Tags: fitch | housing | worse

Housing Will Get Even Worse, Fitch Says

By    |   Friday, 02 Jan 2009 12:00 PM

If you think the housing market was bad this year, you haven't seen anything yet.

Housing will continue to weaken well into 2009, as the economy deteriorates with no bottom before the second half, or even later, Fitch Ratings predicts in a new report.

As the country heads into a deepening recession, continuing job losses will make a poor house market even worse, Fitch says. Tight credit standards remain a major problem.

Don’t expect a bottom in new home sales until the second half of the year, and don’t be surprised if it’s later, the ratings agency says.

Housing starts should reach bottom three to six months after new home sales.

Average single-family home prices will drop 2 percent next year, Fitch predicts. Real GDP will sink by 1.2 percent in 2009.

Although new government programs and ideas in the pipeline could soften the recessionary blow, housing starts, new home sales, and existing home sales will be much weaker than the rating agency had predicted earlier.

Profitability and cash flow for home builders will be even weaker than previously thought.

Most potential homebuyers are resisting purchase decisions. They’re worried about selling their current homes for a decent price. And some think they could get a better bargain if they wait and prices fall even more.

Another stimulus from Congress and efforts to slow foreclosures and boost demand for housing probably won’t help the housing market until the second half of the year, Fitch says.

Most pundits believe housing will continue to suffer into 2009, but disagree on exactly when the market will begin recovery.

The market may begin responding to a government stimulus next year, IMF Managing Director Dominique Strauss-Kahn told Expansion, a Madrid newspaper.

If that happens, the U.S. economy could turn around in late 2009 or early 2010.

But that outcome is not certain, he admits. If housing continues to deteriorate, deflation will become a threat.

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If you think the housing market was bad this year, you haven't seen anything yet. Housing will continue to weaken well into 2009, as the economy deteriorates with no bottom before the second half, or even later, Fitch Ratings predicts in a new report. As the country heads...
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2009-00-02
Friday, 02 Jan 2009 12:00 PM
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