In its latest prediction, Fitch Ratings said it believes single-family housing starts will increase 10% in 2012, while sales of new home will be up 8% over last year.

Meanwhile, the National Association of Home Builders found that builder confidence, which is rated on a scale of 0 to 100, dropped from 28 to 25 from March to April. (Any score under 50 means more builders are pessimistic about the market, so 25 means about three-quarters of builders aren’t feeling the vibe.)

Fitch’s logic:

Rentals are getting more expensive, making owning more attractive (although it admitted that “negative buying psychology,” — people are afraid to buy — is an issue. 

And the home builders’ argument:

“[C]onsumers are still very hesitant to go forward with a purchase, and our members are realigning their expectations somewhat until they see more actual signed sales contracts,” Barry Rutenberg, NAHB chair

“[I]nterest expressed by buyers in the past few months has yet to translate into expected sales activity…
…tight credit conditions for builders and buyers, competition from foreclosures and problems with obtaining accurate appraisals.” –David Crowe, NAHB chief economist