The FTSE 250 housebuilder said demand from homebuyers slowed in April and May, according to a trading update today. This followed a stronger start to the spring selling 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 home reservations fell 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, down from 242 a year earlier. However, the company said it still expects to open 40 new sites in the second half of the year.

“Trading in the early part of the spring selling season showed a marked improvement compared to autumn 2025, however 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 jumped after the conflict began in February. Five-year fixed-rate deals rose above 5.5 per cent for the first time since September 2024. Rates have since fallen to around 4.35 per cent but remain above pre-war levels.

Bellway also warned that construction costs are rising. Higher fuel and energy prices have pushed up the cost of building materials.

The company said some suppliers have increased prices and added surcharges.

Bellway chief executive Jason Honeyman said: “Bellway continues to perform robustly in an increasingly challenging market, with customer demand having moderated in recent weeks, after a positive start to the spring selling season.

“The outlook beyond the current financial year remains uncertain, reflecting ongoing geopolitical tensions in the Middle East and a less predictable domestic political environment. Against this backdrop our clear focus on self-help and drive for capital efficiency provides resilience while supporting our strategy to increase cash generation and shareholder returns.”

Bellway kept its full-year guidance unchanged. It expects to build between 9,300 and 9,500 homes this year. It also expects pre-tax profit of between £320 million and £330 million.

The company said it remains cautious on land buying. The value of new land contracts fell 27% year-on-year to £363 million in the year to August.

Bellway said the industry still faces major challenges. These include weaker demand from buyers and rising build costs.

Other housebuilders have raised similar concerns. In April, Berkeley stopped buying land. The company cited rising costs and increasing regulation.