Housing Bubble

Fitch: U.S. housing/homebuilders still positively influencing economy

June 17, 2003

NEW YORK--(BUSINESS WIRE)-- U.S. Housing continued to have better than expected results and solid performance so far in 2003, according to a new report by Fitch Ratings. Despite moderately lower residential construction activity for the full year, Fitch does anticipate further growth in builder profits and cash flows.

'For the most part, public homebuilders continued to report very healthy revenue, margin and profitability gains in the March 2003 quarter,' says Robert Curran, Senior Director, Fitch Ratings. 'In general, return ratios were similar to a year ago, while credit ratios continued their steady improvement.'

Fitch believes during the coming decade the homebuilding sector should continue to prosper due to demographic trends and reasonable housing affordability. The advantages of the major homebuilders should continue to be evident: cheaper access to capital, better access to labor and restricted land supplies, buying efficiencies, product flexibility and some technological benefits.

Housing in the aggregate (starts, completions, new and existing home sales) were all higher in 2002 and so far in 2003. Taking into account a somewhat stronger economy later in 2003, these metrics could be a bit softer for the full twelve months as interest rates finally start to move up according to Fitch.

There have been some concerns about the levels of speculative housing and high single family start and permit levels, but Fitch does not view these issues as meaningful.

Along with updated company specific and industry data that Fitch provides every quarter the Spring Chalk Line also includes new information on company rankings in 2002 and related information nationally and on a metropolitan markets basis, more state and metropolitan market information, as well as special analysis of historical speculative housing data.

The new report titled 'Homebuilding/Construction: The Chalk Line - Quarterly Update: Spring 2003' is available on Fitch's web site.

Source: Fitch