This report is available on wellsfargo.com/economics and on Bloomberg WFRE.

February 10, 2014

Economics Group


Diminished Expectations for Housing in 2014
Surprisingly weak new home sales figures for December and downward revisions to the prior two
months have lowered expectations for housing in 2014. Despite diminished expectations, we do
not believe the underlying fundamentals of the housing recovery have suddenly taken a turn for
the worse. We have long held that the housing recovery would be a long, difficult slog and now
that investors appear to be backing away from the market, it has become abundantly clear how
modestly the underlying fundamentals have actually improved. Sluggish job and income growth
have weighed on household formation and encouraged a larger proportion of households to rent
rather than buy a home. We see this trend gradually shifting as the economy moves to firmer
ground, but the shift will be gradual and doubts will periodically resurface when bad weather or
unsettling political events send chills throughout the economy.
Decembers disappointing new homes sales figures and the continuing slide in pending home
sales is all the more disappointing because there has been so much positive anecdotal evidence
that home sales and new home construction were set to improve. Home builder confidence has
been gradually improving. The NAHB/Wells Fargo Home Builders Index fell 1 point to 56 in
January, as both the present and future sales indices fell slightly. The overall index, however,
remains above its October and November level and improved over the course of the year. Many
builders also reported rising order backlogs at the end of 2013 and are planning to increase land
development in 2014. Confidence also seems to be gradually returning to the existing home
market, despite the recent slide in pending home sales. With home prices rising nearly 12 percent
over the past year, more homeowners now feel comfortable putting their homes on the market.
Existing home inventories have risen from their historic lows, and homes are selling relatively
quickly across much of the county.
Figure 1


Figure 2

Source: NAR, CoreLogic, NAHB, U.S. Dept. of Commerce and Wells Fargo Securities, LLC
0
10
20
30
40
50
60
0
10
20
30
40
50
60
Oct-08 Jul-09 Apr-10 Jan-11 Oct-11 Jul-12 Apr-13 Jan-14
Total Distressed: Dec @ 14.0%
NAHB Housing Market Index: Jan @ 56.0
NAHB Housing Market Index & Distressed Sales
62%
64%
66%
68%
70%
-10%
-5%
0%
5%
10%
87 89 91 93 95 97 99 01 03 05 07 09 11 13
CoreLogic National Home Price Index vs. Homeownership Rate
Year-over-Year Percent Change, Rate
CoreLogic HPI: Q4 @ 2.7% (Left Axis)
Homeownership Rate: Q4 @ 65.2% (Right Axis)
Special Commentary

Mark Vitner, Senior Economist
mark.vitner@wellsfargo.com (704) 410-3277
Anika R. Khan, Senior Economist
anika.khan@wellsfargo.com (704) 410-3271



Housing Chartbook: February 2014
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


2
Sluggish Household Formations Continue to Weigh on Housing Demand
The most recent data on residential vacancies and homeownership are reflective of the
diminished expectations for housing in 2014. The total number occupied housing units increased
by an incredibly modest 265,000 in 2013. Once again, all of the growth occurred in rental
households, which grew by 315,000. The number of owner occupied homes fell by just under
50,000 during the year. The sluggish pace of household formations is likely due to the shaky
recovery in employment and income. Nonfarm payrolls grew by an average of 182,000 jobs a
month in 2013 and many of those jobs were in relatively low-paying industries, which weighed on
wage and salary growth. We expect hiring to improve in 2014 and are currently looking for job
gains to average around 195,000 per month this year. We also expect the quality of jobs to
improve, with a larger proportion of new jobs created in higher paying industries.
The rental vacancy rate fell 0.5 percentage points over the past year and ended 2013 at
8.2 percent. The homeowner vacancy rate rose 0.2 percentage points over the past year to
2.1 percent, however, with the number of vacant homes for sale rising by 92,000 units. The drop
in the rental vacancy rate reflects tightening rental markets across much of the country, with the
biggest declines coming in the Northeast and Midwest. The West remains the tightest market,
however, with a rental vacancy rate at just 6.3 percent. The drop in residential vacancy rates has
lifted rents across the country and made homeownership relatively more attractive.
There is mounting evidence that the nine-year slide in the homeownership rate is nearing an end.
The homeownership rate was unchanged in the fourth quarter at 65.1 percent on a seasonally-
adjusted basis, which is where it has been for the past three quarters. The rate had peaked at
69.0 percent back in the fourth quarter of 2004.
We have slightly lowered our forecast for 2014 and 2015 to reflect the lower yearend home sales
and new home construction figures. Sales of new homes are expected to rise 19.4 percent to
510,000 units in 2014, while sales of existing home rise 4.5 percent to 5.3 million units. With
sales improving, new single-family starts should rise 19 percent in 2014 and by nearly 25 percent
the following year. Overall housing starts are expected to rise nearly 16 percent to 1.07 million
units in 2014 and another 14 percent to 1.22 million units the following year.
The gradual ramp up in new home construction will keep new home inventories relatively lean,
which means new home prices will likely once again post gains well above their historic norm. We
look for the median price of a new home to rise 4.6 percent in 2014 and look for median price of
existing homes to rise 4.0 percent. In addition to tight inventories, new home prices are also
being bolstered by rising construction costs and higher lot prices. Home price measures from
Case-Shiller and CoreLogic will likely post somewhat larger gains but the pace of home price
appreciation is expected to moderate in all measures, as more new and existing homes come on
the market.
Figure 3


