Fitch: Long-Elusive Stability Within Reach for U.S. Homebuilders in 2012

Modest cyclical improvement in overall construction activity next year will help support a stable outlook for U.S. homebuilders in 2012, according to Fitch Ratings in its 2012 Outlook report. Builders will enjoy relatively strong liquidity positions at the beginning of 2012. However, the financial performance among builders may vary depending on customer, geographic and product emphasis and community count expansion. Cash flow for builders remained largely flat in 2011, while land and development spending was flat to up slightly. Builders who have historically been aggressive in sourcing land have meaningfully reduced cash positions over recent years, although not to problematic levels. Fitch anticipates that land and development spending generally will be flat to moderately higher in 2012 versus 2011 levels. Cash flow is likely to be negative for most builders in 2012.