- Instrument: Persimmon Plc (PSN)
- Average Pattern Move: +56.71%
- Timeframe: March 23 – May 27
- Winning Percentage: 80%
Dear Investor,
You may have heard that the UK housing market is showing signs of recovery after a turbulent period. With mortgage rates stabilizing, wages growing, and home prices finding some footing, homebuilders are starting to regain confidence. Persimmon Plc, one of the UK’s largest developers, has reported stronger sales figures, signaling a potential turnaround. Given these dynamics, we want to analyze the data in more detail.
Persimmon’s Outlook: Cautious Optimism
According to Bloomberg Persimmon expects to increase housing completions to 11,500 this year, up from 10,664 in 2024, driven by a stronger sales rate of 0.67 per site, a 14% increase from the previous year. Moreover, private sales prices have risen by 3% to an average of £288,542, and the company’s forward order book has jumped 27% year-on-year to £1.15 billion. These are promising signals that demand is returning, even if supply remains constrained.
Interest rate expectations also play a key role in this recovery. The potential for rate cuts later in the year could further support housing affordability, encouraging more buyers into the market. However, Persimmon’s current completion rate remains well below pre-pandemic levels of 14,500 homes in 2021, illustrating that while the market is recovering, there is still a long road ahead.
Seasonality: The FTSE Homebuilder Advantage
The chart below shows that Persimmon shares tend to perform exceptionally well from late March through May. Over the past 15 years, the stock has posted an average annualized return of +56.71% during this period, with an impressive 80% win rate and an 8.36% average return. This seasonal pattern suggests that, historically, investors have anticipated stronger demand and improved financial performance for homebuilders around this time of year.
Persimmon’s stock has already seen a 5.6% gain in early London trading, indicating that market sentiment is shifting. Given the stock’s strong seasonal bias, investors may be positioning ahead of further potential upside.
Technical Perspective
There is a potential daily trend line marked below which could provide potential support for buyers and an area for stops underneath the big round number of 1000.
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Trade risks
While Persimmon’s outlook is improving, risks remain. The company’s success is highly dependent on macroeconomic conditions, particularly interest rates and wage growth. If inflation remains sticky and the Bank of England delays expected rate cuts, affordability concerns could re-emerge. Furthermore, any policy shifts in housing regulations or supply constraints could limit growth potential in the sector.
Don’t Just Trade It – Seasonax It!
