Industry News

Fitch says recession would stretch housing downturn into 2008

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The downturn in the housing market could extend into 2008 if a recession develops before the housing market bottoms out, according to analysts at Fitch Ratings who track the home-building industry. In a new report, Fitch analysts say home builders will continue to produce new housing at a reduced rate into next year as the U.S. housing market continues a multiyear contraction. Although the 106-page report is focused on new home construction, it details a broad range of factors affecting the real estate industry, such as housing supply, housing affordability, population trends, interest rates, lending practices, government regulations, and economic factors such as employment and income. Housing affordability, excess supply and "a negative psychology (among buyers) that seems to have become pervasive" are the biggest factors in the current downturn in the housing market, the report concludes. The existing-home supply has steadily risen to 7.5 months in August, compared with 4.7 mont...