The ONS report states while the sectors decline was not as bad as the 1.4% fall predicted last month, the figure is still the lowest industry reading for four years.
The majority of the decline is contributed to all repair and maintenance work, which fell by 3.6%, partially offset by a 0.3% increase in all new work.
Compared with third quarter figures last year, output was estimated to have increased by 0.1%. All new work increased by 2.0% while there was a fall of 3.4% in repair and maintenance and 7.7% in infrastructure.
However, total housing rose 8.7%, with private new housing increasing by 10.8%, the 14th period of consecutive year-on-year growth.
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Rebecca Larkin, Senior Economist at the Construction Products Association, said while the figures show a contraction in output, surveys across the industry have painted a more positive picture.
"This suggests that official data are likely to be revised up further as more data becomes available," she said.
"Certainly, the ONS data show that new construction work remains the primary driver of activity, rising by 0.3% during the quarter. In contrast, repair and maintenance work was reported to have fallen by 3.6%.
"Despite the contraction in Q3, the rise in new orders in Q2, along with broadly positive expectations expressed in industry surveys, points to a favourable performance over the rest of the year. For the year to date, overall construction output remains 0.6% higher than a year ago."
Shraga Stern, Director at construction firm Decorean, added: "These ONS statistics make interesting and to a degree, worrying reading. It must be said, however, that as a growing construction company – this is not something we are seeing in our day to day operations.
"In fact, we expect to build and sell new homes at an increased rate year-on-year. Living in this country is, and always will be, incredibly desirable, and so demand will continue to grow, irrespective of any political decisions or changes. As a construction company, we've been as busy as ever and where there is still a shortage, we're looking forward to providing as many new homes as possible."
(LM/MH)
