Housing starts surge to fastest pace since 2008

, Wed Oct 17, 2012 – Groundbreaking on new U.S. homes surged in September to its fastest pace in more than four years, a sign the housing sector’s budding recovery is gaining traction.

The Commerce Department said on Wednesday housing starts increased 15 percent last month to a seasonally adjusted annual rate of 872,000 units. That was the quickest pace since July 2008, though data on housing starts is volatile and subject to substantial revisions.

Augusts’ starts were revised to show a 758,000-unit pace instead of the previously reported 750,000.

Economists polled by Reuters had forecast residential construction rising to a 770,000-unit rate.

The housing starts rate is now about 40 percent of its peak in January 2006. The housing market, the Achilles heel of the recovery from the 2007-09 recession, is slowly healing.

September groundbreaking for single-family homes, the largest segment of the market, rose 11 percent to a 603,000-unit pace – the highest level since August 2008. Starts for multi-family homes climbed 25.1 percent.

Building permits grew by 11.6 percent to an 894,000-unit pace in September. August’s permits were unrevised at 801,000 units.

Economists had expected permits to rise to an 810,000-unit pace last month.

Wells Fargo reports higher profit on mortgage gains

SAN FRANCISCO, Fri Apr 13, 2012 – A surge in mortgage banking income lifted Wells Fargo & Co’s. first-quarter profit by 13 percent, but its shares fell on concern that the bank is falling behind on its drive to cut expenses.

Wells Fargo, the fourth largest U.S. bank and the country’s biggest mortgage lender and servicer, said on Friday that net income increased to $4.25 billion, or 75 cents a share, from $3.76 billion, or 67 cents a share, year earlier.

The results beat analysts’ average forecast of 73 cents per share, according to Thomson Reuters I/B/E/S, but the bank’s shares opened lower and were off 1.4 percent in early trading.

Shares of JPMorgan Chase & Co., which also reported stronger-than-expected results on Friday, were trading down by 2.2 percent and the KBW Banks Index .BKX was off 2.4 percent.

Total revenue at Wells rose to $21.6 billion, from $20.3 billion a year earlier, signaling stronger demand for consumer and commercial loans.

“We’re seeing improvement,” Wells Chairman and Chief Executive John Stumpf said in a conference call with respect to the U.S. housing market. Profit in general benefited from “improvement in the economy,” he said.

The bank’s expenses increased to $13 billion from $12.5 billion in the fourth quarter, partly because of higher personnel costs related to mortgage banking compensation and higher legal reserves.

Wells said it is targeting expenses of $11.25 billion in the fourth quarter, at the upper end of the range set out in its efficiency program called Project Compass. The bank previously said expenses could drop to as low as $10.75 billion, but it said on Friday higher-than-expected revenue from its mortgage business and acquisitions would also result in higher costs.

Job growth surges, jobless rate drops to 8.3 percent

WASHINGTON – The economy created jobs at the fastest pace in nine months in January and the unemployment rate dropped to a near three-year low of 8.3 percent, providing some measure of comfort for President Barack Obama who faces re-election in November.

Nonfarm payrolls jumped 243,000, the Labor Department said on Friday, as factory jobs grew by the most in a year. The gain in overall employment was the largest since April and outpaced economists’ expectations for a rise of only 150,000.

The report pointed to underlying strength in the economy, despite expectations that growth will slow in the first quarter.

Economists had expected the jobless rate to hold steady at 8.5 percent. The rate is the lowest since February 2009 and has dropped 0.8 percentage point since August.

The decline last month reflected large gains in employment in the separate household survey from which the unemployment rate is derived.

“It’s certainly supportive of the U.S. recovery and suggests that momentum is gathering pace,” said Brian Dolan, chief market strategist at FOREX.com in Bedminster, N.Y.

U.S. Treasury debt prices fell sharply on the report, while stock index futures surged. The dollar rose against the yen.

The continued labor market improvement could be a relief for Obama who faces a tough re-election.