Fitch Analysis: Housing will be Economic Boon in 2013

by Peter Thomas Ricci

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The housing market, fresh off the first stages of a recovery in 2012, will positively contribute to the economy in 2013, says Fitch’s managing director.

The housing market will contribute positively to the U.S. economy in 2013, with single-family housing starts climbing 18 percent, new home sales rising 22 percent, and finally, existing-home sales increasing 7 percent, according to an optimistic report by Fitch managing director Robert Curran.

 

 

The Housing Market – Economy’s Best Pal in 2013

The housing market in 2012, Curran said, was a “net plus” for the economy in 2012, and going forward, he sees the housing market building upon that foundation in a number of areas for 2013:

  • Home prices, which were up 3.5 percent in 2012 by Fitch’s count, are expected to continue their strong 2012 momentum in 2013, with Curran projecting a 3.8 percent increase.
  • Curran was also particularly positive with the U.S. homebuilding sector, and sees it contributing positively in 2013. According to HousingWire, eight of the nation’s largest public homebuilders expanded their lots from the second to the third quarter of 2012, and year-over-year, the following homebuilders increased their lot count: D.R. Horton, K. Hovnanian, KB Home, Lennar, Meritage, M/I Homes, NVR, Ryland, Standard Pacific and Toll Brothers.
  • And Curran’s not the only analyst predicting great things for housing construction in 2013. As the Wall Street Journal reported, the recent International Builders’ Show in Las Vegas was filled with bullish analysts on homebuilding.
  • For instance, David Crowe, the National Association of Home Builders’ chief economist, said during a presentation that he expects a 22 percent increase in single-family housing starts, and a 30 percent increase above that in 2013, along with a 22 percent hike in multifamily housing construction.

Robert Curran – Housing Conditions Ripe for 2013

In his assessments, Curran was realistic about some of the impediments that are still sticking with housing, among them negative equity, foreclosure inventory and tight mortgage underwriting.

But still, from home prices to record low mortgage rates, Curran said there are a number of appealing features of the current housing market.

“Attractive home prices, persistently low mortgage rates and a rise in nominal incomes results in superior affordability and valuations,” Curran said. “Mortgage rates remain near their all-time recorded lows and housing appears more undervalued versus incomes than at any time in the past 35 years.”

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