Housing Bubble
Fitch: U.S. homebuilders in position to outperform again in 2003
February 27, 2003
Homebuilding and construction should continue to outperform for the remainder of 2003, according to a new quarterly report by Fitch Ratings.
'In general, the major public homebuilders are well positioned to grow market share in 2003,' said Robert Curran, Senior Director, Fitch Ratings. 'Most of the public homebuilders are capable of boosting revenues and profits this year and should be able to maintain or enhance their credit statistics as well.'
Taking into account the economic forecast for 2003, including a sluggish, war-affected first half and then moderately higher mortgage rates, employment growth, stronger income, rising consumer confidence and, of course, favorable demographics, housing should continue to be healthy although slightly weaker than in 2002.
It now appears that most measures of on-site residential construction could be up slightly. Public construction expenditures should improve by about 2 percent.
Residential alteration and repair spending is expected to grown 4.5 percent in 2003 as a result of the late 2001 and 2002 refinance surge.
Public construction should grow modestly in 2003. Private non-residential construction could be up a few percentage points following very sharp declines in 2002. The rise in non-residential and public spending should offset a modest decline in expenditures from residential construction.
While delinquencies and repossessions have edged down, Fitch is concerned with the steady liberalization of credit standards on mortgages. Credit worthiness of buyers eroded in 2002 but not significantly enough to create a serious threat. Fitch is sensitive to concerns about the increasingly liberal lending standards of recent years. If the economy dips again this could become more of a problem. The generally steady rise in mortgage delinquencies and foreclosures bears witness to the liberalization of standards as does the moderate rise in loans with LTVs in excess of 97 percent
Source: Fitch Ratings
