Taylor Woodrow, the housebuilder, cautioned yesterday that sales will fall short of its previous estimate, causing the steepest decline in its shares in almost two years and dragging down the entire sector.
Last week, George Wimpey and Gleeson also warned of "challenging" market conditions, with Wimpey being downbeat about the spring season.
Taylor Woodrow's sales will be 6 per cent lower than the targeted 10,000 houses, 94 per cent of which are already sold. "Currently it's more challenging for everybody than it was a year ago. Visitor levels are holding up but people are taking longer about committing themselves to purchases," said Ian Morris of Taylor Woodrow.
However, the slowdown in the UK market is offset by a strong performance of the company's US business, leaving it on track to meet expectations for 2004 profit - minus proceeds from the sale of the K2 office development at St Katharine's Dock in London. That profit will move into 2005, meaning that analysts' consensus forecast for pre-tax profits of £440m this year will likely be lowered to about £420m, Taylor Woodrow said.
It has been a poor fortnight for housebuilders' shares, with most companies enduring falls after negative commentary from various housing surveys. With borrowing costs up a third from November, the market is finally cooling. Mark Hake, at Merrill Lynch, said, "Investors won't give the sector the benefit of the doubt. They have expressed some concern over where we go next."
Taylor Woodrow shares closed down 8.5p to 235p after falling to as low as 223p.