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One Homebuilding Forecast Softens
Growth in 2019 Expected to Be Only Six to Eight Percent

One Homebuilding Forecast Softens

Though homebuilding is still predicted to make gains in the coming year, concerns referred to in a new report that could dampen the extent of those gains include growing budget deficits and the burgeoning trade wars.

In a recent report, Moody's Investors Service downgraded its assessment of the homebuilding industry nationwide from positive to stable, citing that "after a seven-year homebuilding expansion signs of a slowdown are increasing."

The report takes into account the fundamental business conditions in the industry, many of which the firm says are healthy, over the next 12 to 18 months.

"The change to a stable outlook for the U.S. homebuilding industry reflects our belief that industry revenue growth will be below 10%, in the 6%-8% range, in 2019," says Joseph Snider, a Moody's VP-senior credit officer and co-author of the report. "In recent months the number and strength of headwinds hindering growth have increased, particularly rising mortgage rates, declining affordability and ballooning new home inventories, along with slowing customer traffic and order rates."

"The current buyer softness may be temporary given that the industry's underlying fundamentals are still strong," says co-author Natalia Gluschuk, a Moody's AVP-analyst. "That said, we do not anticipate a return to the robust order books of the last few years that produced superior revenue growth."

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November 17, 2019, 6:00 am PDT

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