Figure 4

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC
-1,500
-1,000
-500
0
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1,000
1,500
2,000
2,500
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
66 70 74 78 82 86 90 94 98 02 06 10
U.S. Homeowners vs. Renters
Annual Change in Occupied Units, In Thousands
Renters: 2013 @ 525.5 Thousand
Homeowners: 2013 @ -76.5 Thousand
Series
Break
1981
0.0
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80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
T
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a
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Housing Starts
Millions of Units
Multifamily Starts
Multifamily Forecast
Single-family Starts
Single-family Forecast
Forecast
There is
mounting
evidence that the
9 year slide in the
homeownership
rate is nearing an
end.
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


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Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


4

Mortgages


Following a spike in mortgage rates,
applications for mortgages to purchase a home
fell 18.5 percent from their summer peak before
rebounding over the past few weeks. The recent
improvement provides a hint that the recent soft
housing data may be due to unseasonably cold
weather. The gain in purchase applications
foreshadows a modest rebound in home sales.
Rising mortgage rates over the balance of this
year should not significantly impede
affordability but will shift the mix of home sales
toward smaller and less expensive homes.
Refinance applications have also been weak in
recent months and are down more than
70 percent from their mid-2012 peak.












Source: Mortgage Bankers Association, FHLMC, U.S.
Department of Commerce, Federal Reserve and
Wells Fargo Securities, LLC
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0% 0
200
400
600
800
1,000
1,200
1,400
1,600
90 92 94 96 98 00 02 04 06 08 10 12 14
New Home Sales vs. 30-Year Mortgage Rate
Thousands; SAARFHLMC Conventional Fixed Rate Mortgage
New Home Sales: Dec @ 414,000 (Left Axis)
30-Year Fixed Mortg. Rate: Feb @ 4.2% (Inverted Right Axis)
100
125
150
175
200
225
250
275
300
100
125
150
175
200
225
250
275
300
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Conventional Mortgage to 10-Year Treasury Spread
Basis Points
Mortgage Spread: Feb @ 159 bps
0
100
200
300
400
500
0
100
200
300
400
500
92 94 96 98 00 02 04 06 08 10 12 14
Mortgage Applications for Purchase
Seasonally Adjusted Index, 1990=100
Weekly Figure: Jan-31 @ 180.5
Down From 187.6 on Jan-24
8-Week Average Down 9.1% From Same Period Last Year
Mort. Appl.: 8-Week Average: Jan 31 @ 179.1
-80%
-60%
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-20%
0%
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40%
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-60%
-40%
-20%
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Apr 07 Apr 08 Apr 09 Apr 10 Apr 11 Apr 12 Apr 13
Residential Loan Standards and Demand
Prime Mortgages, Net Percent of Banks Reporting Change
Tightening Standards: Q4 @ -8.7%
Reporting Stronger Demand: Q4 @ -7.2%
0
2,000
4,000
6,000
8,000
10,000
12,000
0
2,000
4,000
6,000
8,000
10,000
12,000
94 96 98 00 02 04 06 08 10 12 14
Mortgage Applications for Refinancing
4-Week Moving Average, Seasonally Adjusted
Weekly Figure: Jan-31 @ 1,693
Up from 1,645 on Jan-24
4-Week Average: Jan-31 @ 1,558
4-Week Average Down 63.3% from Same Period Last Year
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


5

Single-Family Construction


Following two straight monthly gains, single-
family starts dropped 7 percent in December.
Although swings in the monthly data are
expected during the seasonally slow winter
months, non-seasonally adjusted figures
plummeted more than 17 percent in December.
We suspect the dip in starts is weather-related,
which suggests construction activity may
remain soft through January and February.
The more forward-looking single-family permits
data have also been disappointing. Single-family
permits were down 4.8 percent in December
and have risen just 4.5 percent over last year.









