Bellway Plc is the latest UK housebuilder to say it plans to cut jobs as stubbornly high mortgage rates weigh on demand for new homes.

The developer said it was taking steps to reduce headcount across the firm as it navigates a housing slump and an uncertain economic outlook, Bellway said in a statement Wednesday. The homebuilder said its weekly reservation rate had dropped by 28% in the year through July compared with the previous year, a sign of declining demand for its homes.

“The backdrop of macroeconomic uncertainty and cost of living pressures affected consumer demand during the year,” Chief Executive Officer Jason Honeyman said in the statement. “Given affordability remains constrained by higher mortgage interest rates, underlying trading conditions are likely to remain challenging in the near term.”

UK households are facing an avalanche of cost pressures triggered by rising interest rates and the worst cost-of-living crisis in a generation. Key mortgage rates soared above 6% again this summer, and homebuilders including Ballymore Properties and Vistry Group Plc have already said they’re planning to cut staff numbers.

Still, Bellway said build cost inflation had softened slightly in the first half of the year after a long period of persistence and the firm expects cost pressures to moderate in coming months.

Bellway said its cancellation rate in the year — an early indicator of distress in the housing market — was 18%, compared with 13% in the same period a year earlier. The group contracted to purchase fewer than 5,000 plots of land in the period, compared with almost 20,000 a year earlier.

What Bloomberg Intelligence Says:

“Though Bellway’s trading update points to a resilient fiscal 2023, it paints a dire picture for 2024. Shrinking forward sales and weekly reservations may “materially” cut next year’s completions, with the average selling price also seen declining on more affordable homes.”

- Iwona Hovenko, BI senior industry analyst

The homebuilder fell as much as 2.2% in early morning London trading and was down 0.9% at 9:33 a.m.

“In the current financial year, given the level of the order book and prevailing low reservation rates, legal completions are expected to decrease materially,” Bellway said in the statement. “We remain focused on maintaining the group’s strong cost control disciplines and balance sheet resilience.”

(Updates with an analyst comment in the seventh paragraph and share price movement in the eighth paragraph.)