Fitch: U.S. Homebuilders Enjoying a Solid Spring So Far

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: U.S. Homebuilding/Construction: The Chalk Line (Spring 2016)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=878481

Steady order growth and strong backlogs should continue to support healthy financials for U.S. homebuilders for the remainder of the spring and beyond, according to Fitch Ratings in the latest edition of the 'Chalk Line'. Potential impediments include a slowing U.S. economy, volatile financial markets, and labor issues relating to cost and an adequate supply.

'Low oil prices, generally healthy employment growth and pent-up demand should help support the housing upturn for at least the next few months,' said Managing Director and lead homebuilding analyst Robert Curran.

Fitch is projecting single-family starts to expand about 11.5% in 2016 and multifamily volume to gain about 4%. New home sales should improve about 14.6%, while existing home sales rise 3%. Fitch expects the housing upcycle to continue in 2017. Fitch projects single-family starts to improve 10% as multifamily volume to grow 5.1%. Fitch also expects new and existing home sales to increase about 11.5% and 4%, respectively.

Fitch expects stable ratings for most issuers within the homebuilding sector during 2016, reflecting a continued, moderate cyclical improvement in overall construction activity. However, there is potential for a few positive outlooks and/or rating upgrades.

Fitch will provide a brief recap of the fourth-quarter 2015 (4Q'15) and comment on recent financial/operating results for the 1Q'16 and calendar years 2016 and 2017 during a teleconference to be held Wednesday, May 11, at 2:00 p.m. ET (separate press release to follow).

Fitch's latest 'U.S. Homebuilding: The Chalk Line - Quarterly Update: Spring 2016' includes the following key updates and new features:

--Homebuilders' quarterly growth trends and margin statistics for 4Q'15, excluding the impact of non-recurring, non-cash real estate charges, are provided.

--Liquidity analyses are updated and historical liquidity profiles are presented for perspective.

--Recovery ratings are detailed for four single B or lower rated homebuilding credits.

--Fitch is providing a first look at homebuilder 1Q'16 financial and operating results.

--We have included comments about the current spring selling season.

--Urban and suburban mobility trends are examined.

--Fitch notes that the NAR has published its updated vacation-home and investment home survey for 2015.

--Information on mortgage trends is provided.

--We note changing trends in purpose of construction and design of homes.

--Capital Economics' updated comments on home valuations are provided.

--The pace of housing recovery is depicted in cycles since the mid-1960s.

--Trends in household formations are juxtaposed with housing starts.

--Data shows new homes' share of the housing market continues to edge up.

--The inter-relationship between the economy, employment and housing is depicted.

--Construction employment and compensation is referenced.

--The availability of AD&C financing is profiled.

--There are also updated input on the Fed and interest rates, foreclosure statistics, metropolitan home prices, Fannie Mae and Freddie Mac, cash sales, national home pricing trends, jumbo loans, lumber and other materials prices, the FHFA, the FHA, credit scoring, regulator actions, labor shortages and costs, trends in homeownership rates, underwater homes, underwriting standards, owning vs. renting, the new FHFA principal modification program, and demographics.

--Fitch's economic and construction estimates for 2016 and initial projections for 2017 are provided.

The report is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available at 'www.fitchratings.com'

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View source version on businesswire.com: http://www.businesswire.com/news/home/20160510006402/en/

Fitch Ratings
Robert P. Curran
Managing Director
+1-212-908-0515
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY 10004
or
Robert Rulla
Director
+1-312-606-2311
or
Monica Delarosa
Associate Director
+1-212-908-0525
or
Media Relations:
Sandro Scenga, New York, +1 212-908-0278
Email: [email protected]

Source: Fitch Ratings

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