Source: U.S. Dept. of Commerce, National Association of
Realtors, NAHB and Wells Fargo Securities, LLC
0.0
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2.0
3.0
4.0
5.0
6.0
7.0
8.0
0.0
0.2
0.4
0.6
0.8
1.0
1.2
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94 96 98 00 02 04 06 08 10 12 14
Existing & New Single-Family Home Sales
In Millions, Seasonally Adjusted Annual Rate
New Home Sales: Dec @ 414 Thousand (Left Axis)
Existing Home Sales: Dec @ 4.3 Million (Right Axis)
0.2
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n
d
s
Single-Family Housing Starts
SAAR, In Millions, 3-Month Moving Average
Single-family Housing Starts: Dec @ 661K
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
90 92 94 96 98 00 02 04 06 08 10 12 14
T
h
o
u
s
a
n
d
s
Single-Family Building Permits
SAAR, In Millions, 3-Month Moving Average
Single-family Building Permits: Dec @ 624K
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
87 89 91 93 95 97 99 01 03 05 07 09 11 13
Expected Single-Family Home Sales
Percent, NAHB Housing Market Index
In the Next 6 Months: Jan @ 60.0%
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
87 89 91 93 95 97 99 01 03 05 07 09 11 13
Single-Family Housing Completions
Seasonally Adjusted Annual Rate, In Millions
Single-family Housing Completions: Dec @ 550K
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


6

Multifamily Construction


Despite summer slowdown, multifamily starts
are running nearly 25 percent ahead of last
years pace, reaching the highest level in seven
years in 2013. Multifamily construction
accounts for a third of total housing starts and is
expected to continue to grow this year, albeit at
a more modest pace.
Multifamily starts are expected to rise only
modestly in coming years as the supply of newly
completed units begins to run ahead of demand
and sluggish income gains limit rent growth.
Even with the dynamics shifting, the apartment
market appears set for several years of gains.









Source: U.S. Dept. of Commerce, REIS Inc. and
Wells Fargo Securities, LLC
0
50
100
150
200
250
300
350
400
450
0
50
100
150
200
250
300
350
400
450
90 92 94 96 98 00 02 04 06 08 10 12 14
Multifamily Housing Starts
SAAR, In Thousands, 3-Month Moving Average
Multifamily Housing Starts: Dec @ 340K
0
100
200
300
400
500
600
0
100
200
300
400
500
600
90 92 94 96 98 00 02 04 06 08 10 12 14
Multifamily Building Permits
SAAR, In Thousands, 3-Month Moving Average
Multifamily Building Permits: Dec @ 390K
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
94 96 98 00 02 04 06 08 10 12 14
Private Multifamily Construction Spending
Percent
3-Month Annual Rate: Dec @ 23.3%
Year-over-Year Percent Change: Dec @ 27.3%
-75
-50
-25
0
25
50
75
100
2%
3%
4%
5%
6%
7%
8%
9%
2005 2006 2007 2008 2009 2010 2011 2012 2013
Apartment Supply & Demand
Percent, Thousands of Units
Apartment Net Completions: Q4 @ 41,651 Units (Right Axis)
Apartment Net Absorption: Q4 @ 50,627 Units (Right Axis)
Apartment Vacancy Rate: Q4 @ 4.1% (Left Axis)
-1.6%
-1.2%
-0.8%
-0.4%
0.0%
0.4%
0.8%
1.2%
1.6%
-1.6%
-1.2%
-0.8%
-0.4%
0.0%
0.4%
0.8%
1.2%
1.6%
2006 2007 2008 2009 2010 2011 2012 2013
Apartment Effective Rent Growth
Quarter-over-Quarter Percent Change
Apartment Effective Rent Growth: Q4 @ 0.8%
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


7

Buying Conditions


With the Fed winding down its unprecedented
asset purchase program, many are concerned
that rising long-term rates could derail the
housing recovery. With the summer spike in
mortgage rates and rise in home prices, housing
affordability has edged lower over the past year.
First-time home buyers, which now account for
an exceptionally small portion of sales, are
particularly sensitive to rising mortgage rates.
Tight lending conditions and investors paying
all-cash for properties have played the largest
role in keeping first-time home buyers on the
sidelines. According to the latest Senior Loan
Officer Survey, few banks reported any change
in lending standards or demand.










