Fitch: U.S. Single-Family Housing Starts to Drop Over 7% by Year's End

NEW YORK--(BUSINESS WIRE)--Continued weak and disappointing macroeconomic statistics all but ensure a decline in U.S. housing metrics by year's end, though 2012 may bring slightly better news for the sector, according to Fitch Ratings in the latest edition of 'Chalk Line'.

'The seasonal pickup in the spring orders did little to improve hopes of increased profits for the full year for public builders,' said Managing Director and lead Homebuilding analyst Robert Curran. In any case, builders by and large will be unprofitable in the second quarter (excluding non-cash real estate charges) with revenues trailing a year ago.

'If the economy continues its lackluster advance and rate of jobs added, new home sales may decline by 4.7% this year,' said Curran. Conversely, 2012 housing metrics may show modest improvement off a very low bottom. This comes amid a somewhat stronger economy with slightly lesser distressed home sales competition and less competitive rental cost alternatives, but modestly higher mortgage rates.

Additional projections for this year and 2012 are:

--Single-family starts of 436,000, down 7.4% in 2011:
--Starts up 11.9% in 2012.

--New home sales of 307,000, off 4.7% in 2011;
--Sales up 15% in 2012.

--Existing home sales of 4.81 million, down 2% in 2011;
--Existing sales up 4% in 2012.

Fitch will provide a brief recap of first quarter 2011 (1Q'11) as well as discuss the outlook for the balance of 2011 during a teleconference to be held on Monday, July 18, 2011 at 11:00 a.m. ET (separate press release to follow).

Fitch's latest 'U.S. Homebuilding: The Chalk Line - Quarterly Update: Summer 2011' includes the following key updates and new features:

--Homebuilders' quarterly growth trends and margin statistics for 1Q'11, excluding the impact of non-recurring, non-cash real estate charges, are provided as is information about the calendar first quarter and fiscal year-to-date option write-offs and land value write-downs;
--Current builder margin trends are reviewed;
--Liquidity analyses are updated and historical liquidity profiles are presented for perspective;
-- Recovery ratings are detailed for five single B or lower rated homebuilding credits;
--Corporate governance profiles are supplied for each of the 13 companies monitored;
--Proposed and new housing related regulations are discussed;
--The relative import of new construction to the total housing market is examined;
--Various foreclosure statistics and related data are updated and a summary of historical foreclosure filings is presented;
--New comments on home pricing, Fannie Mae/Freddie Mac, rent vs. buy decisions, tightening credit standards, strategic defaults, covered bonds and Chinese drywall;
--Fitch's economic and construction forecasts for 2011 have been updated and 2012 forecasts have been introduced.

Additional information is available at 'www.fitchratings.com'

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.