The Barratt Developments (LSE: BDEV) share price has fallen 2.95% after this morning’s buying and selling replace, however I feel the market has been too downbeat.

The FTSE 100 housebuilder delivered some excellent news in its replace for the yr to 30 June, with adjusted revenue earlier than tax “slightly ahead of our previous expectations”. But buyers most popular to concentrate on the negatives.

There have been a couple of of these, with CEO David Thomas bemoaning “another year of economic and political uncertainty”. Whole residence completions have been on the higher finish of the group’s full-year 2024 steering vary at 14,004, however this was nonetheless properly down on final yr’s 17,206. In 2025, they’ll slip to between 13,000 and 13,500, together with 600 joint ventures.

FTSE 100 earnings hope

This could’t have come as a shock to buyers, with fellow FTSE 100 housebuilder Taylor Wimpey reporting a pointy drop in completions as greater rates of interest drive up prices and deter consumers.

Barratt’s whole ahead gross sales additionally fell, from 8,995 properties in 2023 to 7,239, in keeping with expectations. Measured by worth, that’s a 14% drop from £2.22bn to £1.91bn.

But issues appear like they’re selecting up, with the typical weekly internet personal reservation fee up 5.5% to 0.58.

The final decade has been arduous on housebuilders usually, due to Brexit, the pandemic and cost-of-living disaster. Final yr, I loaded up on Taylor Wimpey shares, as I assumed the sector would get well as rates of interest peaked.

We’re nonetheless ready for that first fee minimize however the shares are up 50% in 12 months. Barratt’s trailing considerably with progress of twenty-two%. That’s nonetheless fairly good although.

I wish to diversify and I’m questioning if Barratt now has a chance to play catch-up. It appears good worth, with a trailing price-to-earnings (P/E) ratio of seven.03. Nevertheless, the ahead P/E isn’t so engaging, at 20.5 occasions earnings.

I received’t purchase it at present

It’s an identical story with the dividend yield. On a trailing foundation, the inventory seems to supply earnings of seven%. But the ahead yield for 2024 is simply 3.03%. It’s forecast to climb to three.9% in 2025, however with Taylor Wimpey yielding greater than 6%, I really feel like I’ve backed the correct horse.

Barratt’s proposed tie-up with FTSE 250 housebuilder Redrow ought to carry scale and synergies if accepted by competitors authorities. We should always know subsequent month. If it isn’t, the shares might take successful.

It has a powerful steadiness sheet place with year-end internet money of round £865m. That’s down barely from final yr’s £1.07bn, however as Thomas put it, that “positions us well as land market activity increases”.

The group ought to profit from PM Keir Starmer’s plans to “bulldoze through” planning legal guidelines to construct 1.5m properties in 5 years. Even when Labour doesn’t hit that focus on this could generate lots of exercise. There’s a hazard that elevated property provide might suppress promoting costs, however I’m not too involved given at present’s shortages.

With the financial system more likely to choose up, and analysts forecasting Barratt gross sales will bounce from £4.13bn in 2024 to £4.39bn in 2025,ni assume there’s a strong Purchase case to think about right here. But I nonetheless favour Taylor Wimpey. It’s cheaper at 15.2 occasions trailings earnings and yields extra.