Gannett (GCI) was among the media companies rising after an upgrade early Wednesday.

Wells Fargo analysts upped their rating for Gannett to Outperform from Underperform and increased their rating for New York Times (NYT) to Market Perform from Underperform.

After years of downward revenue estimate revisions, it appears as though the newspaper ad market is improving more quickly than we previously anticipated, particularly in December, wrote analyst Jon Janedis.

Janedis said checks indicate rapid improvement in the ad pages at The Wall Street Journal and the Times from October to December, and also in the fourth quarter over the third quarter. Banks/financials, national auto and telecom ads in particular are all up more than 75%, he said. While the sustainability is unclear, the comparisons should be particularly easy for the next several months.

The bottom line: Wells Fargo analysts say their prior negative view was based largely on the belief that pressures including circulation decline would lead to double-digit ad decline and that expense pressures would weigh on earnings.

However, over the past several weeks, our proprietary page counts suggest that December could be the best month for the industry in [roughly] three years, they wrote. While the sustainability of the improvement is unclear, very easy comparisons and ad revenue trends should allow the industry to improve modestly in the coming quarters.

Toll Brothers Down

Shares of luxury home builder Toll Brothers (TOL) initially opened higher but lost their luster after two reports showed the road to stability in housing might not be a straight path up.

New homes sales fell unexpectedly by 11.2% in November to their lowest level in seven months, according to data released Wednesday by the Department of Commerce. There were 355,000 new home sales in November, down from 400,000 in October and compared to expectations for 438,000. The October figure was also revised down by 30,000.

The Mortgage Bankers Association reported earlier Wednesday that application volume also tapered off. Its mortgage composite index, a measure of loan application volume, fell 10.7% in the week ended Dec. 18 to a seasonally adjusted 595.8, the lowest level since late October.

The decline in volume came as the average contract interest rate for 30-year fixed-rate mortgages remained flat at 4.92%.

Fellow home stocks D.R. Horton (DHI) and Hovnanian (HOV) were also slightly lower after the data, while KB Home (KBH) and Pulte Homes (PHM) remained more than 1% higher.

The bottom line: I think the problem is you still have existing homes out there so there s just not the need for new homes, says Bill Stone, chief investment strategist at PNC Wealth Management. When you have so much inventory languishing, the best thing do is clean it out -- so that doesn t make me less positive when you look at what happened yesterday.

Data on Tuesday showed existing home sales rose 7.4% in November to 6.54 million units, surpassing an expected 6.25 million units.

Of course, if you happen to be a home builder, this isn t necessarily good news, says Stone. But the more you can clear out the existing homes, the new home sales will follow.