Housebuilder’s Berkeley Group (LON: BKG) and Taylor Wimpey (LON: TW.) dipped in Tuesday’s session despite Morgan Stanley analyst Cedar Ekblom slightly improving his outlook on the sector…

Yet, it’s not a significant improvement, with the analyst saying the firm believes the backdrop for the UK building and construction industry is now “bad” rather than “dire.”

In his note to clients, Ekblom cut Berkeley Group shares to Underweight from Equal Weight, lowering the firm’s price target on the stock to 3,667p from 3,715p.

Despite his slightly improved outlook, Ekblom states that the sector continues to stumble from a lack of share catalysts, and it is difficult to make a valuation case for Berkeley following the stock’s outperformance.

Berkeley shares are up more than 18% in the last three months.

On Taylor Wimpey, Ekblom upgraded the stock to Equal Weight from Underweight, raising the price target to 114p from 85p. Taylor Wimpey shares have rallied more than 24% in the last three months.

Despite Morgan Stanley’s view of the sector, it was reported on Tuesday that UK housing activity is “slowing rapidly.”

The Reuters headline followed data that showed mortgage approvals in the UK declined in December to levels seen during the global financial crisis, something Reuters said is a “further indication that the housing market is slowing much faster than the consensus predicted.”

The data showed 35,612 mortgages were approved in the UK last month, compared with 46,186 in November.