Wells Fargo economists less bullish on housing market gains this year

The housing gurus at Wells Fargo say while 2011 ended on a "fairly solid note," the latest data for 2012 is a "little less heartening."

By the end of last year, sales were appearing to improve, inventories appeared to be declining and builder optimism had posted four increases in a row, according to Well's Fargo Economic Commentary, released Wednesday.

But cracks are now appearing in that rosy picture.

New home sales for December showed sales weakening somewhat, the commentary says. And the S&P/Case-Shiller Home Price Index, released Tuesday, showed a larger-than expected decline in November.

Still, the analysts expect sales of both new and existing homes to improve this year. New home construction will also post its first meaningful gain since the home-buyer tax credit frenzy, the report says.

"We remain somewhat optimistic about the outlook for 2012, but we generally see less improvement than does the consensus," the commentary says. "Unfortunately, there is still much work to be completed before a self-sustaining recovery in housing can take place."