Shares across the housebuilding sector fell after Taylor Wimpey PLC (LSE:TW.) warned of softer pricing in the order book and that build cost inflation will be higher than previously expected.
In a scheduled trading update for the period since 1 January, the FTSE 250 builder reported resilience in current trading, broadly similar to last year.
However, the group said it has seen 1% softer selling prices, due to weakness in the South East and Greater London, and warned that build cost inflation will be a few percentage points higher.
City analysts had expected an underlying profit (EBIT) of around £392 million at a margin of around 10% for the current financial year,
Analysts at Stifel said they expect the consensus EBIT estimate to be cut around 10-15%, with a margin of around 8-9%, given the comments on price and build costs.
"Taylor Wimpey's estimate that build cost inflation might accelerate from low single digits to low to mid single digits seems credible, given that manufacturers have started to notify price rises already.
"A 2.5% increase in build cost inflation is consistent with a 25% increase in energy and oil based inputs (we understand these make up 20% of the cost of materials and 10% of overall build costs)."
Shares in TW fell 3.3% to 80.6p, while elsewhere in the sector Persimmon PLC (LSE:PSN) dropped 1.15%, Barratt Redrow PLC (LSE:BTRW) 0.9%, Berkeley Group Holdings PLC (LSE:BKG) 0.7% ad Bellway PLC (LSE:BWY) 0.4%.
Vistry Group PLC (LSE:VTY) shares rose 0.6%.