Approved building permits fell 2.2% in February due to weak residential demand

By Heather Caitlin P. Mañago, Researcher

Approved building permits fell 2.2% year-over-year in February, as higher property costs and weaker residential demand weighed on construction activity.

Preliminary data from the Philippine Statistics Authority (PSA) showed construction projects covered by permits were 14,996 in February from 15,341 last year.

This was a change from growth of 3.2% in February 2025 and a revised growth of 1.6% in January 2026.

This was the weakest pace in two months or since a 2.6% decline in December 2025.

In February, construction projects covered 3.58 million square meters (sq.m) of floor space, down 3.5% year-on-year from 3.71 million sq.m.

The construction projects that received approval are estimated at P56.34 billion, 28.1% more than last year when it reached P43.99 billion.

“The strength of the economic recovery and the increase in the cost of construction materials balanced the interest in construction in February,” said Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, in an email.

“The dip in construction permits approved in February was mainly driven by weakness on the residential side,” Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said in a Viber message.

Mr. Peña-Reyes says the reduction was attributed to a combination of high interest rates that dampened housing demand, soft housing use, and cautious developers.

“It was largely the result of tightening financial conditions and soft housing demand outweighing modest gains in non-residential construction.”

In February, permits for residential projects, which accounted for 61.8% of the total, fell 5.8% to 9,273.

These projects amount to P16.42 billion, down from P18.67 billion last year.

Single-family homes, which account for 81.7% of the residential category, fell 9.4% year-on-year to 7,578.

Applications for apartments also fell by 24.4% to 1,020 from 1,350 in February last year.

Meanwhile, applications for duplex or quadruplex homes increased by 381.6% to 549 that month.

Non-residential projects, on the other hand, increased by 3.4 percent year-on-year to 3,542 from 3,426 in February 2025. This was 23.6% of the total.

These permits were worth P36.41 billion, up 67% compared to last year when they reached P21.81 billion.

During that period, approved commercial building applications increased by 0.3% to 2,426. These constituted 68.5% of all non-residential projects.

Industrial permits also increased by 13.7% to 308, while institutional projects increased by 17.6% to 595 approved.

Agricultural projects reached a total of 171 approvals, which is 24.8% more than the 137 approvals last year.

Meanwhile, other non-residential jobs fell 54.8% year over year to 42 permits in February.

Approvals for additions, or construction that increases the height or area of ​​an existing building, also decreased by 4.1% to 514 approvals.

Permits for replacement and repair reached 1,098 in February, 8% lower than last year and were valued at P2.46 billion.

By region, Calabarzon (Cavite, Laguna, Batangas, Rizal, and Quezon) had the most approved construction projects during the period, accounting for 27.4% of the total 4,113 permits.

This was followed by Central Luzon (13.9 percent with 2,090 permits), and Ilocos Region (9.3 percent with 1,390 permits).

“The larger project allocations in Calabarzon, Central Luzon, and the Ilocos Region show the preference of property developers for projects in the suburbs outside the core of Metro Manila,” said Mr. Agony.

Mr. Peña-Reyes added that this trend may reflect the strong diversification of infrastructure projects that open new avenues for growth.

“We expect a further decline in the coming months as the effects of the war in the Middle East weigh on demand for goods and increase construction costs,” Mr Agonia said.

He also noted that high borrowing costs caused by the conflict are also affecting the appetite of developers.

Mr. Peña-Reyes, on the other hand, said that while a continued sharp decline is unlikely, a “weak to flat trend” is an imminent reality.

“One can expect mixed data in March and a gradual recovery in 2026, rather than a strong rebound,” he added.

The PSA said construction figures are compiled from copies of original applications for approved building permits and demolition and fencing permits collected monthly by the agency’s staff from the offices of building officials across the country.