Building-materials pricing remains firm while rising input costs pressure 2026 earnings
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Building-materials pricing remains firm while rising input costs pressure 2026 earnings
JPMorgan’s August Construction Pulse records 8.94% pricing growth since mid-December 2025 and generally improving construction lead indicators. However, energy inputs are up 22% year to date versus 2025 averages, implying a 15% average cost headwind to 2026E sector earnings under the report’s assumptions.
- Prices rose 8.94% across the tracker since mid-December 2025; 225 of more than 300 tracked products recorded changes.
- August energy input costs increased 5.6% month on month and were 22% above FY25 levels on average year to date.
- Average company cost indexes rose 5% in August versus July and about 18% year to date versus the 2025 average.
- JPMorgan estimates that 2026 year-to-date cost trends could be a 15% headwind to sector earnings on average.
- US permits, Dodge Momentum and several European order indicators improved, although US starts and new-home sales weakened.
Report interpretation
Overview
This August edition of JPMorgan’s Construction Pulse tracks the building-materials sector through price, cost and volume indicators. The report presents a mixed operating backdrop: pricing remains strong and several demand indicators are improving, but energy and raw-material inflation is becoming a material earnings pressure.
Core views
JPMorgan’s pricing tracker, restarted in mid-December 2025, shows cumulative price increases of 8.94%, versus 9.67% in the prior monthly edition. The tracker covers more than 300 building-materials products in France, Germany, the UK and the US, including insulation, cement, sealants, adhesives and sanitary products. Of the 300 products monitored, 225 have recorded price changes. The report notes no new price announcements since the prior edition, but the accumulated pricing data indicate that price momentum has remained positive across the sector. Costs moved materially higher in August. JPMorgan calculates that energy inputs were up 5.6% month on month, principally because natural gas, electricity and oil rose from July. On a 2026 year-to-date basis, energy input costs were 22% above FY25 averages. The monthly input table shows August changes of 15% for natural gas, 14% for electricity and 5% for oil, while MDI rose 6%; steel declined 1%. Company-level cost indexes point in the same direction: the sector average was up 5% in August versus July and approximately 18% in 2026 year to date versus the 2025 average. The 2026 year-to-date increase ranged from 3% for Saint-Gobain to 27% for Sika in the reported company index comparison. The report translates these input moves into an earnings sensitivity using assumed company-specific energy and raw-material bill splits. For 2026E, it applies 2026 trends relative to 2025, assumes raw-material costs are flat year on year, assumes cement pricing rises by a mid-single-digit percentage, and assumes no other pricing change. Where data lag, coal is used as a proxy for petcoke and oil as a proxy for liquid asphalt; steel and MDI are calculated as averages across China, the US and Europe. On these assumptions, JPMorgan estimates that costs would be a 15% headwind to earnings on average across the sector. Demand indicators offer a more encouraging but uneven volume backdrop. In the US, July housing permits rose 4% month on month and 2% year on year, the Dodge Momentum Index increased 7% month on month and 4% year on year, the NAHB Index rose one point month on month and three points year on year, and existing-home sales rose 1% year on year. Offsetting these data, housing starts fell 12% month on month and 13% year on year, while new-home sales declined 10% month on month and 6% year on year. Mortgage rates were reported at 6.7% in August, unchanged from the prior month and above 6.6% a year earlier. European indicators also show selective improvement. French residential permits increased 7% month on month in July but declined 12% year on year, while residential starts rose 5% month on month and 29% year on year. In Germany, June residential construction orders increased 12% month on month and 5% year on year; non-residential orders rose 7% and 3%, respectively; and civil construction orders rose 4% and 18%. The report also records a July Eurozone construction PMI of 44.3, up from 42.8 in June but still below 50, alongside mixed UK indicators including mortgage approvals down 4% month on month and 15% year on year.
Analysis framework
JPMorgan follows three sector drivers—price, cost and volumes. It tracks product-level price announcements, aggregates market prices for energy and raw-material inputs into company cost indexes, applies assumed input-cost bill splits to estimate earnings sensitivity, and then reviews regional housing, construction-order and confidence indicators as forward volume signals.
Methodology notes
Price-cost-volume monitoring
The report separates sector conditions into product pricing, input costs and construction-volume indicators to assess operating conditions for building-materials companies.
Input-cost-to-earnings sensitivity
JPMorgan uses company-specific energy and raw-material bill splits and cost assumptions to estimate how upstream cost inflation could affect 2026E EBITDA and earnings.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Buzzi (BZU.MI)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 22%.
- Risks
- Higher energy and raw-material costs.
- CRH Plc (CRH)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 16%.
- Risks
- Higher energy and raw-material costs.
- Heidelberg Materials (HEIG.DE)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 22%.
- Risks
- Higher energy and raw-material costs.
- Holcim Ltd (HOLN.S)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 22%.
- Risks
- Higher energy and raw-material costs.
- Kingspan (KSP.I)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 5%.
- Risks
- Higher energy and raw-material costs.
- Rockwool (ROCKb.CO)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 22%.
- Risks
- Higher energy and raw-material costs.
- Saint-Gobain (SGOB.PA)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 3%.
- Risks
- Higher energy and raw-material costs.
- Sika (SIKA.S)Covered building-materials company included in the cost-index and earnings-sensitivity analysis.
- Comparison
- Its 2026 year-to-date cost-index increase was reported at 27%, the highest among the listed companies.
- Risks
- Higher energy and raw-material costs.
Key data
- Cumulative pricing change+8.94%Since the pricing tracker was restarted in mid-December 2025; 225 of over 300 tracked products recorded price changes.
- Energy input costs+22%2026 year-to-date average versus FY25 levels.
- August energy input costs+5.6%Month on month versus July, driven by natural gas, electricity and oil.
- Average company cost index+5%August versus July; approximately +18% in 2026 year to date versus the 2025 average.
- Implied sector earnings cost headwind15%Average impact on earnings under JPMorgan’s 2026 assumptions.
- US housing permits+4% m/m, +2% y/yJuly 2026.
- Germany residential construction orders+12% m/m, +5% y/yJune 2026.
Impact & implications
The report indicates that sector pricing has remained supportive, while improving permits, construction orders and selected activity indicators could aid volumes. At the same time, the scale of energy and raw-material inflation means cost pass-through and company-specific input exposure are central to the 2026 earnings outlook.
Risks
- Energy and raw-material inflation could create a 15% average headwind to 2026E sector earnings under the report’s assumptions.
- US housing starts and new-home sales declined sharply in July, despite improvement in several other US lead indicators.
- French permits remained down year on year, and the Eurozone construction PMI remained below 50 in July.
What to watch
- Further building-materials price announcements and whether accumulated pricing momentum can offset higher costs.
- Monthly movements in natural gas, electricity, oil, MDI, steel and other material inputs.
- US permits, starts, new-home sales, Dodge Momentum and mortgage rates.
- French residential activity and German residential, non-residential and civil construction orders.