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Beige Book: A housing market divided in improvement

Residential real estate activity varies across the board

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Residential real estate activity was split between the twelve Federal Reserve Districts, with sales of existing homes and construction of new homes generally expanding or holding steady in about half of the districts, according to the latest Beige Book from the Federal Reserve.

The previous Beige Book in July posted similar results, recording mixed activity across the country and reports of low inventories and increasing home prices coupled with varying levels of demand.

“Barely half of the Districts reported stable or growing residential real estate activity related to the construction of new homes and sales of existing houses. New construction and existing home sales generally grew modestly; market conditions tended to vary by metropolitan area and by neighborhood within metropolitan areas,” the report said.

First District: Boston

June closed sales of single-family homes were mixed compared to June 2013, with sales declining in Massachusetts and Vermont and increasing in Connecticut and Maine. Sales remained unchanged in Rhode Island.

Median sales price changes also varied by state. Prices increased in Massachusetts and declined in Rhode Island and Vermont, while holding steady in Connecticut and Maine compared to June 2013.

Second District: New York

Since the July report, New York City’s markets have been mixed but firmer.

“New York City’s rental market has continued to strengthen, with rents rising at a moderately brisk rate, while the city’s co-op and condo market has been generally stable,” the report said.

A contact in the city noted that there is a good deal of new development in the pipeline and expects sales and closings to pick up in the months ahead.

Third District: Philadelphia

Homebuilders reported little change from the previous book, although results vary across the district.

“First-time homebuyers are nonexistent,” according to a south-central homebuilder who reported that this August is worse than last year.

On a year-over-year basis, most major markets remain somewhat weaker.

Fourth District: Cleveland

Although several homebuilders are saying that their construction backlogs are strong at this time due to a sales surge in the spring, they are uncertain about activity several months down the road.

Since July, sales of new and existing single-family homes have leveled off. Year-to-date purchases through July were slightly lower compared to a year ago.

Fifth District: Richmond

The housing market improved in July in Richmond.

A Charlotte agent stated that closed sales and pending sales were up year over year, while a Northern Virginia Realtor reported above-average buyer traffic.

Meanwhile, a broker in Washington, D.C. said that summer sales had picked up slightly from the slump caused by an unusually harsh winter.

As a whole, the district’s home prices were generally flat and average days on the market appeared little changed in recent weeks, with higher-end homes continuing to sell more quickly than homes at other price points

Sixth District: Atlanta

According to brokers in the area, home sales had increased from their year-earlier level, and the majority of brokers indicated that inventory levels remained flat or declined on a year-over-year basis.

But despite this, the outlook among brokers worsened somewhat from previous reports as most expect home sales to remain flat or decline slightly over the next three months.

On the positive side, reports from district builders remained fairly positive.

Seventh District: Chicago

Chicago’s construction and real estate activity increased over the reporting period. Residential construction expanded at a moderate pace in both the single- and multi-family markets, as builders continued to note that activity varied widely by neighborhood.

“Contacts were optimistic that sales would gain momentum in the fall, as continuing increases in home prices and residential rents signal solid underlying demand,” the report said.  

Eighth District: St. Louis

On a year-over-year basis, home sales decreased in the  St. Louis district.

Compared with the same period in 2013, July 2014 year-to-date home sales were down 3% in Louisville, 4% in Little Rock, 6% in Memphis and 4% in St. Louis.

In addition, residential construction declined in the majority of the District’s metro areas.

Ninth District: Minneapolis

In Minneapolis, residential construction increased from last year.

Based on a Minneapolis Fed mid-August survey of Ninth District contacts, a large majority of respondents from the construction sector thought sales revenue would increase over the next four quarters.

Tenth District: Kansas City

Kansas City recorded a moderate expansion in real estate activity in early August, supported by increased construction and stronger sales activity.

Meanwhile, residential home sales edged up, with sales of low- and medium-priced homes remaining more robust than sales of higher-priced homes.

Home prices continued to rise, and inventories increased slightly compared to the previous survey period.

Eleventh District: Dallas

Dallas posted home sales growing at a steady to slightly slower pace since the last report, along with sales generally even with last year’s levels.

Furthermore, new home prices continued to rise, in part due to low inventories of finished lots and high construction costs, and contacts noted decreased affordability for entry-level buyers.

Twelfth District: San Francisco

Although real estate activity advanced, growth in the residential sector has slowed since the start of the year in many areas.

“Some contacts reported a slower overall pace of transactions, while others reported a pickup, especially for mid-priced homes,” the report said.

Additionally, prices increased in most areas, but generally at a slower pace than earlier in the year.

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