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Monday, May 28, 2012

Wells Fargo: Housing Recovery on Track, but Manufacturing Slows

April housing data on new and existing home sales came in a bit better than expected, and home prices showed more signs of stabilizing, both welcome indications that the U.S. housing recovery remained on track to start the second quarter. On a less positive note, mortgage purchase applications from the Mortgage Bankers Association have dropped for two consecutive weeks in May.

The new Markit PMI for the United States showed moderating manufacturing growth for May. April durable goods orders showed more signs of weakness.

Wednesday, May 23, 2012

New Home Sales Post A Better-Than-Expected Result in April

New home sales rose 3.3 percent in April to a 343,000-unit annual rate. Revisions to previous months’ data show activity was a bit better than first reported. We continue to expect improvement in the coming months.

Tuesday, May 22, 2012

Existing Home Sales Rebound in April

Following two-straight monthly declines, existing home sales rose 3.4 percent in April to a 4.62 million-unit
pace. On a year-ago basis, median home prices are up 10.1 percent, reflecting a decline in distressed sales.

Wednesday, May 16, 2012

Eagle Materials Inc. Reports Fiscal Year and Fourth Quarter Results

American Gypsum Wallboard and Paperboard
Fiscal 2012 operating earnings from Gypsum Wallboard and Paperboard were $23.3 million, an increase of 74% compared to fiscal 2011. Revenues from Gypsum Wallboard and Paperboard were $295.9 million for fiscal 2012, 9% higher than last year's revenues.

Gypsum Wallboard and Paperboard reported fourth quarter operating earnings of $15.1 million compared to an operating loss of $0.4 million in the same quarter last year. The increase in operating earnings was primarily due to higher net wallboard sales prices and increased paperboard sales volumes offset by lower wallboard sales volumes.

Gypsum Wallboard and Paperboard revenues for the fourth quarter totaled $79.9 million, a 23% increase from the same quarter a year ago. Gypsum Wallboard sales volumes of 397 million square feet (MMSF) were down approximately 7% from the prior year's fourth quarter. The average Paperboard net sales price this quarter was $505.93 per ton, 1% greater than the same quarter a year ago. Paperboard sales volumes for the quarter were 56,000 tons, 17% greater than the same quarter a year ago.

Wells Fargo: Housing Starts Picture Brightens in April

Reflecting gains in both single and multifamily, total housing starts increased to an annualized pace of
717,000 units in April. While modest, there is real improvement taking place in the housing market.

Monday, May 14, 2012

Wells Fargo Nonresidential Outlook

Nonresidential construction posted a surprising weak performance during the first quarter, with outlays tumbling at a 12.0 percent annual rate. Most of that decline, however, was due to a sharp pullback in natural gas exploration and production, reflecting the huge buildup in natural gas inventories and a sharp drop in natural gas prices that occurred during the quarter. Several other categories also posted declines, including office, retail, power, lodging, and amusement and recreation. Despite the large drop in nonresidential spending during the first quarter, we remain somewhat optimistic that nonresidential construction will make a positive contribution to economic growth in the coming quarters. The sharp drop in natural gas exploration and production is a bit of an aberration, and oil exploration and production remains exceptionally strong. A huge backlog of energy and power projects also remains in place.

Friday, May 4, 2012

March Pending Home Sales

March pending home sales rise

By HCN Staff

The Pending Home Sales Index, a forward-looking indicator based on contract signings, rose 4.1% to 101.4 in March from an upwardly revised 97.4 in February and is 12.8% above March 2011 when it was 89.9, according to the National Association of Realtors. The data reflect contracts but not closings.

The index is now at the highest level since April 2010 when it was 111.3.

"First-quarter sales closings were the highest first-quarter sales in five years," said Lawrence Yun, NAR chief economist. "The latest contract signing activity suggests the second quarter will be equally good.

"The housing market has clearly turned the corner. Rising sales are bringing down inventory and creating much more balanced conditions around the county, which means home prices will be rising in more areas as the year progresses," he added.

The PHSI in the Northeast slipped 0.8% to 78.2 in March but is 21.1% above March 2011. In the Midwest, the index declined 0.9% to 93.3 but is 16.9% higher than a year ago. Pending home sales in the South rose 5.9% to an index of 114.1 in March and are 10.6% above March 2011. In the West, the index increased 8.7% in March to 108.0 and is 9.0% above a year ago.

Wells Fargo Weekly Economic & Financial Commentary

Modest Growth on a Broadening Base

The underlying tone of the recent economic reports remains consistent with modest economic growth. Consumer spending ended the first quarter on a solid note and spending is now on track to grow at a 2 percent pace in the second quarter.

Reports from the regional manufacturing surveys showed some weakness but the National ISM report came in stronger than expected. The nonmanufacturing survey, however, came in below expectations.

Nonfarm employment rose by 115,000 jobs in April and the unemployment rate fell 0.1 percent to 8.1 percent.

Housing Data April 2012

Early reports show that the critical spring home buying season has gotten off to its best start in five years. Sales of new single-family homes totaled 83,000 units during the first quarter, up 16 percent from a year ago, while sales of existing single-family homes rose 7.2 percent, marking the best combined pace for first quarter home sales since 2007. The rise in existing home sales has generated a little excitement, as news is spreading that homes sold outside the foreclosure process are often receiving multiple bids and selling above the asking price.

The sudden prevalence of multiple bids around the country appears to be the result of unseasonably mild winter weather, which brought buyers back into the market to a much greater degree than sellers. The first quarter is typically the slowest quarter of the year, with March being the only busy month. Inventories of existing homes have fallen to just a 6.3-months’ supply, and the inventory of unsold vacant homes has fallen by 353,000 units over the past year. Inventories of new homes continue to decline and are now at a paltry 144,000 units nationwide. Only about one-third of those homes are actually completed. With inventories dwindling, home prices have improved a bit. The Case-Shiller 20-City Home Price Index rose 0.15 percent in February, and the year-over-year decline has moderated to just 3.5 percent. CoreLogic’s price index shows prices declining 2.0 percent over the past year, with prices excluding distressed properties down just 0.8 percent.