Fed Policy Aims to Put Housing
on a Sturdier Foundation  

CHARLOTTE, NORTH CAROLINA

From Wells Fargo Economics Group

The Federal Reserve's latest attempt to stimulate economic activity and reduce unemployment should also help build a sturdier foundation under the housing recovery. The Federal Reserve has committed to buying $40 billion per month of mortgage-backed securities until economically there is evidence that a self-reinforcing recovery is in place...

What really ails the economy is the lack of a coherent fiscal policy, and monetary policy is not a perfect substitute for fiscal policy. Any benefit to the housing market from the Fed's latest move is likely limited until we see some resolution to the issues surrounding the fiscal cliff, which means the real payoff from even lower mortgage rates likely will not be apparent in the housing market until early 2013.

Even without additional actions from the Federal Reserve, the housing recovery appears to have gained some momentum over the past year. Prices have clearly firmed, although the summer typically sees stronger prices than the fall and winter months. We believe prices have bottomed and look for most price measures to rise at around a two percent annual rate over the next couple of years.

Looking Ahead to the 2013 Spring Selling Season

Sales of new and existing homes improved this past year and appear poised for even stronger gains in 2013. Through the first seven months of 2012, sales of new homes are running 20.8 percent ahead of their year-ago pace. Sales of existing homes have also improved, with single-family homes up 7.9 percent through the first seven months of the year and sales of condominiums and townhomes rising 3.2 percent.

Home sales appear to have hit a bit of a speed bump late this summer. Moreover, several builders have noted that cancellations have increased. We suspect that much of the slowdown in sales and the recent rise in contract cancellations is due to rising jitters ahead of the approaching fiscal cliff, which has led to a slowdown in hiring and reversed recent gains in consumer confidence.

The Fed's latest policy moves should help allay these fears, as open-ended purchases of mortgage-backed securities reduce mortgage rates further and increase the attractiveness of non-agency mortgages. The added liquidity that the Federal Reserve is providing to the mortgage market should also bolster builder and lender confidence, which should provide a real boost to sales and construction activity during the key 2013 spring selling season, when issues surrounding the fiscal cliff are hopefully behind us.

Builders are poised to increase home construction across a number of key markets. Many have purchased lots at greatly discounted prices and have seen buyer traffic improve in recent months. With inventories of new homes at all-time lows and shadow inventories declining, this spring could very well see the pace of the housing recovery ratchet up in a significant way. This may have been part of the motivation for the Fed's actions. Monetary policy is typically more effective when it is going with the tide instead of trying to reverse it.

Harmaja.

Tulikivi's Vesta Award-Winning  Harmaja Fireplace Will Be at the Green Festival in D.C. 

WASHINGTON, D.C.

Tulikivi, the world's largest manufacturer of heat-retaining fireplaces, announced today that the popular Harmaja (har my ah) model soapstone fireplace will make its first official appearance in the nation's capital when Green Festival rolls into town Sept. 29-30, 2012.

Tulikivi won a Vesta Award in the Wood Products category for the Harmaja unit, honoring the company for innovation in product design and technology. The fireplace is attractively priced and combines convection with radiant heat. 

"The Harmaja provides the quick-release heat of a wood stove, with the long-lasting radiant warmth only a masonry heater can provide," said Jeremy Johnson, Tulikivi's marketing and sales manager for North America. "They are also the only masonry stoves in North America tested and listed to UL and ULC standards.  Plus, it is eco-friendly because the wood burns hot and complete, ensuring low emissions," he explained. "People love it because they always wake up warm!"

Tulikivi already has exciting news for 2013, including:

•  Tulikivi has entered in The Next Generation Wood Stove Design Challenge. The Challenge seeks to promote next generation of stove designs, build a community of innovators and showcase stove innovation to the public. 

Visit website.   

• Tulikivi will be launching water heating as an option, debuting this valuable feature at the Hearth, Patio & Barbecue Expo in Orlando next March.

Visit website. 

Bali.

Sphinx to Show at the ICFA in Chicago 

DALTON, GEORGIA

Sphinx by Oriental Weavers will be showing for the second year in a row at the Chicago International Casual Furniture and Accessories Market.

This year Sphinx has more than doubled its space and will be located on the eighth floor of Merchandise Mart suite # 8-4046. The company will be featuring this year's new indoor/outdoor collection, Bali, and its new casual yet sophisticated Karavia collection. It will also be showcasing the ever-popular Caspian, Montego and Lanai collections.

"Outdoor décor continues to be the fastest growing category in home décor, said Pat Muschamp, Oriental Weavers' vice president of Sales, "and consumers are branching out with very fashionable outdoor textiles. Our indoor/outdoor collections have proven to be right on trend with today's outdoor fabrics and colors. As the largest manufacturer of indoor/outdoor area rugs in the world, we are able to offer the widest selection of designs and constructions in the industry."