Based on recent economic data and real estate records, Fitch Ratings states the U.S. housing market is poised for a minor recovery in 2012, led by a spike in new home sales and housing starts.
According to the ratings firm's report, home sales are forecast to rise 3 percent this year, while new home sales are expected to improve by 5.5 percent. Additionally, home construction should increase modestly, hiking 5 percent.
"Many people expect or fear that home prices are vulnerable to further declines and buying now might be a mistake," Fitch said in its report. "This psychology applies to all types of buyers, but especially applies to trade-up and second-home buyers."
Fitch added that while homebuilders should see marked improvements in business in 2012, they should be careful in land purchases as a precaution should the market not turn out as strong as expected.
Despite this suggestion, the latest Housing Market Index from the National Association of Home Builders and Wells Fargo indicates strong confidence on the part of the residential construction industry.
"Builder confidence has now risen four months in a row, with the latest uptick being universally represented across every index component and region," NAHB chairman Bob Nielsen said of the latest report.