Builder forecast: Chilly start, followed by tough conditions
A just-released report on the homebuilding industry from Standard & Poor’s has predicted “tough conditions” and no major improvement over the remainder of the year in the U.S. homebuilding market.
"U.S. home builders got off to a very slow start in 2011 as winter storms contributed to a record low level of new home sales in February," said credit analyst James Fielding, a senior director in Standard & Poor’s U.S. real estate companies group. "Our baseline scenario for the rest of the year includes a slight warm-up as the spring selling season progresses, but we don’t expect to see significant improvement over a very weak 2010."
Fielding also noted it will be difficult for builders to keep their liquidity intact if they opt to attain market share via aggressive land purchases. Standard & Poor’s, a credit rating agency, expects issue increasingly negative rating outlooks for the U.S. homebuilding sector.
"In essence, we do not yet believe that key economic drivers of housing demand, such as consumer confidence, employment growth, and household formation, are supportive of a strong recovery in the homebuilding sector," Fielding said. "In fact, we currently don’t anticipate upgrading any homebuilder in 2011, barring company-specific events such as a successful recapitalization."
Of the 15 builders Standard & Poor’s rates, three are rated in the ‘BBB’ category, three are in the ‘BB’ category, seven are in the ‘B’ category, and two are in the ‘CCC’ category. Standard & Poor’s hasn’t changed any builder ratings this year, but it did downgrade KB Home, Lennar Corp., and PulteGroup Inc. during the second half of last year because new home sales dropped more than we had anticipated after the temporary tax credits for homebuyers expired.
For information about the full report, "U.S. homebuilders face a chilly start to the spring selling season," visit www.globalcreditportal.com.
Masco loss widens in first quarter
Energy costs and slow job growth are tempering expectations at Taylor, Mich.-based Masco, which posted a loss of $46 million in the first quarter, compared to a loss of $7 million in the same quarter last year.
Masco saw sales decline 4% to $1.8 billion in its first quarter of 2011. North American sales decreased seven percent and International sales increased four percent.
"While we still believe that the second half of 2011 will be stronger than the first half, our enthusiasm has been tempered somewhat," said Masco CEO Tim Wadhams.
Plumbing products were strong in the first quarter, he said. "And we believe that our North American cabinet business and our installation business, while still depressed, were able to gain share sequentially, compared to fourth quarter of 2010," he said.
Depressed new home construction, the deferral of "big ticket" repair and remodel activity and commodity cost pressures have continued into 2011, according to Wadhams.
Masco Corporation is one of the world’s leading manufacturers of home improvement and building products, as well as a leading provider of services that include the installation of insulation and other building products.
AZEK earns “Green Approved Product” seal
The National Association of Home Builders (NAHB) Research Center’s “Green Approved Product” seal of approval was awarded to AZEK Building Products for its AZEK Trim, AZEK Mouldings, AZEK Deck and AZEK Porch product lines. This means the products are eligible to earn points toward certification of a given project under the National Green Building Standard.
“This program is an excellent way to guide architects and building products specifiers on which products can contribute to National Green Building Standard points,” said Jim Gross, VP Sales, AZEK Building Products, in a prepared statement. “We are pleased that AZEK products have demonstrated the durability and sustainability to be designated as Green Approved Products.”
The NAHB Research Center program was created to help bridge the gap between manufacturers who make sustainable products and builders, architects and designers who want to use them. It is awarded to manufacturers who provide third-party evidence that their products meet the criteria for use in buildings certified to the National Green Building Standard.