Banks’ Focus Residential Construction Portfolios (BAC, RY, DB)

Barclays (NYSE: BCS) examined through the third quarter earnings transcripts for roughly 20 banks to capture their views on the residential and commercial construction markets. Banks are primarily focusing on residential construction portfolios.

When commenting on the overall and residential credit trends, "stabilization" appeared to be the word of the quarter. Several banks are anticipating a further decline in home prices. Barclays forecasts the national pricing for most of the builders to be flat to slightly down in 2010.

REO cost assumptions and updated appraisal values will be ultimately positives for the builders. Barclays believes a higher focus on commercial properties could be mixed for the home-builders. They are concerned that the banks may desire to remove the residential land quickly from their books if reduced the focus on the residential portfolios slow asset valuation adjustments.

Though banks like Bank of America Corporation (NYSE: BAC), Royal Bank of Canada (NYSE: RY) and Deutsche Bank AG (NYSE: DB) are claiming to be aggressive, they are not yet willing to take significant price reduction steps.