Homebuilders Face More Tough Times in 2009

Homebuilders have had a rough 2008, with revenues down nearly 40 percent in the first nine months of the year. Figures due out this week for November existing and new home sales are expected to show a further slide in the housing market.

And now, in a 15-page outlook report for 2009, Fitch Ratings says the tough times are far from over.

As weak as housing has been, it could deteriorate further, influenced in particular by job losses, fear of job loss, poor consumer confidence and lack of income growth or possibly income contraction…Fitch concludes that operational and financial pressures will persist and probably intensify for the public homebuilders during 2009.

The ratings agency has lowered its credit ratings for most of the homebuilders, including Beazer Homes USA (NYSE:BZH), Centex Corp. (NYSE:CTX), D.R. Horton Inc. (NYSE:DHI) , KB Home (NYSE:KBH), Lennar Corp. (NYSE:LEN) and Toll Brothers Inc. (NYSE:TOL).

Even with the promise of a housing stimulus program from Congress in early 2009 aimed at forestalling foreclosures, Fitch says any such actions would be unlikely to stabilize or boost housing demand until late 2009 or even later.

For details, see “U.S. Homebuilding 2009 Outlook: First Housing, Now the Economy: The Housing Downturn Extends into its Fourth Year.”

Comments

[Robert Nabloid:]

A video that might be interesting to watch and has to do with how Sub-prime was only half the problem... the rest is coming in 2009/10/11. Watch the graph (at about halfway through): www.cbsnews.com/video/...

2008 Dec 22 07:33 PM

[SteveD64:]

The big public homebuilders are dinosaurs.....they are ill suited to being a public company...better off going private...

Their biggest danger is that they have no moat around their business....the small local/regional homebuilders will run circles around them in the future.

They simply can no longer compete in the forseeable future

2008 Dec 23 08:24 AM

[Guero:]

Steve, right on the mark...running a public, national builder is like herding cats......each region is different in style, regs, costs, market, etc etc.

Only thing is, the big national builders are almost the only ones with any cash built up to attempt to ride out 09.

2008 Dec 23 11:30 AM