Housing starts rose 3.6% in June, signaling some stabilization in the homebuilding  industry.  Affordable prices and low interests rates are aiding the recovery efforts after a three year plunge. Federal Reserve Chairman Bernanke’s efforts to keep rates low should stimulate substantial recovery of the housing market in the second half of 2009.

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Decreased industry revenue and slim margins led to distressed M&A activity in the first half of 2009.  Small players find it difficult to stay profitable without the economies of scale of the larger firms.  Expect deal flow in the low-middle market as small players attempt to exit.