Industry News

Fitch sees more drastic cuts in new-home sales, starts

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Excess supply, buyer psychology and tightened underwriting standards in subprime and Alt-A mortgage lending have analysts at Fitch Ratings more pessimistic about the prospects for new-home construction and sales in 2007. In their latest "Chalk Line" quarterly report on new-home construction and the home-building industry, Fitch analysts forecast new-home sales in 2007 will fall 15 percent, to 902,000. Fitch had previously forecast an 11.5 percent decrease. That would still be less severe than last year's 17.9 percent decline in new-home sales. But Fitch is forecasting a 19.9 percent cutback in single-family housing starts for 2007, which fell 15.1 in 2006. The National Association of Home Builders on Tuesday predicted a 23 percent decline in single-family housing starts this year, followed by 2 percent growth in 2008. Fitch said it will release its forecasts for 2008 three months from now, in the next Chalk Line. Excess supply continues to be the most troubling issue, Fitch analysts...