Beige Book Summarizes Housing Markets in Fed Districts

The Summary of Commentary on Current Economic Conditions by Federal Reserve District or the so-called Beige Book was released on Wednesday.  The document consolidates comments from non-Federal Reserve contacts and sources on conditions prior to September 28 and is not a commentary on the views of Federal Reserve officials.</p

Most Districts reported conditionsrnhad improved since the last report with strengthening existing home sales,rnrising residential constructions, and prices described as steady to increasing.  Declining inventories were noted in thernBoston, Atlanta, Minneapolis, Dallas, and San Francisco Districts. Here is arnbrief summary of residential real estate information from each of the 12rnFederal Reserve Banks.</p

First District – Boston </p

Annual sales growth continued inrnAugust in both single family and condo markets. rnLow interest rates and affordable prices contributed to improving salesrnand increased residential rents.  Therernwere reports of improved lending conditions but most contacts said mortgagernqualification remains difficult.  </p

Median prices appear to be mixed byrnarea.  Prices in the Great Boston area arernreported to have declined rather than increased as expected because ofrnsignificant demand and dwindling inventory.  The decline might be the result of increasedrnsales of lower priced properties.  </p

Inventory throughout the regionrncontinues to decline and some contacts fear this will discourage buyers andrnalso sellers who may not be able to find a replacement property.  There are increasing reports of multiple bidsrnand sales over asking price.  </p

Contacts expect sales to continue torngrow on an annual basis in the next several months but many note that conditionsrnremain fragile and recovery could be derailed by deterioration in economicrnconditions.  Some contacts expect anrninflux of sellers in the spring which would reverse declining inventory levels.rn Median sale prices are expected tornremain flat or improve modestly in the coming months. </p

Second District – New York</p

Residential real estate hasrncontinued to improve.  The Buffalo marketrnflattened in August but picked up sharply in September while Northern NewrnJersey’s shows further modest signs of improvement and sustained pickup in rentalrnapartment construction.  Home pricesrnacross northern New Jersey are recovering gradually and distress sales stillrnhold down but no longer push down prices,  Manhattan’s co-op and condo market hasrnremained stable–both in terms of sales activity and prices with strength atrnthe upper end partly fueled by foreign buyers. Market conditions are reportedrnto have strengthened in Brooklyn and especially Queens in the third quarter,rnwhile Long Island’s housing market is weak but stabilizing. New York City’s rentalrnmarket remains robust: rents have decelerated a bit in recent months but arernstill estimated to be rising at a 6-8 percent annual pace. </p

Third district – Philadelphia </p

Builders reported a drop-off inrntraffic and slower sales in August and early September and lament that peoplernare choosing to rent rather than buy even when rents exceed ownership costs. Residentialrnbrokers reported somewhat stronger annual sales growth in August than earlierrnthought and continued strength into September. Inventory levels of real estaternlistings remain at lower levels than one year ago with no signs of arnsignificant emerging shadow inventory. Multiple bids are reported for homes pricedrnbetween $250,000 and $400,000; more very high-end listings are beginning tornappear and test the market. </p

FourthrnDistrict-Cleveland</p

Builders report that single-familyrnhousing starts were mixed and construction activity is about the same as a yearrnago.  Builders expect a modest rise in startsrnin the near term but spec building remains on the low side, due in partrnfinancing difficulties and the costs of some construction materials which rosernmodestly.  List prices of new-homes heldrnsteady and most builders indicated that they have reduced discounting.  There were sales contracts across allrnprice-point categories. Sales of existing homes continued to show improvement,rnalthough inventory is tight in the mid-price range. </p

FifthrnDistrict–Richmond </p

Residential activity has improved sincernthe last report with lower-priced properties selling more quickly in thernRichmond area while an agent in the D.C. area indicated that sales in thern$800,000-plus range were rising relatively quickly.  Housing inventories in DC are reported atrneight year lows, pushing up prices.  ArnRealtor in the Fredericksburg area reported that in her agency sales were uprnforty percent over last year and she expected the stronger market to continue.   Another contact said that foreclosures inrncentral Maryland had fallen thirty percent from the previous quarter, bolsteringrnhousing prices.  A report described thernhousing market in North Carolina as mostly unchanged, with the exception of anrnimprovement in the Research Triangle. Another source reported a slowdown inrnhousing in the Hagerstown area. </p

