Fitch: U.S. Homebuilders Primed for a Solid Spring

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: U.S. Homebuilding/Construction: The Chalk Line (Winter 2015/2016)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=876044

Steady order growth and strong backlogs should support healthy financials for the U.S. homebuilding sector entering the always pivotal spring selling season, according to Fitch Ratings in the latest edition of the 'Chalk Line'.

Contagion from the weak Chinese economy influencing the U.S. economy, volatile financial markets, and an adequate, reasonable cost labor supply are potential impediments. That said, 'Low oil prices, robust employment growth, pent-up demand and steep rent increases should help support the housing upturn for at least the next six-to-12 months,' said Managing Director and lead homebuilding analyst Robert Curran. 'Additionally, the continued moderate easing in credit standards is enticing more first-time homebuyers to enter the market.'

In 2015, single-family starts expanded about 10.8% and multifamily volume gained about 11.5%. New home sales improved about 14.6%, while existing home sales rose approximately 6.5%. The upcycle for housing should continue in 2016. Fitch projects single-family starts to improve 11.5% as multifamily volume grows approximately 6%. Fitch also expects new and existing home sales to increase about 14.5% 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 third-quarter 2015 (3Q'15) and comment on recent financial/operating results and expectations for the 4Q'15 and calendar years 2015 and 2016 during a teleconference to be held Friday, Feb. 5, at 2:00 p.m. ET (separate press release to follow). Fitch's latest 'U.S. Homebuilding: The Chalk Line - Quarterly Update: Winter 2015/2016' includes the following key updates and new features:

--Homebuilders' quarterly growth trends and margin statistics for 3Q'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;

--A first look at homebuilder 4Q'15 financial and operating results;

--A preview into the upcoming spring selling season;

--The variability of housing markets during this recovery and past recoveries is discussed;

--The FHA's recent accomplishments and challenges are examined;

--Information on the cost of constructing a single-family home is updated for 2015;

--New housing legislation is referenced;

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

--RealtyTrac's recent rental affordability analysis, which shows that buying is still more affordable than renting, is summarized;

--We update previous commentary on the continuing trend of young adults living with their parents;

--Organizational (debt) structured for each homebuilder are provided.

--There are also updated comments on the Fed and interest rates, foreclosure statistics, metropolitan home prices, housing related regulations, owning versus renting, cash sales, national home pricing trends, jumbo loans, lumber and other materials prices, underwriting standards, underwater homes, demographics, the FHFA, FHA, credit scoring, regulator actions, housing legislation, trends in homeownership rates, joint mortgage bond program of Fannie and Freddie, labor shortages and costs, and demographics.

--Fitch's economic and construction estimates for 2015 and forecasts for 2016 have been updated.

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/20160204005901/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, +1 212-908-0278
[email protected]

Source: Fitch Ratings

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