The construction cost index published by INSEE shows -2.89% year-on-year in the first quarter of 2026. This decline, the sharpest in several years, fuels the idea of a general easing in construction prices. However, the reality on construction sites tells a more nuanced story, where some costs are decreasing while others continue to rise.
Construction Cost Index and BT Index: Two Curves, Two Interpretations
Simplifying construction prices to a single indicator distorts the analysis. The ICC measures the overall cost of new housing construction. The BT and TP indices, on the other hand, track the evolution of costs by trade and separately account for labor, materials, and energy.
| Indicator | Scope | Trend early 2026 |
|---|---|---|
| ICC (INSEE) | New housing construction | -2.89% year-on-year (Q1 2026) |
| Residential IPEA | Residential maintenance-improvement | +1.0% quarter-on-quarter (Q2 2026) |
| Non-residential IPEA | Non-residential maintenance-improvement | +0.3% quarter-on-quarter (Q2 2026) |
| ICM (Material Cost Index) | Construction materials | Stabilized at 117.1 (2024-2025 level) |
The decline in the ICC mainly reflects a slowdown in demand for new housing and a partial easing on certain materials. In contrast, the maintenance-improvement price index (IPEA) continues to rise by 2.1% year-on-year in the second quarter of 2026.
To cross-reference this data with real estate market projections, the real estate forecasts from Projet Immobilier detail the scenarios considered for the cost of new construction in the coming months.
Maintenance-Improvement: The Factors Driving Prices Up
The stabilization of raw materials does not translate to renovation work. The IPEA rises by 0.8% quarter-on-quarter in Q2 2026, driven by well-identified trades.
- Carpentry shows the highest quarterly increase: +1.6%, with an index reaching 129.5. Processed wood and aluminum joinery remain under pressure.
- Plumbing, heating, and air conditioning increase by +1.3% quarter-on-quarter, fueled by demand related to heat pumps and ventilation systems compliant with new requirements.
- Painting and glazing rise by +0.8%, a category often underestimated in renovation budgets.
These increases directly impact individuals engaged in energy renovation work. The actual cost of a renovation project continues to rise, even when new major works show declining prices.
Construction Materials in 2026: Stabilization, Not a Reversal
The materials cost index (ICM) remains at 117.1, the same level as in 2024 and 2025. This stabilization masks a reality: material prices are still 31% higher than in 2020 following the cumulative increase between 2020 and 2023.
Several factors prevent a true reversal. Transportation costs have not returned to pre-pandemic levels. Geopolitical tensions maintain uncertainty over steel and copper supply chains. Increasing environmental requirements, particularly related to RE2020, add structural costs to insulation, ventilation systems, and bio-sourced materials.
The current plateau of materials does not mean that building is cheaper. It means that the inflationary spiral has stopped, without a significant downward correction.
Building and Public Works Activity: A Budgetary Context Weighing Down
The volume of activity in the building sector remains on a downward trend. The FFB reports a decline in housing starts, and the non-residential market does not compensate for the shortfall.
On the public works side, the FNTP anticipates a decline in activity of -1% in volume for 2025, with an expected intensification in 2026. The municipal election year traditionally slows public orders. The tight budgetary context reinforces this phenomenon: adjustment measures for local authorities, estimated at around 5 billion euros, reduce local investment capacity.
The General Directorate of the Treasury notes that investment in construction remains weakened by the rise in interest rates in recent years, although a gradual stabilization is anticipated. Public and private orders are under distinct but converging pressures towards a global slowdown.
What Construction Prices in 2026 Indicate About the Real Estate Market
The decline in the ICC creates an opportunity for new project owners, but it does not mechanically translate into cheaper homes for purchase. Land costs, environmental standards, and marketing fees represent an increasing share of the final price.
For renovation, the signal is the opposite: prices continue to rise. A homeowner postponing insulation or heating replacement work in hopes of a price drop risks paying more in twelve months.
The decrease in new construction costs coexists with an increase in renovation costs. This divergence is the defining feature of 2026 for anyone preparing a real estate project, whether it involves building or renovating an existing property.
