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Investors Fleeing Housing Markets

Housing market participants are eagerly monitoring every word spoken by Federal Reserve officials while speculators and investors are backing away from the housing market. And that's shaping the prevailing mood in the housing market today, according to analysts at CreditSights.

Despite a rising inventory of unsold homes and dropping home purchase demand, CreditSights noted that interest rates remain relatively low and that lower home prices translate into better affordability. "As demand drops and unsold homes continue to rise, we still believe that the major homebuilders have the financial strength to endure the current downturn," CreditSights said, maintaining a "market weight" rating on the sector.

Whereas in recent years speculators and investors helped push up home and condo prices, they now are in the position of becoming "skittish sellers" seeking to cash out on earlier gains.

CreditSights said that it believes major publicly traded homebuilders have the financial strength to ride out the storm, but the independent analysis firm also said that it may have been "somewhat premature" in raising the homebuilding sector from underweight to market weight earlier this year. (c) 2006 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com

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