Taylor Wimpey hit by cost surge as energy shock and weak housing market bite

Taylor Wimpey has warned that rising costs are beginning to filter through its supply chain, as higher energy prices linked to Middle East tensions add fresh pressure to an already subdued housing market.

The FTSE 250 developer saw its shares fall in early trading on Tuesday, slipping to their lowest level in around 13 years as investors reacted to a worsening outlook for construction costs and demand.

The group said build cost inflation is now expected to run at low- to mid-single-digit levels in 2026, up from earlier forecasts of low-single-digit growth, as suppliers begin passing on higher charges and energy-related surcharges.

The update comes as the wider property sector continues to struggle with softer house prices, cautious buyers and persistent affordability pressures, leaving housebuilders exposed to both demand weakness and rising input costs.

Taylor Wimpey reported a net private sales rate of 0.74 per outlet per week for the year to 26 April, down from 0.77 per outlet per week a year earlier, signalling slightly weaker momentum in new home sales.

Its order book also slipped to £2.23bn, down from £2.33bn a year ago, reflecting a modest contraction in forward sales despite what the company described as “resilient” customer interest.

However, pricing pressure is becoming more visible, with average selling prices across its order book down 1pc year-on-year as buyers remain sensitive to affordability constraints.

The company has previously warned that earnings are set to fall in 2026, underscoring the challenging environment facing the UK housebuilding sector.

The latest update highlights the dual squeeze facing developers: higher construction costs driven in part by global energy volatility, alongside subdued demand in a housing market still adjusting to higher interest rates and stretched household finances.

Jennie Daly, chief executive, said: “Sales in the year to date have been steady and our teams continue to work extremely hard to support customers through their homebuying journeys against ongoing affordability challenges and an increasingly uncertain macro backdrop.

“We are committed to delivering high-quality homes and driving our assets and continue to see good progress on planning and outlet openings whilst maintaining strict operational discipline.

“With highly experienced teams, a high-quality landbank and a healthy balance sheet, we remain focused on delivering growth over the medium term and value for all our stakeholders.”

Shares in Taylor Wimpey were 4.8% lower at 79.34p.