Taylor Wimpey's full-year average weekly private sales rate fell from 0.68 to 0.62 as a result of "difficult market conditions".
The group completed 10,848 new homes over 2023, down from 14,154 in the prior year. Average private selling prices in the UK rose by 5.1% to £370,000.
Taylor Wimpey's order book slipped 8.7% lower to £1.8bn. The group's net cash position fell from £864mn to £678mn.
Full-year operating profit is expected to be at the top end of the group's £440-£470mn guidance range.
Heading into the new year, the market remains uncertain but Taylor Wimpey expects recent mortgage rate reductions to improve affordability for buyers. Build cost inflation is set to run at around 4% in the first half.
The shares were broadly flat following the announcement.
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Our view
Taylor Wimpey's sales rates have held up relatively well, given the difficult market conditions of 2023. And while we're not calling a step-change improvement given there's still plenty of uncertainty in the housing market, falling mortgage rates and lower build-cost inflation are both early positive signs heading into the new year.
With softer inflation figures coming through, markets expect rates to fall over 2024. Lower rates are a tailwind for buyers, increasing their purchasing power. A potential homebuyer with a £1500 monthly mortgage budget has over 10% more borrowing capability at 4.0% than 5.0%.
Keep in mind that Brits are ideologically committed to home ownership and the country has been in a prolonged period of housing undersupply, a trend that's unlikely to change anytime soon.
The landbank is a particular strength for Taylor Wimpey, who have a robust pipeline of potential projects. The focus now is bringing plots online, with new land spend slowing as sales rates decline. That's wise, given the cost of land is yet to reflect the less favourable outlook.
But there are still plenty of challenges to navigate.
Despite 2023's operating profit being expected to come towards the top end of its £440-470mn guidance, that still marks a rough halving from the £907.5mn seen in 2022. That's part of the reason Taylor Wimpey's pulled back on investing in new land - something that's likely to remain the case throughout this year.
The sector's also facing ongoing labour and supply chain challenges, and planning permission disruptions are continuing to be a thorn in the group's side.
The balance sheet's in very good shape, arguably one of the strongest in the sector. And a net cash position of £678mn at year-end should help provide a cushion for any potential bumps in the road.
The current dividend policy is linked to asset value, rather than earnings. That means investors are more likely to receive a base level of dividend even in a downturn. But remember, dividend policies can change on a dime. No dividends are guaranteed.
The UK housebuilding sector has had a bit of a recovery in late 2023, meaning there's limited potential for further swift gains in our view. But with a longer-term lens, the valuation remains attractive, and given its robust financial position, Taylor Wimpey is one of our preferred names in the sector.
Taylor Wimpey key facts
All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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