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Fitch Expects Deeper Decline in China Home Sales

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Fitch Ratings lowered its 2026 China new-home sales forecast to a decline of between 11% and 13% from a decline of between 7% and 8% as weakness in lower-tier cities continues to overshadow pockets of recovery.

The shift also reflects a growing share of housing demand being absorbed by existing-home transactions in major metros, according to a Monday research note.

The downturn is moderating from 2025's steeper slide, with the rating agency expecting further stabilization in 2027 amid policy support and gradual sentiment improvement.

Market performance remains uneven, with Shanghai leading resilience in tier-one cities, while Guangzhou struggles with larger land supply.

Most rated state-owned builders, except Yuexiu Property (HKG:0123), reported sales growth in the first five months of the year. Margins are expected to stay pressured as developers work through older land banks.

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