SixthrnDistrict–Atlanta </p

District residential brokersrnindicated that recent existing home sales and buyer traffic were up slightlyrncompared with year-earlier levels and noted declining inventories continuing tornput upward pressure on home prices in many markets. Contacts anticipate modestrnhome price gains over the next year; however, it is expected that neighborhoodsrnhard hit by foreclosures will continue to experience home price weakness forrnsome time. </p

District homebuilders remainedrnpositive, indicating that recent new home sales and construction activity werernup slightly from last year and new home inventories remained lower. Constructionrnremained mostly limited to more desirable locations such as highly regardedrnschool districts. Southeastern builders also reported that finished lotrninventories varied across the region, but most anticipate a decline in thoserninventories over the next six months. Many indicated that financing termsrnremain prohibitive for acquisition and development. New home prices werernslightly up compared with a year earlier. Homebuilders also witnessed strongerrnbuyer traffic. </p

SeventhrnDistrict–Chicago</p

Growth in construction moderatedrnsome from the previous reporting period. Homebuilders indicated that newrnsingle-family construction continued to rise at a slow but steady pace with multi-familyrnconstruction comparatively stronger. rnLending remains tight both for residential development and homernpurchases   Prices edged higher, despite a rise in shortrnsales. </p

EighthrnDistrict–St. Louis </p

Home sales increased throughout mostrnof the District on an annual basis. Compared with the same period in 2011, year-to-daternhome sales were up 15 percent in Louisville, 6 percent in Little Rock, 11rnpercent in Memphis, and 17 percent in St. Louis. Year-to-date single-familyrnhousing permits increased in the majority of the District metro areas comparedrnwith the same period in 2011 and were up 41 percent in Louisville, 27 percentrnin Little Rock, 39 percent in Memphis, and 17 percent in St. Louis. </p

NinthrnDistrict–Minneapolis </p

The value of residential buildingrnpermits in the Sioux Falls area in August was up 11 percent from the samernperiod last year and the number of permits more than doubled in thernMinneapolis-St. Paul area and in Billings. </p

Home sales in mid-September were uprn18 percent from the same period a year ago in the Minneapolis-St. Paul area;rnthe inventory of homes for sale was down 30 percent. In the Sioux Falls area,rnAugust home sales were up 44 percent, inventory was down 14 percent and thernmedian sales price rose 5 percent relative to a year earlier. </p

TenthrnDistrict–Kansas City </p

Solidrngrowth in residential real estate activity continued in late August andrnSeptember; housing starts edged higher, and some builders had trouble findingrnworkings in states with low unemployment rates. Expectations for futurernhomebuilding remained favorable and building materials were generallyrnavailable. Home sales continued to grow at a solid pace, though slightly slowerrnthan in the previous survey. Residential realtors said mid-range homes soldrnwell, while the luxury home market remained exceedingly slow. Several contactsrnnoted a rise in sales to investors, as rental rates increased. Expectations forrnfuture home sales flattened somewhat, but prices were generally rising andrnexpected to increase further. Mortgage lending activity eased slightly but onerncontact noted continued tightening of underwriting guidelines. </p

EleventhrnDistrict–Dallas </p

Single-family housing activityrncontinued to increase at a good pace over the past six weeks. Contacts said newrnand existing home sales outpaced expectations, and new home constructionrnactivity increased. Inventories of both new and existing homes remained tight,rnleading to price gains. Apartment construction picked up since the last report,rnand outlooks for the multifamily sector remain quite optimistic. </p

TwelfthrnDistrict–San Francisco  </p

Althoughrnstill well below its historical average, the sales pace for new and existingrnhomes picked up further in many areas and contacts said pent-up demand may spurrnadditional gains in coming months.  They notedrna decrease in inventory and a noticeable increase in construction activity.

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