Updated at 12:28 p.m., Tuesday, August 28, 2007
Fitch cuts credit ratings for six U.S. homebuilders
Bloomberg News Service
CHICAGO — Lennar Corp., Centex Corp. and Hovnanian Enterprises Inc. were among six U.S. homebuilders whose credit grades were lowered by Fitch Ratings because of the weakening housing market.Lennar, the largest builder by revenue, and Centex, the fourth-biggest, had their "issuer default ratings" reduced to BBB, the second-lowest investment grade, from BBB+, Fitch said today in statements. Hovnanian was cut to BB- from BB+.
Fitch said in a statement on Lennar that its "negative outlook" for the Miami-based builder "reflects a more challenging outlook for homebuilders during the balance of calendar 2007 (largely due to disruptions and tightening of standards in the mortgage market) and probable future weakening in the housing market in 2008."
Five of the largest U.S. homebuilders reported combined losses of $1.85 billion and took charges of $2.9 billion to write down land values and walk away from property options in their most recent quarters.
Meritage Homes Corp., Standard Pacific Corp. and M/I Homes were lowered by Fitch to BB- from BB.
Fitch said it may lower its ratings on five other builders, including those of Toll Brothers Inc., KB Home and D.R. Horton Inc. Demand for new homes is being hurt by a glut of unsold homes on the market, reduced consumer confidence and tighter lending standards for potential homebuyers.
