Bellway has warned that higher mortgage rates and rising construction costs are hurting the housing market.
The FTSE 250 housebuilder said homebuyer demand fell in April and May, according to a trading update today. This followed a stronger start to the spring sales season.
The company said higher mortgage rates were a key reason for weaker demand.
Rates rose after the outbreak of war in the Middle East earlier this year.
Private residential bookings fell by 6.2% year-on-year to an average of 151 per week in the four months since February.
Bellway traded from an average of 233 outlets during the period, up from 242 a year earlier. However, the company said it still expects to open 40 new locations in the second half of the year.
“Early spring trading season trading showed a marked improvement compared to autumn 2025, but we have seen a moderation in customer demand in April and May in response to the recent rise in mortgage rates,” Bellway said.
Mortgage rates soared after the conflict broke out in February. Five-year fixed interest rates rose above 5.5 percent for the first time since September 2024. Interest rates have since fallen to around 4.35 percent, but remain above pre-war levels.
Bellway also warned that construction costs are rising. Higher fuel and energy prices have increased the cost of building materials.
The company said some suppliers have raised prices and added surcharges.
Bellway chief executive Jason Honeyman said: “Bellway continues to perform robustly in an increasingly challenging market, with customer demand having declined in recent years.
in recent weeks, after a positive start to the spring sales season.
“The outlook beyond the current financial year remains uncertain and reflects ongoing geopolitical tensions in the Middle East and a less predictable domestic political environment. Against this backdrop, our clear focus is on self-help and the pursuit of capital
efficiency creates resilience while supporting our strategy to increase cash generation and shareholder returns.”
Bellway maintained its full-year guidance unchanged. This year the company expects to build between 9,300 and 9,500 homes. It also expects pre-tax profits of between £320m and £330m.
The company said it remains cautious about purchasing land. The value of new land contracts fell 27% year-on-year to £363 million in the year to August.
Bellway said the sector still faces significant challenges. These include weaker buyer demand and rising construction costs.
Other homebuilders have expressed similar concerns. In April, Berkeley stopped buying land. The company cited rising costs and increasing regulations.