Fitch Cautiously Optimistic on Home Prices; Real Prices Remain Overvalued

NEW YORK--()--Fitch Ratings believes that the recent home price growth is being driven more by technical factors than fundamentals. For this reason, the agency's sustainable price projection is more somber than that observed by current market trends. However, Fitch believes that the price growth trends in certain locations are indeed supported by fundamentals and the agency's view is more positive.

Fitch's sustainable market value decline (sMVD) forecast for the U.S. has increased to approximately 10.0% this quarter, which reflects the agency's view that real prices remain overvalued. From a regional perspective, Fitch's projections for home price movement trajectories widely vary with many of the hardest hit markets at or below sustainable values and posting impressive recoveries.

While in real terms Fitch projects that national prices are 10% overvalued, in an expected scenario, the agency believes that nominal prices are roughly 2% above sustainable levels nationally as inflation and a stronger economic recovery push prices higher.

Fitch's latest report, 'U.S. RMBS 2Q2012 Sustainable Home Price Projection, is available at 'www.fitchratings.com' or by clicking on the above link.

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

Applicable Criteria and Related Research: U.S. RMBS 2Q12 Sustainable Home Price Projection

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=697778

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.

Contacts

Fitch Inc.
Stefan Hilts, 1-212-908-9137
Director
or
Suzanne Mistretta, 1-212-908-0639
Senior Director
or
Rui Pereira, 1-212-908-0766
Managing Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com

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Contacts

Fitch Inc.
Stefan Hilts, 1-212-908-9137
Director
or
Suzanne Mistretta, 1-212-908-0639
Senior Director
or
Rui Pereira, 1-212-908-0766
Managing Director
or
Media Relations
Sandro Scenga, +1-212-908-0278
sandro.scenga@fitchratings.com