Source: CoreLogic, S&P, Federal Reserve, NAR, U.S. Dept. of
Labor, U.S. Dept. of Commerce and
Wells Fargo Securities, LLC
80
100
120
140
160
180
200
220
80
100
120
140
160
180
200
220
92 94 96 98 00 02 04 06 08 10 12 14
Housing Affordability, NAR-Home Sales
Base = 100
Housing Affordability Index: Nov @ 170.3
6-Month Moving Average: Nov @ 164.9
50
70
90
110
130
150
170
190
50
70
90
110
130
150
170
190
76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
U.S. Real Home Prices
Index, Jan. 2000=100, Not Seasonally Adjusted
U.S. Real Home Prices: Nov @ 118.2
Trough Trend
* CoreLogic HPI Deflated with CPI Less Shelter
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Apr 07 Apr 08 Apr 09 Apr 10 Apr 11 Apr 12 Apr 13 Apr 14
Net Percent of Banks Tightening Standards
Nontraditional Mortgages
Nontraditional Mortgages: Q1 @ 8.6%
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0.8
1.0
1.2
1.4
1.6
1.8
2.0
87 89 91 93 95 97 99 01 03 05 07 09 11 13
S&P Case-Shiller Home Price Index P/E Ratio
January 1987=100
S&P Case-Shiller P/E Ratio: Nov @ 1.28
S&P Case-Shiller C-10 Home Price Index
Divided by CPI Owners' Equivalent Rent
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
85 88 91 94 97 00 03 06 09 12
Occupied Housing Units
Year-over-Year Percent Change
Owner Occupied: Q3 @ -0.2%
Renter Occupied: Q3 @ 1.4%
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


8

New Home Sales


Reflecting unseasonably cold weather, new-
home sales dropped more than expected in
December to a 414,000-unit pace and sales for
the previous three months were revised lower.
The weaker new home sales data are at odds
with improving builder sentiment.
Although inventories remain exceptionally tight,
they are 15 percent higher than one year ago.
Completions may have been slowed by
unseasonably wet weather. Units not started
and under construction have seen a
meaningful increase over the past year.
Sales of new homes below $150,000 rose in
December, but activity in this segment has been
a weak spot during the past year.









Source: U.S. Department of Commerce, National Association
of Realtors and Wells Fargo Securities, LLC
100
150
200
250
300
350
400
450
500
550
600
100
150
200
250
300
350
400
450
500
550
600
97 99 01 03 05 07 09 11 13
Inventory of New Homes for Sale
New Homes for Sale at End of Month, In Thousands
New Homes for Sale: Dec @ 171,000
2
4
6
8
10
12
14
2
4
6
8
10
12
14
90 92 94 96 98 00 02 04 06 08 10 12 14
Months' Supply of New Homes
Seasonally Adjusted
Months' Supply: Dec @ 5.0
100
300
500
700
900
1,100
1,300
1,500
100
300
500
700
900
1,100
1,300
1,500
89 91 93 95 97 99 01 03 05 07 09 11 13
New Home Sales
Seasonally Adjusted Annual Rate, In Thousands
New Home Sales: Dec @ 414,000
3-Month Moving Average: Dec @ 440,667
0
20
40
60
80
100
120
140
160
180
0
20
40
60
80
100
120
140
160
180
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
New Home Sales
New Homes Sold During Month, 2002=100
South: Dec @ 62.7
Midwest: Dec @ 33.5
West: Dec @ 43.2
Northeast: Dec @ 43.3
$100
$150
$200
$250
$300
$100
$150
$200
$250
$300
97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Median New & Existing Home Sale Prices
In Thousands, Single-Family
Median New Sales Price: Dec @ $270,200
Median Existing Sales Price: Dec @ $197,900
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


9

Existing Home Sales


Existing home sales rebounded in December to
a 4.87 million-unit pace. Over the last year, all-
cash transactions have played a large role in
overall sales activity. Although this activity has
helped fuel the housing recovery by clearing up
foreclosures and short sales, the spike in prices
for lower priced homes has pushed many
potential first-time home buyers to the
sidelines. Investor purchases have shown signs
of pulling back more recently, however.
Listed inventories fell to 1.86 million units, but
we are in the seasonally slow period of the year.
We will get a better idea of the pace of activity
this spring, when the bulk of for-sale inventory
tends to come on the market.










