Home Sales Forecasts Raised at Fitch Rating

In its latest research on the U.S. housing market, the ratings agency says:

In a slowly growing economy with somewhat diminished distressed home sales competition, less competitive rental cost alternatives, and new home inventories at historically low levels,single family housing starts should improve about 19%, while new home sales increase approximately 19.5% and existing home sales grow 8.5%. Further moderate improvement is forecast for 2013.

Fitch also raised its forecast for home prices, saying that average and median new home prices will both rise 3.2% in 2012 and 2.5% in 2013.

Of 13 U.S. homebuilders, Fitch rates only NVR Corp. (NYSE: NVR) as investment grade, with a ‘BBB+’ rating. Toll Brothers Inc. (NYSE: TOL) and MDC Holdings Inc. (NYSE: MDC) get a ‘BBB-’ rating from the agency, and Lennar Corp. (NYSE: LEN) nabs a ‘BB+’ rating. The lowest rating goes to Hovnanian Enterprises Inc. (NYSE: HOV) with a ‘CCC’ rating.

Fitch did not that ratings outlooks for all the publicly traded homebuilders except Hovnanian are ‘stable’ and D.R. Horton Inc. (NYSE: DHI) even gets a ‘positive’ outlook.

The Fitch report is available here.

Paul Ausick