Fitch: Homebuilding to Get Boost From Falling Foreclosures

October 22, 2012

Homebuilders may benefit from the drop in distressed properties in recent months, which might spur greater activity in new-home construction, according to a new report by Fitch Ratings. 

Distressed home sales have hampered home prices the last few years. But with less competition from distressed home sales and rental prices, more home buyers may consider new homes, according to Fitch. 

Robert Curran, Fitch’s managing director of homebuilding, forecasts single-family housing starts to rise 19 percent in 2012, and existing-home sales to grow 8.5 percent this year. 

“However, we note that new home construction can be volatile as they fluctuate more frequently verses other [housing] indicators,” Curran says. “Although starts have been stronger for several months, we are hesitant to suggest that a V-shaped housing recovery is forming.” 

Last week, the Commerce Department reported new home construction increased 15 percent in September. 

Source: “Fewer Distressed Homes Could Spur Home Construction,” HousingWire (Oct. 19, 2012)