Cairn Homes said it expects total build cost inflation - including infrastructure, materials and labour - of about 6% for this year but reiterated its full year guidance.
In a trading update ahead of its AGM in Dublin today, the company said the build cost inflation outlook is uncertain.
But it added that it anticipates it will remain at elevated levels over the coming months mainly as a result of energy cost volatility.
Cairn Homes said that recognising the impact of recent rises in the cost of living, it has introduced cost of living increases for employees in line with forecasts.
The home builder said that demand for its "energy efficient, quality built new homes" from its broad and widening customer base has sustained and is the strongest the company has experienced to date.
It said it is expecting turnover of more than €600m from 1,500 closed new homes sales with about 1,300 of these forecast sales already closed or or sale agreed.
The company said it continues to collaborate with the State on the delivery of social and affordable housing initiatives and are in the middle of finalising two significant partnerships with state agencies.
Cairn Homes today reiterated its guidance for the year and said it expects to deliver €100m in operating profits, which will deliver an operating margin of about 16.5%.
It also said that shareholder returns for the year will amount to a minimum of €115m through both ordinary dividends and share buybacks.
The company said its medium term targets are to build up to 5,500 new homes and generate in excess of €500m in operating cashflow in the three year period to the end of 2024, while also growing its return on equity (ROE) to 15%.