The mood within the German residential construction sector has recently worsened further. According to the Ifo Institute in Munich, the business climate index dropped from -29.5 to -31.0 points in June. Companies are assessing both the current situation and their forecast for the coming months negatively. Their expectations have reached the lowest level since March 2025. Klaus Wohlrabe, the head of the Ifo surveys, stated, “Hopes for a gradual recovery have been dampened once again. Many companies currently see no signs of a sustainable revitalization of residential construction.”
Operating challenges remain intense. The proportion of companies reporting insufficient orders rose from 42.2 to 43.7 percent. Furthermore, the cancellation rate remains elevated at 11.4 percent. Concerns regarding material supply persist, as 9.7 percent of companies reported bottlenecks in essential raw materials once again. Wohlrabe noted that despite an increase in building permits, businesses are still struggling with weak demand. He added that a reduction in cancellations would not compensate for the lack of new orders, meaning it would not trigger a turning point.
