Taylor Wimpey cheers investors

Taylor Wimpey (TW-) shareholders were today hoping for a reversal of the housebuilder's fortunes amid "ongoing stability" in the housing market and a healthier order book.

Shares in the troubled group have plunged 20% over the past fortnight amid concerns over the consequences of rising unemployment and poor lending conditions on the sector.

However, Taylor's latest update went some way to reassuring its long-suffering investors.

"We have been encouraged by the ongoing stability in the UK housing market, but remain cautious with regard to the prospects of the wider economy and, in particular, the potential impact of rising unemployment," the company said.

Taylor's finances have shown a marked improvement after it successfully restructured its debt facilities and completed a £510 million rights issue. Its net debt now stands at £1.01 billion - down from £1.53 billion at the end of 2008.

Its current order book stood at £971 million, up 73% from its end-2008 level. The FTSE 250 group has battled against sharply falling orders since 2007.

Cancellation rates also came in below the long-run average and the housebuilder says it now hopes to see an improvement in selling prices in the latter half of the year, despite ongoing difficulties with mortgage availability and valuations.

"Whilst wider economic conditions remain weak and rising unemployment could still have an effect on our markets, the severe downside scenarios for which we have been planning now appear less likely," said Taylor.

It is considering starting new building projects and hopes to have more sales outlets in the second half if conditions continue to hold up. It is also looking at land buying opportunities to snap up cheap offers beginning to emerge.

Across the Pond, it said trading in North America was starting to look up, with higher reservation rates and fewer cancellations.

However, it added that conditions remain tough in Spain and "plans to exit the Gibraltar market remain on course".

Analysts, however, urged caution. Rachael Waring at broker Panmure said: "Taylor Wimpey's trading statement is fairly upbeat in tone, which is unsurprising given that [its] comments regarding the UK market have been a little more positive than others.

"That said, we still have concerns regarding the sustainability of recent momentum in the sector. Although the market may take confidence from today's statement, we believe it is too early to predict a sustained recovery in market conditions."

Gary Hobbs of Fortis said: "While the backdrop appears to be improving, continued rising unemployment and the prospect of weak trading over the next few months may see better buying opportunities emerge for those with the appropriate risk appetite."

Investors were more upbeat on Interactive Investor's Taylor Wimpey discussion board:

Confuseddotcom said: "All seems positive to me, Armageddon scenario now very unlikely, debt level significantly reduced, some stability in the UK and US housing markets, mix of products in the UK meaning higher selling price going forward and keeping their eyes on opportunities to buy cheap land.

"Would be very surprised if the markets viewed this negatively but you never know in the current climate."

Nautorious added: "This will break the shackles from the other building companies and I would expect money to start to flow into TW now."