JUST as the industry is sensing the first whiff of a downturn, the City has decided the longer-term outlook for the sector is pretty bright after all.
Shares in all the major house builders and a few large materials suppliers leapt last week despite the first significant reported profit falls in this cycle from any quoted companies - Berkeley and FairBriar, lower growth forecasts from the Construction Products Association and an ominous report showing that materials and labour costs fell in the second quarter for the first time in years.
As the new consensus emerged that interest rates have peaked and are now set to fall later this year, shares in Barratt and Wilson Bowden raced up 4 per cent, while Taylor Woodrow's shares touched a new year high.
Meanwhile, soothing noises from Berkeley Group about the overall market, and the firm's focus on urban regeneration, has inspired faith among investors that the major groups can survive the housing downturn in reasonable shape.
Persimmon's trading statement this week, showing its first half completions were close to last year's level also served to reinforce confidence.
Yet a key question for the rest of the industry is whether rates can fall quickly enough to restore some momentum to the private industrial sector and keep the fledgling recovery in office building going.Rates will have to fall fairly rapidly to avoid a slowdown in retail building activity next year.Meanwhile the second quarter dips in the price of reinforcement and structural steel highlighted by EC Harris suggest these sectors may already be under pressure.
But some markets remain buoyant.Morgan Sindall this week said its first half trading was in line with expectations with growth at its fit-out and affordable housing operations and a 29 per cent rise in its order book to £2.9 billion. Contractors like Morgan, which have maintained a wide mix of business streams, may well see this pay off in the months ahead.