Fitch: Solid Spring for U.S. Home Builders

Fitch Ratings, New York, said steady order growth and strong backlogs should continue to support healthy financials for U.S. home builders for the remainder of the spring and beyond.

“Low oil prices, generally healthy employment growth and pent-up demand should help support the housing upturn for at least the next few months,” said Fitch Managing Director and lead home building analyst Robert Curran.

Fitch projects single-family starts to expand by 11.5 percent in 2016, with multifamily volume to gain by 4 percent. New home sales should improve by 14.6 percent, while existing home sales rise 3 percent.

The Mortgage Bankers Association will release its April Builder Applications Survey this Friday, May 13. Last month, the BAS reported mortgage applications for new home purchases increased by 17 percent in March from February. MBA estimated new single-family home sales ran at a seasonally adjusted annual rate of 574,000 units in March, an increase of 5.5 percent from February (544,000 units). On an unadjusted basis, MBA estimated 54,000 new home sales in March, an increase of 14.9 percent from 47,000 new home sales in February.

Fitch said it expects the housing upcycle to continue in 2017. Fitch projects single-family starts to improve 10 percent as multifamily volume to grow by 5.1 percent. Fitch also expects new and existing home sales to increase by 11.5 percent and 4 percent, respectively.

Curran said potential impediments include a slowing U.S. economy, volatile financial markets and labor issues relating to cost and an adequate supply.