Housebuilder warns of falling margins because of use of incentives but says business has picked up since January.

Housebuilder McCarthy & Stone has reported a 3% rise in average selling prices for its homes, despite a 5% fall in sales for the first half of the year.

In a trading update released this morning, McCarthy & Stone revealed that it had sold 753 units in the six months to 28 February, down from 792 in the same period last year.

Average selling prices, however, were up 3% to £170,900 from £165,400 a year earlier. Net borrowings at the firm plummeted to £5m from £20.2m in the previous year.

McCarthy & Stone is now carrying forward 493 reservations, up from 403 last year.

It warned, however, that in its interim accounts for the period, due on 25 April, sales margins would be down because of the use of sales allowances and incentives for buyers.

It said: "While trading conditions have improved since mid-January it is too early to assess how the market will develop over the full financial year."