Fitch Expects Slower than Usual Recovery of Housing Sector

With major new home metrics leveling off from fresh lows, the long-awaited bottom in U.S. housing may finally be in sight, according to Fitch Ratings.

‘Single family housing starts and new home sales seem to be indicating a trough, albeit at very low levels absolutely and by historical comparisons,’ said Managing Director and lead home building analyst Bob Curran. ‘The early stages of this recovery may be more muted than average recoveries of the past.’

The first year of a recovery tends to reflect a sharp upward thrust indemand. However, following an untypical expansion and then untypical correction, Fitch anticipates that the early stages of this recovery may be more muted than the average.

This is reflected in Fitch’s full-year forecasts for 2009 and initial forecasts for 2010. In addition, if the forecasts are correct, despite having fewer competitors builders will continue to be challenged and need to maintain tight controls over costs and expenses during the balance of this year and in 2010.

“If updated forecasts for 2009 and initial forecasts for 2010 are correct, public builders will continue to be challenged and need to maintain tight controls over costs and expenses during the balance of 2009 and next year despite having fewer competitors.” Fitch says.

For details see U.S. Homebuilding: The Chalk Line - Quarterly Update: Summer 2009.

Comments

[Dave Wrixon:]

Do the words Inventory or Foreclosue mean anything to these guys?

Jul 16 02:40 PM

[LilBob:]

Real Estate can no longer effectively be discussed as a single market. Real Estate will level off for a period, but then start to decline again in one sector as Baby-Boomers try to sell off their homes and move into tiny "green retirement," bungalows and town-houses which are expected to become the next hot thing in real estate in the coastal states. Tiny, energy-efficient homes with single-floor layouts are going to appreciate considerably in price-as measured by a $/sq-ft. metric-over the course of the next ten years while Suburban McMansions will continue their inexorable decline.

Jul 16 04:29 PM

[cebu sun:]

Fitch?/ Yeah they are real credible. Weren't they (as Moodys and s&P) guilty- or about to be found guilty of fraud and taking money for grading crap AAA?

Jul 18 12:09 AM

[Research Recap:]

Thanks for your comments. At Research Recap we strive to accurately convey the key findings of the research we feature. Therefore, this is not RR's view, but a summary of Fitch's views.
The role of the ratings agencies in the financial crisis is well known, so readers will no doubt make their own judgments about how much store to place in their research.


On Jul 17 02:36 PM WAKEUP wrote:

> "With major new home metrics leveling off from fresh lows, the long-awaited
> bottom in U.S. housing may finally be in sight, according to Fitch
> Ratings." ENGLISH TRANSLATION: The "new" metrics have come to rest
> (for now) at some really bad levels. We (Research Recap) are (arbitrarily)
> taking the view that these really bad levels are about as bad as
> it is going to get, even if we have to distort Fitch's actual report
> to do so. Furthermore, we (Research Recap) are telling you, gentle
> readers, that this skewed interpretation of Fitch's report means
> that the bottom in U.S. housing MAY BE IN SIGHT. How far ahead?,
> you ask. Well, we're not really all that sure, about THAT. What we
> ARE sure of, though, is that we are trying ANYTHING AND EVERYTHING
> we can think of to make it SEEM as though the bottom is getting closer;
> we are selecting our words toward that end, because we liked things
> a lot better, when real estate was rosy, and we want things to return
> to that condition, as soon as we can cause this to happen.

Jul 23 01:12 PM