Although still healthy by historic standards, U.S. home-building metrics should be somewhat less robust during the balance of 2005 and probably into 2006, according to Fitch Ratings.
While the U.S. home-building sector remains a powerful stimulant for the U.S. economy so far through this year, with new peaks likely for housing starts and new- and existing-home sales, home refinancing activity has not been as robust this year, the ratings agency said.
“While it appears quite unlikely that housing will deteriorate meaningfully during the next year or so, housing demand is also unlikely to improve over the next 12 to 15 months,” said Robert P. Curran, senior director and primary home-building analyst, Fitch Ratings.
From a credit perspective, public home builders will likely maintain their financial ratio discipline well into next year, with most companies improving their credit statistics during the first half of 2005, according to Fitch. “Home builders in general are keenly focused on at least maintaining, if not, improving their debt ratings and have a large amount of discretion in managing their capital structures,” said Curran.
The huge gains in home prices in recent years have prompted concern that a national housing price bubble is occurring. If a bubble exists, home prices in some metropolitan markets could be at risk if their economies falter.
Fitch will be discussing the sector in more detail during a teleconference to be held on Friday, Oct. 7 at 11 a.m. EDT.
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