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Homebuilders benefit from small housing inventory

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Homebuilders saw better results than expected in 2012, according to Standard & Poor’s Ratings Services. Sales volumes and average selling prices well exceeded what was expected by the ratings service, delivering nearly 20% more homes this year compared to 2011.

S&P also reported that many new homebuilders posted healthy increases in average selling prices, often outpacing overall market trends. The rise in selling prices is partially due to a small existing home inventory as well as the gravitation toward new home communities by buyers.

"Despite our expectation that favorable housing demand and supply fundamentals will continue to support strong revenue and EBITDA growth in 2013, our outlook on the homebuilding sector remains stable," S&P said.

There is reason for concern, however, as the impact of a potential recession in the U.S. would affect homebuilders more than most other sectors.

S&P also notes that a number of regulatory and policy initiatives are set to be established in the first half of 2013, which would significantly affect the availability and costs of mortgage financing.

mhopkins@housingwire.com

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