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Sunday, April 24, 2011

Wells Fargo Forecast for New Home Sales

by Calculated Risk on 4/24/2011 10:59:00 PM

From Alan Zibel at the WSJ: Home Builders' Outlook Stays Fragile

Wells Fargo Securities projects only modest increases over the next two years, with 330,000 new-home sales likely this year, followed by 440,000 in 2012. It is likely to take another three years before new-home sales return to healthy annual sales of around 770,000, said Wells Fargo economist Anika Khan.
That is a little more optimistic than my outlook. The key will be how long it takes to absorb all the excess vacant housing units. The pickup in residential investment this year will be mostly from apartments and home improvement, but eventually we will see an increase in new home sales.

I haven't forecast new home sales for 2012 yet, but Khan's forecast of 440 thousand sales next year is still for one of the lowest years on record - and yet that would be a 33% increase in sales from her forecast for this year. If her forecast is close that would give a nice boost to employment and GDP.

But for the home builders right now, it is "wait until next year" once again.

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