PREVIEW:UK housebuilders seen muted on outlook

By Lorraine Turner

LONDON, July 6 (Reuters) - British housebuilders will report stabilising sales and prices this week, but trading updates will be marked by a cautious tone and muted comment on the outlook as a dearth of mortgage lending continues to crimp momentum.

Positive data and trading updates kickstarted confidence in the sector in the first half, with shares in UK housebuilders .FTASX3720 rallying 10 percent, bouyed by home buyers trickling back to the market.

"We will hear a continuing trend of stabilisation on volumes but at a very low level, and a short-term stabilisation of prices," Mark Hughes, co-head of research at Panmure Gordon told Reuters.

"But any growth you are seeing, it's coming from an incredibly low level," he added.

Current commentary is likely to be positive said Andrew Gardner at MF Global, "although the housebuilders will probably sound quite frustrated with regards the outlook".

Robin Hardy, analyst at KBC Peel Hunt agreed that housebuilders "won't want to look forward" when they update the market as the rest of the year could pose more of a challenge to the builders. Banks continue to curb lending, and the onset of quieter summer trading as well as rapidly depleting stocks may hit volumes and prices further.

"In September, we may see things slip back again on a transactional side," said Hughes. "I do not buy that this is the bottom of the market on price, but I don't think we'll see a further major drop in volume," he added.

"H2 numbers could be very low indeed." said Hardy. "People will drift away from new build because they won't have the same level of stock," he added.