Persimmon PLC's (LSE:PSN) current calendar year looks increasingly secure, but Citi believes the bigger issue for investors is whether margins come under pressure in 2027.
The US investment bank said the FTSE 100 housebuilder started the year strongly, with sales volumes tracking guidance and more than half of its private home completions already secured, per its last update in April.
Nearly all of its housing association units for the year have also been sold, reducing near-term volume risk.
However, Citi sees signs that the housing market is becoming more challenging, with buyer enquiries weakening and conversion times lengthening, suggesting customers are taking longer to commit to purchases.
Demand conditions also appear tougher in southern England, with analysts saying that could put pressure on average selling prices over the coming months, particularly if housebuilders become more aggressive on incentives to maintain sales rates.
An even bigger concern is cost inflation, as build cost pressures are expected to increase in the second half of 2026 and continue into 2027, raising the prospect of a margin squeeze.
So, while current trading remains solid, Citi argued that visibility beyond this year is less clear. Any slowdown in reservations could affect 2027 volumes, while higher labour and material costs would leave less room to offset weaker pricing.
Shares in Persimmon were down 2% to 1,032p on Tuesday afternoon, the worst performing of the FTSE 350 builders.
