Persimmon Plc, the U.K.'s third- largest homebuilder by volume, reported a full-year profit on an improving housing market and an absence of writedowns that pushed the company to a 2008 loss.

Net income was 74.1 million pounds ($110 million), or 24.5 pence a share, compared with a year-earlier loss of 625 million pounds, or 208.3 pence, the York, England-based company said today in a statement. Revenue fell 19 percent to 1.42 billion pounds. Home completions declined to 8,976 from 10,202.

"Prices have held firm since the beginning of the year and we remain focused on improving our operating margins and to profitably grow the business," Chairman John White said in the statement. "The business is well positioned both operationally and financially for a recovering market."

U.K. home prices fell 1 percent in February from January, the first decline in 10 months, partly because snow and the end of a temporary reduction in property-sales tax deterred buyers, mortgage lender Nationwide Building Society said Feb. 26.

Persimmon said the market remains "hampered" by a lack of mortgages for first-time buyers, with banks still demanding 25 percent down payments for newly built properties.

Mortgage approvals dropped in January by more than economists forecast to an eight-month low, adding to evidence that the housing-market recovery may be losing momentum, the Bank of England said yesterday. Home loans fell to 48,198 from 58,223 in December, the Bank said.

"The increased availability of mortgages throughout the year has had a major impact on the stabilization of the market," Persimmon said. "This still remains substantially lower than the historic average of about 92,000 approvals each month."

Eoin Treacy's view There remains considerable conjecture about the state of the UK housing market. Arguments range from the positive effect of low interest rates to the negative effects of future fiscal tightening and the continued fragility of the UK economy. Sentiment remains cautious to bearish and there remains an overhang of supply that is likely to weigh on any price increases over the medium-term. However, prices have stabilized.

The UK Nationwide House Prices Index has a great deal of back history and illustrates the lengthy convalescence experienced by the UK housing market following the 1989 peak. The initial decline from the peak was very sharp and the subsequent convalescence took years as excess supply was absorbed by the market. A similar pattern may now be unfolding.

The Index found support near £300,000 in May and would need to sustain a move below that level to lend credibility to the more bearish forecasts. If house prices are in the process of bottoming, this may be an opportune time to look at some of the surviving home builders.

Persimmon remains one of the better performers in the sector as it tests the upper side of the base near 400p. A sustained move back below that level would likely signal a lengthier period of base formation extension. Other shares in the sector such as Barratt Developments and Tailor Wimpey have been less volatile but share a similar pattern. Also see Comment of the Day on November 16th.