In the News – Fitch: U.S. Homebuilders to Continue to Hit Stride in 2017

In the News – Fitch: U.S. Homebuilders to Continue to Hit Stride in 2017

The U.S. homebuilding sector is in the midst of a multi-year expansion that will enter the mid-to-late innings in 2017, according to Fitch Ratings in its 2017 outlook report.

Housing stands to benefit from a mildly expanding economy in 2017, with more of the help coming from a somewhat different segment of homebuyers, according to Director Robert Rulla. “We’re likely to see first-time and entry level buyers continue to represent a higher portion of home purchases, which should drive further gains in housing in the next few years,” said Rulla.

Fitch projects revenues to grow between 8%-10% for its rated homebuilders next year thanks in part to increased home closings and, to a lesser extent, slightly higher home prices. Margins, however, will remain pressured by greater land and labor construction costs. Affordability will continue to erode, particularly as home prices rise slowly and interest rates head higher in 2017. “Most homebuilders are introducing new products and are repositioning communities to target the growing first-time/entry-level buyers and also address affordability issues,” said Rulla.

Fitch expects stable ratings for most of its rated homebuilders in 2017. That said, Fitch could revise the sector outlook to negative if demand for housing stalls. Conversely, should the housing market recovery accelerate and is maintained for an extended period, Fitch would consider revising the sector outlook to positive.

Fitch’s ‘2017 Outlook: U.S. Housing and Homebuilders’ report is available at ‘www.fitchratings.com‘ or by clicking on the above link.

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

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