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Housebuilder Taylor Wimpey has said it expects the UK housing market to remain "subdued" into next year.

In a trading update the company said that while prices had remained stable in the second-half to date, both visitor and reservation levels had dropped in the wake of the recent turbulence in the financial markets.

Meanwhile in North America, where rising default levels in the US sub-prime mortgage market first prompted the global credit crunch responsible for the financial turmoil, Taylor Wimpey said both prices and sales volumes had continued to fall.

The housebuilder stressed that market conditions in the US had deteriorated "significantly" over the past two months, a development it attributed to the difficulties in the country's mortgage industry and a low level of consumer confidence.

It added that heavy discounting by its competitors had led to further price falls in many markets and a cancellation rate of 30 per cent within its North American business over the third quarter.

But back in the UK Taylor Wimpey says it is confident of delivering an operating margin of 14 per cent for 2007, with the company stressing that it has continued to focus on improving profitability rather than volume over the past three months.

However home completion volumes for the year are still expected to be around five per cent below last year.

"In the UK we anticipate that market conditions will remain subdued into the New Year," warned Taylor Wimpey, created following a merger between Taylor Woodrow and George Wimpey.

"However, long term supply constraints in the UK continue to provide support to the market and our strong progress on integration will assist our drive for relative margin improvement," the company added.