TEXT-S&P: Global housing shows some bright spots

(The following statement was released by the rating agency)

Oct 26 - As the global housing market shows some signs of recovery, markets are re-emerging at different speeds, depending on the strength of individual real estate fundamentals. Moreover, industries that rely on the housing market have adjusted to lower demand and will likely stay cautious until they see clear signs of a rebound, says Standard & Poor's Ratings Services in a special report on the global housing market.

The special report, entitled, "Rebuilding The Global Housing Market," which also will be published in the October 28 edition of Standard & Poor's CreditWeek, examines the housing market across different regions as well as its impact on various asset classes and industrial sectors.

The U.S. housing market, for example, has shown some momentum. Housing starts and home sales are climbing back from lows early this year, and home prices are rising after sharp drops that began in 2006.

"Prices may suffer a setback this winter, in part because unemployment, now 9.8%, is still rising," said Standard & Poor's Chief Economist David Wyss.

Moreover, an $8,000 federal tax rebate for first-time homebuyers is scheduled to end in November. And foreclosure filings in the third quarter were at record levels.

For a few U.S. homebuilders, credit quality is firming, though that could change in the months ahead, as the negative outlooks on 11 of the 15 homebuilders we rate indicate. Despite signs of a slight real estate rebound, we believe our ratings on many of these companies will likely remain under pressure through the balance of the year and probably into 2010.

In Europe, the housing outlook is mixed. U.K. housing prices are rising modestly, though that may be a sign of tight supply. But overall, European real estate fundamentals remain weak. Feeble employment prospects and restricted levels of mortgage financing, along with a likely easing of fiscal stimuli and rising interest rates, promise to make the road to recovery long--and possibly could result in backsliding. House prices are still slipping in Ireland and Spain, while prices in France appear to have hit bottom and may stay there for a while. And the reported arrears, or missed payments, on loans backing European RMBS that we rate may have risen sharply, but more recently, the situation may be improving.

Elsewhere, the Japanese real estate market remains depressed due to the weakened economy. Land prices have continuously declined for the 12 months starting in July 2008, though there have been signs in recent months that prices may be bottoming out.

The following articles are part of the special report:

-- "Despite A Few Bright Spots, A Full Recovery Is Not Yet In Sight For Global Housing Markets;"

-- "Stabilizing Prices In Most Areas Are Strengthening The Foundation Of The U.S. Housing Market;"

-- "Local Governments In Some States Sink Deeper Into The Housing Downturn;" -- "European Economic Forecast: There's One Brighter Spot In Europe's Housing Markets, But Gloom Persists In The Main;"

-- "The Japanese Real Estate Market Continues To Struggle;"

-- "A Foundation For Recovery Is In Place, But U.S. Homebuilders Will Face Headwinds Into 2010;"

-- "U.S. Building Materials Companies Are Laying The Groundwork For Better Times;"

-- "What Mortgage Insurers Are Doing To Curb Losses Until The Housing Recovery;"

-- "Mortgage Originators Have Retreated To Plain Vanilla, But The Aftertaste Of Exotic Flavors Lingers;" and

-- "Europe's Homeowners Begin To Miss Fewer Mortgage Payments."

The report is available to RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site at www.standardandpoors.com; under Ratings in the left navigation bar, select Find a Rating. Members of the media may request a copy of this report by contacting the media representative provided. Credit Market Services: David Wyss, New York (1) 212-438-4952; david_wyss@standardandpoors.com (New York Ratings Team)