In Matthew 16:18, the word Jesus used for "church" is ekklesia (Strong's #1577), and it is so translated in the King James Version 115 times. This Greek word means "an assembly" or "a group of people called together for a purpose." It contains no implication at all of sacredness or holiness.
In practical usage, it commonly identified people called by a magistrate for a public service of some sort. This is how it is used in Acts 19:32, 39, and 41:
Some therefore cried one thing and some another, for the assembly was confused, and most of them did not know why they had come together. . . . But if you have any other inquiry to make, it shall be determined in the lawful assembly. . . . And when he had said these things, he dismissed the assembly. (Emphasis ours.)
Each time, ekklesia is translated as "assembly" and names what could easily be described as a mob of excited and confused people. However, the writers of the New Testament clearly agreed this was the word that best fit the groups of Christians called of God for service to Him. How did it come to be translated as "church" when the word "assembly" fits more accurately?
This change apparently has its beginning in another, far different Greek word, kuriakos (Strong's #2960). Kurios, the Greek word for "Lord," is easily recognizable as the root of kuriakos, which means "belonging to the Lord." Curiously, according to Joseph T. Shipley, author of The Origins of English Words, pp. 183-184, the root of kurios and kuriakos literally means "to bend or curve."
In the course of time, kuriakos was picked up by the Scots as kirk. Shipley shows that kirk and kuriakos share the same root. In the Scottish language, kirk indicates a place or a location, as in a building belonging to the Lord. The kirk became the place where the assembly bent before God in reverence, as in prayer, appealing to Him; or bent looking upward in praise of God; or where God bent in extending mercy.
As more time passed, the English pronunciation of kirk changed to "church." Thus "church," which indicates a building, a place where God is worshipped, gradually evolved to include, not just the place, but also the people who worshipped there and the worship services too. The modern English Reader's Digest Great Encyclopedic Dictionary reflects this in its definitions for church: "1. A building for Christian worship. 2. Regular religious services. 3. A local congregation of Christians." We regularly use all three in our everyday speech and writing, allowing the context to indicate which is intended.
However, in the Bible the word "church" never refers to a building or to worship services held within the building. It always refers to the assembly, group, or congregation of called-out ones who belong to the Lord, worship Him, and fellowship with others of the same mind.