Housebuilder Crest Nicholson's shares tumbled more than 13% after warning its operating margin has been squeezed by rising building costs.
The FTSE 250 company, which builds homes primarily in London and the South East, had expected operating margins of 18-20%.
"The experience of generally flat pricing against a backdrop of continuing build cost inflation at 3-4% will mean that operating margins for the full year are expected to be around 18%," the company said.
Homes priced at more than £1m are proving more difficult to shift because of a slow second-hand market, the company said.
Crest said average selling prices of its properties rose 5% to £439,000 in the first half of its current fiscal year and this is "expected to represent a peak level for the business".
Earlier this year, the company posted a 6% rise in pre-tax profit but warned price growth was weaker in central London due to higher rates of stamp duty.
It also said a shortage of skilled labour and a weaker pound following Britain's decision to leave the European Union was likely to increase the cost of imported materials.