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Tuesday, February 26, 2013

New Home Sales Begin the New Year

New home sales surged 15.6 percent in January to a 437,000-unit pace. Sales for the prior month were also revised higher. Home prices moderated during the month, reflecting a shift in composition of homes sold.

New Home Sales Surge in January January’s surge in new home sales should allay fears that the housing recovery is losing momentum. Sales jumped 15.6 percent to a 437,000-unit annualized pace, marking the highest level since July 2008. With sales rising and construction of single-family homes still lagging, the supply of homes available for sale fell to just 4.1 months, which is the lowest since March 2005 –nearly 8 years!

With Sales Up, Why is Builder Confidence Sagging? The NAHB/Wells Fargo Home Builders’ Index fell one point in February and has stalled just below the key 50 breakeven level. Builders remain relatively upbeat about future sales but concerned about buyer traffic. Regional builders and custom home builders may also be expressing some frustration with rising land costs, material prices and tight labor supplies. Home prices moderated in January, but remain up year to year.

Thursday, February 21, 2013

January Housring Starts and Permit Data

U.S. builders broke ground on fewer homes last month but a jump in permits for future construction to a 4-1/2-year high indicated the housing market recovery remains on track.
Housing starts fell 8.5 percent in January, as multifamily starts tumbled 24.1 percent, partially reversing the prior month’s 34.7 percent rise. Single-family starts rose 0.8 percent and permits rose in both categories.

Following a downward revision in December, sales of existing homes increased 0.4 percent in January to an annualized 4.92 million unit rate. Tight inventory remains a major factor for many markets.

Sunday, February 10, 2013

Wells Fargo Monthly Economic Outlook

Trend economic growth, low inflation and steady Fed policy provide the framework for our economic outlook. For the first half of this year, our outlook is for trend growth of 2.0 percent with contributions from consumer spending, business investment in both equipment & software and structures, and net exports as well as residential investment. Detracting from growth will be government spending and inventories. Current strength in consumer spending for the first quarter will likely slow as tax increases reduce disposable income. Equipment & software and structures should add to growth in the first half of this year, but at a slower pace than last year, as fiscal restraint hits contract spending and taxes rise. Residential investment will provide some offset to slower domestic demand elsewhere as housing affordability, demographics and the lure of low interest rates relative to home price appreciation support further recovery in the housing sector.
Inflation remains a back-burner issue for the economy and the Federal Reserve. The personal consumption deflator and the consumer price index measures of inflation remain below any threat point for the Fed. Corporate profit growth continues to slow as is typical at this stage of business expansion as unit labor costs rise, while top-line revenue gains remain steady. The outlook for growth and inflation supports the case for the Fed to remain on autopilot, with its open-ended Treasury and MBS bond buying program for the foreseeable future–given the expectation of 7 percent plus unemployment rates for both 2013 and the greater part of next year as well.

Friday, February 1, 2013

Better Construction Numbers in December

Multifamily Took the Lead in December
· Construction spending improved 0.9 percent, in December
while the drop in November was revised upward to a
0.1 percent gain. December’s outlays were motorized by
residential construction, of which multifamily construction
surged 6.2 percent while single-family construction increased
0.8 percent. This performance closes the best year for the U.S.
construction industry since 2010.

Public Sector a Drag for Construction in 2012
· The public sector continued to be a drag on construction activity
with total public construction falling 1.4 percent in December,
while dropping by 5.6 percent when compared to December of
2011. This behavior will probably continue in 2013 as U.S.
government expenditures remain constrained at federal and
local levels.