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Fitch: U.S. homebuilders primed for a solid spring

 

NEW YORK – Feb. 5, 2016 – Steady order growth and strong backlogs should support healthy financials for the U.S. homebuilding sector entering the pivotal spring selling season, according to Fitch Ratings in the latest edition of the "Chalk Line."

The weak Chinese economy, volatile financial markets and an adequate, reasonable cost labor supply are potential impediments, according to the report.

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," says 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 percent and multifamily volume gained about 11.5 percent. New home sales improved about 14.6 percent, while existing home sales rose approximately 6.5 percent.

The upcycle for housing should continue in 2016. Fitch projects single-family starts to improve 11.5 percent as multifamily volume grows approximately 6 percent. Fitch also expects new and existing home sales to increase about 14.5 percent and 4 percent, 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 also potential for a few positive outlooks and/or rating upgrades.

© 2016 Florida Realtors®

 

Related Topics: Economy