In this study, we critically examine the potential of recycled construction materials, focusing on how these materials can significantly reduce greenhouse gas (GHG) emissions and energy usage in the construction sector. By adopting an integrated approach that combines Life Cycle Assessment (LCA) and Material Flow Analysis (MFA) within the circular economy framework, we thoroughly examine the lifecycle environmental performance of these materials. Our findings reveal a promising future where incorporating recycled materials in construction can significantly lower GHG emissions and conserve energy. This underscores their crucial role in advancing sustainable construction practices. Moreover, our study emphasizes the need for robust regulatory frameworks and technological innovations to enhance the adoption of environmentally responsible practices. We encourage policymakers, industry stakeholders, and the academic community to collaborate and promote the adoption of a circular economy strategy in the building sector. Our research contributes to the ongoing discussion on sustainable construction, offering evidence-based insights that can inform future policies and initiatives to improve environmental stewardship in the construction industry. This study aligns with the European Union’s objectives of achieving climate-neutral cities by 2030 and the United Nations’ Sustainable Development Goals outlined for completion by 2030. Overall, this paper contributes to the ongoing dialogue on sustainable construction, providing a fact-driven basis for future policy and initiatives to enhance environmental stewardship in the industry.