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Saturday, March 30, 2013

Wells Fargo Weekly Economic Commentary

· Personal spending posted a solid gain in February as
consumers shake off January’s hit to income. Income is,
however, recovering, up 1.1 percent in February.

· February durable goods orders rose 5.7 percent on the
back of stronger transportation orders. Shipments
recovered from January’s decline, but suggest modest
business spending in the first quarter.

· New home sales stumbled in February, but the broader
housing recovery remains intact. The S&P/Case-Shiller
index showed home values across 20 major markets rose
a solid one percent in January.

New Home Sales Moderate in February

Following an outsized gain in January, new home sales fell 4.6 percent in February. On a trend basis, new home sales continue to improve, while inventories remain lean at 4.4 months’ supply.

Prices rebounded a bit in February with the median sales price rising to $246,800 as the composition of sales shifted. The median price of a new home is up 2.9 percent from a year ago. The pullback in February sales seems to be in line with slightly lower builder sentiment. The NAHB/Wells Fargo Home Builders Index reported lower sales activity in February and March, but builders are more optimistic about future sales.

Friday, March 22, 2013

Metal Framing Package at St Catherine of Siena's - Wake Forest, NC


Video: Monthly Economic Outlook - March 2013


Existing Home Sales Rose Modestly in February

Existing home sales rose 0.8 percent in February to a 4.98 million-unit pace. However, single-family sales fell 0.2 percent, while condo sales were up. Reflecting some seasonality, inventories jumped 9.6 percent.

Wells Fargo: Housing Starts Show Recovery Is Still Intact in February

Housing Recovery Still Underway
Overall, today’s housing report is good, and it is clear the trend in housing is still upward despite monthly volatility. While the winter months tend to include some seasonal noise, the underlying details still show a sustainable housing recovery. Housing starts rose 0.8 percent to a 917,000-unit pace, which was roughly in line with expectations given upward revisions to the previous month. Single-family housing starts rose 0.5 percent to a 618,000-unit pace, which was the fastest rate since June 2008. Moreover, the volatile multifamily component rebounded after tumbling in January, rising 1.4 percent to a 299,000-unit rate in February.

To find another silver lining, one need look no further than building permits. With the level of building permits higher than starts, we expect the coming months will also see a rise in starts. Single-family permits are now up nearly 34 percent on a year-ago basis, further suggesting housing will be a bright spot for the year. Multifamily permits also edged higher and are up a whopping 51.1 percent over the past year. While demand for apartments is showing few signs of abating, construction pipelines are fairly robust in select markets with deliveries expected to pick up in 2013 and 2104.

Which One of These Kids is Doing His Own Thing?
The biggest question mark in the sea of housing data, is the recent back-to-back decline in builder sentiment. According to the Wells Fargo/NAHB Builders’ Survey, builder confidence fell in March for the second consecutive month, suggesting something is amiss in the housing recovery. While we remain optimistic about the prospects for the housing recovery, we suspect small builders may be under some pressure as they face difficulty in securing developed lots and new residential development financing remains tight. Moreover, construction material prices have also increased. Other housing market indicators continue to show gains. All price measures continue to improve which should encourage more single-family activity as the labor market continues to strengthen. Regarding sales activity, more investor and cash purchases of single-family homes is helping clear out excess supply in hard hit areas, and more traditional buyers are also entering the market.

The Outlook for Housing Starts
We expect housing starts to increase to a sustainable pace of roughly 990,000-units in 2013 with much of the gains in single-family. With single-family gaining solid footing, multifamily will likely begin to stabilize. We believe the trend toward multifamily housing will continue, but multifamily starts should peak in the next few years. That said, real residential construction spending will likely continue to add to real GDP growth.

Saturday, March 9, 2013

Wells Fargo Weekly Economic Data

• Nonfarm payrolls increased by a stronger-than-expected 236,000 jobs in February. Average hours worked and earnings also rose, which bodes well for income growth.

• The unemployment rate fell to 7.7 percent from 7.9 percent on the back of an increase in household employment and a drop in the labor force.

• The ISM non-manufacturing index posted another solid reading in February. The index rose to 56 with gains across most categories.