Overall construction growth fell from 64.2 in September to 61.4 in October according to the UK Construction Purchasing Managers’ Index, with above 50 indicating growth.
But despite the slowdown construction has still grown for 18 months consecutively – a post-2008 record.
Tim Moore, senior economist at Markit and author of the Markit/CIPS Construction PMI, said: “October’s survey provides the first indication that the chill winds blowing across the UK housing market have started to weigh on the booming residential building sector.
“House building activity still increased at a strong pace overall, but the sharp growth slowdown since this summer reflects greater caution towards new development projects amid tighter mortgage lending conditions and renewed uncertainties about the demand outlook.
“Despite signs that the house building recovery has lost some intensity, UK construction companies remain highly upbeat about their overall prospects for growth.”
More than half of those surveyed (55%) expect output to rise within the next 12 months, with just 9% anticipating a reduction.
Commercial activity was the strongest construction category despite the sub-sector seeing its slowest pace of growth for five months.
David Noble, group chief executive at the Chartered Institute of Procurement & Supply, added: “This month the construction sector maintained an impressive growth trajectory and true grit with continuing strong levels of new business, albeit at a slower pace.
“Though it appears that the euphoria of the last few months is now settling down to a slightly more modest level of expansion, delivery times continue to lengthen and suppliers of raw materials are in high demand, making the completion of construction projects more challenging and showing how the number of available suppliers has not yet reached pre-recession levels.
“The commercial sub-sector is this month’s star performer as residential housing expansion weakens.
“Although employment growth took a marginal dip this month in the construction sector, sub-contractors were able to make up the shortfall, with greater demand for their expertise helping to push up salary rates at a near-survey record pace.”
