Wells Fargo "Some Signs of Improvement" in Housing

“Some Signs of Improvement” in Housing

For the better part of the past year and a half, we have identified early signs of stabilization in housing prices in some markets and we have noted an incipient recovery in homebuilding activity. We have struck a cautious tone repeatedly in recent publications of our housing chartbook, noting that the bottoming process will vary by market and the recovery in both prices and residential construction activity will take years to fully recover.
In its statement released this week, the FOMC added four words in the section dedicated to the housing sector—“some signs of improvement.” Indicators this week affirmed that notion, though perhaps not with the sort of conviction that would signal a definite firming. The S&P Case-Shiller 20-city home price index posted a nearly imperceptible increase, up just 0.15 percent in February, while the broader FHFA home price index added a more substantial 0.3 percent. The pace of new home sales picked up slightly as well with 328,000 new homes sold in March. That is a far cry from the 1 million-plus numbers during the housing boom, but it was better than the consensus had been expecting. It also follows an upwardly revised print of 353,000 new homes for the prior month—a decidedly better outturn than the 313,000 that had first been reported for February. We also learned this week that the pipeline for future existing sales seems to be filling up as well, with March pending homes sales up 4.1 percent on the month—the largest sequential increase since November.