All 12 Federal Reserve districts witnessed moderate to modest economic growth as the housing market continued to improve on rising home values and more demand for a smaller inventory of homes, the Fed's November Beige Book said Wednesday.
Residential real estate activity improved in most districts, with multifamily construction posting moderate to strong growth on its own.
Comparatively, single-family home sales slowed on seasonal trends, while activity in nonresidential real estate remained stable or slightly improved across many districts.
Real estate activity in Boston, Philadelphia, Chicago, St. Louis, Minneapolis and San Francisco improved, while other housing markets either remained steady or softened.
Most districts attributed the continued rise in home prices to increasing demand, low to declining levels of inventory and slowly rising new-home construction. However, prices are still moving at a slower pace than what was observed earlier in 2013.
Furthermore, the housing inventory of unsold homes hit a historical low in Philadelphia, Richmond, Chicago, Kansas City and Dallas.
But the problem does not solely lie in a lack of houses, with Philadelphia, Cleveland, Kansas City and San Francisco builders facing a scarcity of high-skilled trade workers.
According to HousingWire’s Census Bureau residential sales report released Wednesday, "Rising home sales caused the nation's housing supply to tumble from a 6.4-month inventory in September to a 4.9-month supply in October."
"There is still very little inventory of new homes and most are already sold, and the forecast for single-family construction activity is positive. Despite the slowdown, contacts were optimistic in their outlooks," representatives from the Dallas Fed district reported in the latest Beige Book survey.
Commercial real estate activity stayed relatively stable or improved slightly across a majority of the districts.
Meanwhile, the technology sector drove demand for commercial real estate in the San Francisco district, and Cleveland saw gains in affordable housing.
As a whole, market participants expect continued improvement in the Philadelphia, Atlanta, Kansas City and Dallas districts, while contacts in Boston and Cleveland remain cautiously optimistic.
Good news is coming from the New York district, with Manhattan’s rental market softening slightly and rents running modestly lower when compared to a year earlier.
"Builders are confident that demand for new homes will persist, and sales should pick up after the first of the year," the Cleveland district noted.
Multifamily housing experienced solid growth. One example is in Richmond, where they reported continued strength in multi-family construction.