The latest Forecast Report from the Builders Merchants Federation (BMF) reveals a slight upward adjustment to 2.5% in the baseline forecast for sales of building materials in 2025, due to marginally better-than-expected growth rates in the first half of the year.

The first six months of 2025 showed signs of an improving market with a 1.9% value growth. But, despite this relatively positive start to the year, there remains a sense that the industry should, by now, be doing better. The baseline forecast for 2026 remains unchanged from the BMF’s Spring Forecast at 3.1%, although lower and upper forecast scenarios are also provided due to continued economic uncertainty.

The BMF Forecast combines an analysis of merchant market performance, drawn from the Builders Merchants Building Index, regarded as the key indicator of current RMI activity, with an examination of key factors affecting builders’ merchants to project future sales for 2025 and 2026

A closer investigation of the year to date shows that there has been a degree of variance in the strength of builders’ merchants’ sales, with some parts of the country and certain sales channels performing better than others.  

London, historically a key barometer of economic activity, has not performed as well as other regions, notably the North East. One reason for the regional disparities is increased price competition in areas with higher clusters of merchants. Another is the variations in the cost of living. Higher living costs reduce the disposable income available for home improvement projects that drive RMI activity, making consumers wary of upsizing their homes and taking on higher mortgages.

Furthermore, while merchants have seen modest growth in ex-stock sales, the downward trend in direct-to-site sales continues, with some reporting double-digit declines. 

Price growth throughout the sector has also been slower than expected, with the two largest categories, Heavy Building Materials and Timber & Joinery, recording year-on-year price deflation of 2.4% and 2.8% respectively, for the first half of 2025.

Commenting on the BMF Summer Forecast, John Newcomb, BMF CEO, said: “The key thing that is missing is ‘confidence’. When consumers and businesses feel optimistic about the economy, they are more likely to spend and invest, fuelling growth and job creation.  Economic uncertainty dampens confidence and holds back growth, and we have been in this cycle for some time.

“Our members would certainly appreciate confidence-boosting stimulus measures such as lower borrowing costs, planning reform or wider support for housebuilding, particularly for SME contractors.

“Despite these concerns, we recognise that demand was stronger than expected in the first half of 2025, even when confidence was low.  Conditions remain tough, but as long as there are no further shocks in the Autumn Budget, we believe the market is likely to meet the forecasted growth rate for the year.

“ Uncertainty remains a key theme, however.  Looking ahead to 2026, our forecasted baseline year-on-year growth rate of 3.1% is tempered by lower and upper forecast scenarios of 1.2% and 3.7%.”