Source: National Association of Realtors, U.S. Department of
Commerce, CoreLogic and
Wells Fargo Securities, LLC
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
7.5
99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Existing Home Resales
Seasonally Adjusted Annual Rate - In Millions
Existing Home Sales: Dec @ 4.87 Million
2.0
3.0
4.0
5.0
6.0
7.0
2.0
3.0
4.0
5.0
6.0
7.0
86 88 90 92 94 96 98 00 02 04 06 08 10 12 14
Existing Single-Family Home Resales
Seasonally Adjusted Annual Rate - In Millions
Existing Home Sales: Dec @ 4.3 Million
3
4
5
6
7
8
9
10
11
12
3
4
5
6
7
8
9
10
11
12
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Existing Single-Family Home Supply
In Months, Seasonally Adjusted
Home Supply: Dec @ 4.6
6-Month Moving Average: Dec @ 4.9
-15%
-10%
-5%
0%
5%
10%
15%
20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
$0-100K $100-250K$250-500K$500-750K $750-1M $1M+
Percent Change in Existing-Home Sales
Year-over-Year Percent Change, By Price Range
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
92 94 96 98 00 02 04 06 08 10 12
Single-Family Home Inventory
Millions of Units
New Homes: Dec @ 0.17M
Existing Homes: Dec @ 1.64M
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


10

Home Prices


Home price appreciation has begun to moderate
due to stronger year-over-year comparison as
well as some softening in investor demand. An
influx of investors concentrated in the parts of
the housing market where prices overshot the
most, further exaggerated the turnaround in
prices and give the impression that the housing
recovery is stronger than it actually is. The
underlying fundamentals, such as job growth,
income growth and household formations, have
improved much more modestly.
With investors pulling back and monetary policy
set to become progressively less supportive of
housing, we expect price appreciation to
decelerate to the mid- to low-single digit range.










Source: CoreLogic, NAR, S&P, FHFA, U.S. Department of
Commerce and Wells Fargo Securities, LLC
-6.0%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
-12.5%
-10.0%
-7.5%
-5.0%
-2.5%
0.0%
2.5%
5.0%
7.5%
10.0%
12.5%
15.0%
96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
FHFA Purchase-Only Index, NSA
Bars = Q/Q % Change Line = Yr/Yr % Change
Purchase-Only Index: Q3 @ 2.1% (Right Axis)
Purchase-Only Index: Q3 @ 8.5% (Left Axis)
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
-24%
-18%
-12%
-6%
0%
6%
12%
18%
24%
88 90 92 94 96 98 00 02 04 06 08 10 12
S&P Case-Shiller National Home Price Index, NSA
Bars = Q/Q % Change Line = Yr/Yr % Change
National Home Price Index: Q3 @ 3.2% (Right Axis)
National Home Price Index: Q3 @ 11.2% (Left Axis)
-32%
-24%
-16%
-8%
0%
8%
16%
24%
-32%
-24%
-16%
-8%
0%
8%
16%
24%
96 98 00 02 04 06 08 10 12 14
Home Prices
Year-over-Year Percentage Change
Median Sale Price: Dec @ $197,900
Median Sales Price 3-M Mov. Avg.: Dec @ 10.1%
FHFA (OFHEO) Purchase Only Index: Nov @ 7.6%
S&P Case-Shiller Composite 10: Nov @ 13.8%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
97 99 01 03 05 07 09 11 13
Median Single-Family Existing Home Price
Year-over-Year Percentage Change
Median Price Change: Dec @ 9.8%
6-Month Moving Average: Dec @ 11.2%
Median Sale Price: Dec @ $197,900
26%
28%
30%
32%
34%
36%
26%
28%
30%
32%
34%
36%
Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13
First-Time Home Buyers
Share of Existing-Home Sales
Share of Total Existing-Home Sales: Dec @ 27%
Housing Chartbook: February 2014 WELLS FARGO SECURITIES, LLC
February 10, 2014 ECONOMICS GROUP


