Persimmon, the UK's largest housebuilder, warned today that the housing market was deteriorating faster than expected, with the sales decline accelerating in the last three weeks.

In an update ahead of its annual shareholder meeting, Persimmon said it had suspended construction work on new sites until the mortgage market improved.

It said that during the last three weeks, the ‘unprecedented tightening’ in the mortgage market had led to lower sales volumes and increased cancellation rates, and predicted its revenues would fall by almost a quarter this year.

Unprecedented tightening

'Over the last three weeks the unprecedented tightening in the mortgage market has caused a further deterioration of the housing market leading to lower sales volumes and increased cancellation rates,’ it said.

‘At the same time, the backdrop of extensively reported concerns about the global credit crisis have continued to undermine consumer confidence.’

Down 24%

Persimmon said total sales revenue for 2008 was currently about £1.37bn, down 24% from £1.8 billion last year.

Shares in Persimmon tumbled 8% this morning, dragging down other housebuilders and housing-related stocks including retailers, estate agents and building materials groups.

Concerns about the housing market have intensified this week. The British Bankers’ Association warned on Wednesday that UK mortgage approvals fell to the lowest level in a decade last month, while Merrill Lynch said housebuilders were entering a new and ‘potentially’ volatile period.