Taylor Wimpey sees tough housing market as sales fall

British house builder Taylor Wimpey said yesterday its forward orders fell 19 per cent and it suspended a $996 million share buyback plan due to tough market conditions, taking nearly six per cent off its shares.

The group, formed by the merger of Taylor Woodrow and George Wimpey last July, said profit before tax and exceptional items fell by 31 per cent to £535.6 million from £776.5 million a year ago, compared with analysts' average forecast of £530.1 million.

"We've seen in the first few weeks of the year an increase in sales rates... but it is still running some way below more normal levels. The cancellation rate is also lower than the second half of last year but still running higher than we'd like to see," chief executive officer Pete Redfern told reporters.

"So there's no doubt the UK market is more subdued and it's going to be a quite challenging year."

The group, which announced a £750 million share buyback in July and has since repurchased £250 million of shares, said it had decided to suspend the programme "temporarily until conditions improve".

Taylor Wimpey, which also has operations in the US, Canada, Spain and Gibraltar, said the North American business was also well positioned for difficult market conditions, as unsold inventory was reduced by 29 per cent in the second half.

Its US home completion fell by 23 per cent to 6,740 homes, with margins tumbling to 5.1 per cent from 17.5 per cent, as housing meltdown triggered by risky mortgage lending lowered housing prices and increased cancellation rates and land write-down. Its average selling prices fell 13 per cent to £175,000.