Emulsions, 2nd Quality Emulsions, and Exterior products.

Neil Hargreaves, Knauf Insulation: For most of this year, analysts have predicted an uptick in construction activity. The fundamentals are solid, and the political will is there. But reality hasn’t yet met those expectations. Now the industry holds its breath, awaiting the impact of planning reforms, the Future Homes Standard, and November’s budget. The hope is for a policy landscape that gets the nation building, and building more sustainably.

Housebuilding woes

One of the common issues cited by the experts as contributing to a drop in sales volumes has been the slowdown in housebuilding. Once thought to be the answer to getting more homes built, our experts are largely in agreement that the Government’s 1.5 million homes target is now unachievable.

Ian Doherty, Hexstone and Owlett-Jaton: The Government’s rhetoric on building 300,000 houses a year in this parliament, once an ambitious target, now seems no more than a pipe dream, and this is perhaps reflected in the downward trend in merchant sales.

Jim Blanthorne, Keylite: At the recent BMBI round table event, the manufacturers in the room were unanimous in their view that there needs to be significant demand stimulus from the Government if there is to be any realistic prospect of its ambitious house building targets being achieved.  Similarly, at a recent Future Homes event, the audience were unanimous in their view that the housing target is beyond reach, both on the supply and demand side. Developers are generally positive about the planning reforms, which will help unlock building opportunities, but plots will only sell if customers come.

James Davenport, Metsä Wood: House building and general construction activity remains weak and well short of government targets. I will leave my opinion on the viability of these targets for another day! There are pockets of residential building activity in certain parts of the country and these more buoyant regions seem to be linked to house affordability which tells us that the underlying demand for property is still there, when it is affordable.

Andy Simpson, Heidelberg Materials: It’s not hard to see where the lack of growth is rooted. A lot has been made of the 1.5m homes promise to support the construction industry, but it’s increasingly less likely that we’ll get anywhere close to that figure. The Housing Minister still insisting it’s doable shows a lack of understanding of our sector. None of the levers the government have pulled so far, like the planning system changes, are yet bearing fruit and there’s much more work to be done if we are to build over 300,000 homes a year.

Derrick McFarland, Keystone: To stimulate opportunities to build more good homes, ongoing challenges with planning red tape and further delays to the Future Homes Standard need resolving sooner rather than later.

Matt Williams, Polypipe Building Products is the Expert for plastic plumbing for hot and cold water systems: There has been no noticeable recovery in the UK housing market in the last quarter, however I remain optimistic for housing.

Gordon Parnell, British Gypsum: While sectors such as housing experience continuing difficulty, other sectors are seeing signs of growth. Infrastructure, public sector and energy-related projects are accelerating, fuelled by long-term investment and a clear commitment to transition the UK towards a low-carbon economy.

Jamie Barber, Dulux Trade: With new construction output remaining flat year-on-year, much of the demand for trade paints has shifted towards RMI activities. Homeowners and property managers have continued to invest in maintaining and upgrading existing properties, driving steady demand for both interior and exterior paint products. This trend has helped offset the stagnation in new build activity and has provided a stable foundation for market growth.

Global impact

Most building materials are made in the UK, but we’re affected by what’s going on in the rest of the world.

Krystal Williams, Pavestone: Unprecedented rainfall in India has flooded sandstone quarries in the north, so getting blocks of stone out is impossible until the water subsides. The pause in production in our partner mines is adding to a wider shortage of sandstone in India which will have a knock-on effect on the UK.

James Davenport, Metsä Wood: The UK timber industry operates within a global marketplace and international trade flows are currently being challenged with the imposition of new tariffs on lumber entering the US. The impact of these tariffs will inevitably be felt in the EU and UK market going forward; exactly how remains to be seen.

Jim Blanthorne, Keylite: Cost pressure will dictate a price increase early next year driven in large part by the significant Forex movement between Sterling and the Polish Zloty, the currency in which all roof window manufacturers incur a significant part of their costs at their production sites in Poland. At the time of writing, the Pound is 7.7% weaker than it was against the Zloty just one year ago, a continuation of a 3-year trend. All imports being that much more expensive it has inevitable consequences to the cost of goods.

Krystal Williams, Pavestone: Shipping prices continue to be volatile and were recently impacted by China and US trading peaks and subsequent capacity constraints. The longer route around the Cape of Good Hope is likely to be permanent too, as shipping companies realise they can charge more for this.

The road to Net Zero

Matt Williams, Polypipe Building Products: I see the Future Homes Standard and the national drive for decarbonisation as the biggest growth opportunity our sector has ever faced. The UK’s housing stock is aging and inefficient—with the median Energy Performance Certificate (EPC) for housing in England and Wales sitting disappointingly at around Band D. To meet the goal of Net Zero by 2050 while delivering the 1.5 million new homes required, simply maintaining the status quo is a recipe for failure. The market demands radical innovation, and we must rise to meet it.

Gordon Parnell, British Gypsum: There’s growing interest in local supply chains, circularity and low-carbon products as attention turns to materials themselves: where they come from, how they’re made, and how they progress through the value chain. With greater focus on these factors, supply chain localisation and transparency about product origin are becoming more important.

Neil Hargreaves, Knauf Insulation: Embodied carbon is now responsible for around half of the total carbon cost of a building, so it’s inevitable the UK will follow the lead of other countries in setting building carbon limits. But construction isn’t waiting to be forced to act. Whether it’s developers aiming to meet voluntary building standards, customers seeking to reduce their scope 3 emissions, or contractors responding to homeowner requests, we’re seeing increased demand for lower-carbon solutions now.

2026 forecasts

Andy Simpson, Heidelberg Materials: The merchants we have spoken to don’t expect an upturn in trade for at least 18 months. We are all in for a tough time as the end of the year draws in.

Krystal Williams, Pavestone: It’s likely be a subdued Q4 for paving products. We don’t expect homeowners to commit to big ticket items or home improvements until after the budget and people better understand what their finances look like.

Jamie Barber, Dulux Trade: For 2026, we are forecasting the market will be in slight growth. While no significant growth is expected, the stability and relative resilience of the RMI sector and an improving commercial market should help maintain current volume levels with additional value opportunities as tradespeople trade up.

Derrick McFarland, Keystone: Growing sales in a difficult economy is a team game, and the more we can work together, the more we can maximise opportunities as they arise, while putting plans in place to meet demand when better times arrive.

Chris Fisher, ECI Software: Artificial intelligence is reshaping product content creation across the sector. Recent developments show merchants achieving remarkable productivity gains through AI-powered content generation, with some reporting comprehensive product descriptions created in minutes rather than the traditional twenty-minute manual process. This technological advancement is crucial as B2B buyers increasingly expect detailed, searchable product information comparable to consumer ecommerce experiences.

Read more on the BMBI website.