11

Renovation and Remodeling


The share of owner-occupied homes built more
than four decades ago now represent more than
40 percent of total housing stock. Older housing
units could bode well for remodeling activity
and new construction in the years ahead.
Spending on residential improvements
accounted for nearly 40 percent of total
residential outlays in 2012. Part of the increase
reflects investors upgrading formerly distressed
properties.
Rising home prices has also helped fuel
spending on improvements, as homeowners
benefitted from rising home equity. The NAHB
Remodeling Market Index recently hit its
highest level since early 2004.










Source: Joint Center for Housing Studies, U.S. Department
of Commerce, NAHB and
Wells Fargo Securities, LLC
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Residential Investment
Year-over-Year Percent Change
Improvements: Q4 @ 7.7%
Res. Investment Ex. Improvements: Q4 @ 16.2%
15
20
25
30
35
40
45
50
55
60
65
15
20
25
30
35
40
45
50
55
60
65
01 02 03 04 05 06 07 08 09 10 11 12 13
NAHB Remoldeling Market Index
Index, Seasonally Adjusted
Overall Index: Q4 @ 57.0
Future Expectations: Q4 @ 58.0
Backlog of Remodeling Jobs: Q4 @ 59.0
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Residential Investment
Billions of Dollars
Other: Q4 @ $6.6 Billion
Brokers' Commissions: Q4 @ $127.1 Billion
Improvements: Q4 @ $177.0 Billion
New Building: Q4 @ $209.5 Billion
1969 or earlier
41%
1970 to 1979
17%
1980 to 1989
13%
1990 to 1999
14%
2000 to 2009
15%
Share of Owner-Occupied Housing
Year Structure Built - 2011
$100
$110
$120
$130
$140
$150
$160
$100
$110
$120
$130
$140
$150
$160
2009 2010 2011 2012 2013 2014
Leading Indicator of Remodeling Activity
In Billions, 4-Q Moving Total, Harvard Joint Center for Housing Studies
JCHS
Forecast


Wells Fargo Securities, LLC Economics Group

Diane Schumaker-Krieg Global Head of Research,
Economics & Strategy
(704) 410-1801
(212) 214-5070
diane.schumaker@wellsfargo.com
John E. Silvia, Ph.D. Chief Economist (704) 410-3275 john.silvia@wellsfargo.com
Mark Vitner Senior Economist (704) 410-3277 mark.vitner@wellsfargo.com
Jay H. Bryson, Ph.D. Global Economist (704) 410-3274 jay.bryson@wellsfargo.com
Sam Bullard Senior Economist (704) 410-3280 sam.bullard@wellsfargo.com
Nick Bennenbroek Currency Strategist (212) 214-5636 nicholas.bennenbroek@wellsfargo.com
Eugenio J. Alemn, Ph.D. Senior Economist (704) 410-3273 eugenio.j.aleman@wellsfargo.com
Anika R. Khan Senior Economist (704) 410-3271 anika.khan@wellsfargo.com
Azhar Iqbal Econometrician (704) 410-3270 azhar.iqbal@wellsfargo.com
Tim Quinlan Economist (704) 410-3283 tim.quinlan@wellsfargo.com
Eric Viloria, CFA Currency Strategist (212) 214-5637 eric.viloria@wellsfargo.com
Michael A. Brown Economist (704) 410-3278 michael.a.brown@wellsfargo.com
Sarah Watt House Economist (704) 410-3282 sarah.house@wellsfargo.com
Michael T. Wolf Economist (704) 410-3286 michael.t.wolf@wellsfargo.com
Zachary Griffiths Economic Analyst (704) 410-3284 zachary.griffiths@wellsfargo.com
Mackenzie Miller Economic Analyst (704) 410-3358 mackenzie.miller@wellsfargo.com
Blaire Zachary Economic Analyst (704) 410-3359 blaire.a.zachary@wellsfargo.com
Peg Gavin Executive Assistant (704) 410-3279 peg.gavin@wellsfargo.com
Cyndi Burris Senior Admin. Assistant (704) 410-3272 cyndi.burris@wellsfargo.com

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