Midlands housebuilder Taylor Woodrow said it would meet profits forecasts after reporting "encouraging signs of recovery" in its UK market.

Solihull-based Woodrow endured a sharp fall in profits in the UK last year but yesterday said it had seen an improvement in visitor rates and reservations per site since then.

The company, which also has a sizeable North American business, completed 5,052 homes in the first half, broadly similar to last year's figure.

The group's housing order book was up two per cent to £1.62 billion while it said it also increased the size of its landbank by two per cent to 76,771 plots.

Woodrow said first half profits were anticipated to be in line with expectations, but slightly below the levels of a year earlier because of the impact of delays in receiving habitation certificates in some US markets.

Home completions in the US were down nine per cent at 1,512 as a result, although the division will still a record first half performance, Woodrow added.

The slip in profits also reflects guidance from the company in February that margins in the UK will be similar to those seen in the second half of 2005.

It has also seen a £2,000 fall in its average selling price, which reflects a higher proportion of social housing completions.

The company added: "The UK market has shown some encouraging signs of recovery in the first half, with our sites seeing improvements in both visitor rates and reservations per site per week."

Woodrow's domestic business posted profits of £233.4 million in 2005, against £301.1 million in 2004 when conditions were more favourable.

Work in the Midlands includes a new stage on The Crescent development on the old cricket ground in Lichfield.

Woodrow is also building 24 detached homes in Redhill Gardens, West Heath, Birmingham, and a range of new-build apartments in Stourbridge High Street.

It has also recently embarked on a combination of new homes and refurbishments on a 26-acre site at Diglis which is along the Worcester canal basin.

Persimmon, Redrow and George Wimpey have already forecast growth over the rest of the year, while estate agency group Countrywide reported its busiest ever June and property group Rightmove also said trading had been positive.

And Woodrow echoed the comments of Wimpey when it said it had seen market softening in some American markets, in particular Arizona, California and Florida.

Chief executive Iain Napier declined to offer a forecast beyond the half year point for its US operations, only saying that first half results are expected to be in line with expectations.

Market conditions in Arizona, California and Florida were particularly poor in the firm's North American sector, which has provided half of the group's operating profit for the six months to June 30.

He said: "We're unable to comment on the outlook for the US, and we'll have to wait until the selling season in October before we can. There has been a softening of the market and we're not immune to that."

The company said US completions were down nine per cent to 1,512 but an improved operating margin of 17.5 per cent was predicted.

That should be enough for the North American business to deliver a record first half performance, Woodrow, valued at around £2 billion, has underperformed the UK housebuilding sector by around 16 per cent over the past 12 months.

"In our view, this represents a good performance in light of increasingly challenging conditions in the North American housing market," Bridgewell Securities said in a note.

The company is expected by analysts to report £390.6 million in pretax profit for the year to the end of December on a revenue of £3.4 billion.