A slowly expanding economy should provide a boost for the U.S. homebuilding sector in 2014, according to Fitch Ratings in its outlook report.
“Home prices are likely to increase by 2.5 percent to 3.5 percent next year with employment showing gains and consumer confidence likely to improve,” said Robert Curran, managing director. “New home pricing will benefit from restrained levels of new home inventory. With mortgage rates likely to increase, the Spring selling season will likely set the tone for the year.”
The moderate cyclical improvement in overall construction activity should translate to stable ratings for most homebuilders during the year. Some companies may even be positioned for upgrades in the coming months.
Longer term, Fitch may consider revising the homebuilding industry outlook to positive if the housing market embarks on a more V-shaped recovery and starts and new home sales grow considerably. Conversely, Fitch could revise the rating to negative if the broader economy stalls and construction fundamentals do not improve.