Industry News

Housing market remains green for home builders

National analysis identifies problems in some local markets
Published on Oct 10, 2005

Major public home builders are positioned for continuing growth in market share and profitability, and the industry "should continue to prosper" for the next decade, a global ratings agency reports in its fall 2005 report on the home-building and construction industries. But no analysis of the housing market is complete without a caveat, and in this case it's the uncertain future of interest rates, the dangers of loose lending practices, and the escalation of home prices, according to the Fitch Ratings report, "U.S. Homebuilding/Construction: The Chalk Line – Quarterly Update Fall 2005." Home builder stocks "continue to be relatively volatile, principally because of fears that with the Fed steadily raising short-term interest rates, mortgage rates will follow, and that will lead to diminished housing demand." Fitch analysts are also "sensitive to concerns that the liberal and innovative lending standards of recent years could become more of a problem if the economy dips again...

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