Italy’s construction and housing markets continued to grow in mid-2025, though the pace of expansion slowed compared with earlier months. Both sectors posted steady gains, highlighting resilience despite economic pressures.
Italy’s construction sector strengthened in July 2025. The seasonally adjusted index of production in construction increased by 0.7% compared with June reports Istat.
Growth also extended over the medium term. In the three months to July, construction output rose by 1.3% against the previous period. This reflects steady momentum in the industry despite a backdrop of high costs and tight credit.
On an annual basis, the construction sector posted solid gains. Both the calendar-adjusted and unadjusted indices increased by 5.2%. July 2025 had the same number of working days as July 2024, ensuring a fair comparison.
Looking at the first seven months of the year, the trend remains positive. The calendar-adjusted index rose by 4.7%, while the unadjusted index grew by 3.1%. These figures highlight resilience in the sector at a time when broader economic conditions remain uncertain.
House prices also moved higher. According to preliminary estimates, the House Price Index (HPI) increased by 2.7% in the second quarter compared with the first. On an annual basis, prices rose by 3.9%, easing slightly from the 4.4% growth seen in the first quarter.
Existing homes remain the main driver of this rise. Prices increased by 4.5% over the year, down slightly from the previous quarter’s 4.9%. Prices for new dwellings grew by 1.1%, compared with 1.5% earlier in the year. Both categories contributed to the quarterly gain.
The HPI increase occurred as sales volumes grew at a slower pace. Residential sales rose by 8.1% year-on-year in the second quarter, according to the Tax Office’s Real Estate Observatory. This marks a decline from the 11.2% growth recorded in the first quarter, indicating some cooling in market activity.
Regional data showed significant differences across the country. The North-East recorded the highest annual growth at 5.4%. Existing homes in this area rose by 6.5%, with new homes increasing by 0.8%. The Centre followed with annual growth of 3.8%, compared with 4.7% in the first quarter. The South and Islands recorded 3.6% growth, while the North-West posted 3.4%.
