British housebuilder Persimmon said volumes and forward orders were ahead of 2008 comparisons and it expected no more writedowns of the value of its land holdings, boosting shares in the sector on Tuesday.
Britain's largest housebuilder by market value also said it had cut its debt by nearly half in the past 12 months to 495 million pounds ($803 million) at end-June and that prices were stabilising in some locations.
"Persimmon's update is raising hopes that the worst for the house building sector may be over," said Keith Bowman, analyst at Hargreaves Lansdown, adding "a sense of perspective is still required" given the lack of mortgage availability.
His comments echoed those by the company's management which said it was seeing "historically low" cancellation rates.
Persimmon said completed house sales dropped 27 percent to 4,006 houses in the six months to end-June. Revenue fell 37 percent to 625 million pounds. In calendar 2008, Persimmon completions fell 36 percent while revenue fell 42 percent.
"We're encouraged by the market, it's still constrained by the mortgages but what we've seen is an increased volumes and lower level of cancellation rates," said chief executive Mike Farley.
Persimmon shares, which have doubled in value since a record low of 180 pence in December, were up 3.8 percent at 377 pence 0840 GMT, while Bellway was up 4.2 percent and Bovis Homes was 4.1 percent higher.
Debt reduction is taking its toll on margins, which remain under pressure as the company focuses on positioning itself for a recovery, Farley said.
The outlook for British housebuilders remains tough as a record low level of mortgage transactions continues to hamper momentum in the market coupled with rising unemployment and the approach of the quieter summer trading period.
The Council of Mortgage Lenders reported gross mortgage lending plummeted 58 percent year-on-year in May to 10.3 billion pounds.
Hit by the global credit crunch, lenders have tightened borrowing conditions, demanding as much as 25 percent of a home's value as a deposit, hitting first-time buyers.
Farley said the return of players such as Northern Rock to the mortgage market was encouraging, and the housebuilder remained on track to meet its full-year guidance.
"We guided 9 (million pounds), 9 and a half for the year, it will be loaded towards the second half," he said.
Persimmon said both volume and revenues were currently seeing "increasing improvement on the comparative weeks of the previous year" and forward sales revenue for second half was 700 million pounds, up from 650 million a year ago.
CUT PRICE
Persimmon said houses were performimg better than flats and the south of England slightly stronger than the north.
A 10-year boom in Britain's housing market saw house prices triple. But the credit crisis and recession has seen prices fall about a fifth from peaks in the autumn of 2007.
Prices in May rose 2.6 percent, the biggest monthly gain in 6-1/2 years, according to the Halifax, Britain's biggest home loan lender
Persimmon said its landbank was 64,500 plots, a seven-year supply at current rates of sale. It opened 45 sites in the first half and plans to open a further 50 in the second half.
The York-based housebuilder, which wrote down the value of land holdings by 10 percent at the start of the year based on house prices falling 10 percent, said it did not expect further writedowns.
Rival housebuilders Barratt Developments and Redrow were due to report on Thursday, with Bovis Homes scheduled for Friday.
