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Friday, October 26, 2012

Economic Growth Picks Up the Pace in the Third Quarter

Reflecting improvement in consumer spending, residential investment and government spending, real GDP
accelerated to a 2.0 percent annualized pace in Q3. Significant headwinds, however, weigh on the outlook.

New Home Sales Rise in September

New Home Sales Rise Solidly
· New home sales rose solidly in September, paced by strong
gains in the South. The South, which accounts for just over half
of the nation’s new home sales, posted a 16.8 percent gain in
September, pushing sales to a 215,000-unit pace.
· Sales also rose modestly in the Northeast and West, but fell
37.3 percent in the Midwest. The outsized drop in the Midwest
looks suspicious, but growth has slowed there recently.

New Home Inventories Remain Exceptionally Lean
· September’s solid gain in new home sales is keeping inventories
exceptionally low at just a 4.5 months’ supply.
· Lean new home inventories are helping drive prices higher. The
median price of a new home has risen 11.7 percent over the past
year, while the average price has jumped 14.5 percent. Plenty of
foreclosures are still for sale and that is keeping the gap between
the median new and existing home price unusually wide.

Friday, October 19, 2012

Wells Fargo's Economic Commentary - Housing

Residential Construction Boosting Economic Growth
Housing seems to be firming up, particularly the residential
construction sector. Not only did September housing starts jump
to the fastest pace since 2008, but building permits also surged
11.6 percent, the largest monthly jump since the expiration of the
homebuyer credit in 2010. We expect improvement in housing to
underpin economic growth in 2013.

New Home Sales • Wednesday
New home sales pulled back in August, declining 0.3 percent to a
373,000-unit pace for the month after a sharp 3.6 percent rise in
July. The decline was concentrated in the South, with the other
major regions all posting increases. Even with the pullback in
August, new home sales are still up 27.7 percent over last year. The
inventory of new homes remains very depressed at 4.5 months’
supply. The other big news from the August report was an
11.2 percent jump in median new home prices for the month. We
expect September new home sales to bounce back in September,
rising 3.5 percent to a 386,000-unit pace. The stabilization and
modest appreciation in existing home prices is helping to narrow
the price spread between new and existing homes. As a result,
builder confidence continues to rise, indicating a gradual pace of
firming in the new home market.

Housing starts surged 15.0 percent in September

Housing starts surged 15.0 percent in September to a 872,000-unit annual pace. The reading is the highest level since July 2008 with broad-based gains in single-family and multifamily. Permits rose 11.6 percent.