Reports from the twelve Federal Reserve districts generally described modest to moderate economic growth at a pace similar to that noted in the previous Beige Book, last published in July.

Moderate growth was reported by the Cleveland, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco Districts, while modest growth was reported by the New York, Philadelphia, Richmond, Atlanta, and Kansas City Districts.

Residential construction and real estate activity were mixed since the previous report. Commercial construction and real estate activity grew in most Districts. Banking conditions continued to improve relative to the previous Beige Book.

Real Estate and Construction?Reports on residential construction and real estate activity were mixed. New York noted that single-family construction was sluggish in some areas, but that multifamily construction increased. Philadelphia reported only slight growth in home construction.

In August, single-family construction starts in the Cleveland District reached their highest level so far this year, though the number of starts year-to-date remained slightly lower than last year. Richmond noted that residential construction across the District increased slightly for custom homes. Atlanta reported that multifamily construction continued to increase across much of the District, while Chicago indicated that both single- and multi- family construction continued to expand.

Residential real estate contacts in the Atlanta District indicated that existing home sales and prices remained ahead of last year’s levels and inventory levels were down from a year ago. Chicago noted that home sales were somewhat lower, and growth in home prices and residential rents slowed. San Francisco reported that sales of single-family homes were stable since the previous report.

Here’s how it broke down by district.

First District – Boston

Closed sales of both single family homes and condominiums declined in August compared with a year earlier in at least four of the New England states. In Maine, by contrast, sales of single family homes increased as condominium sales decreased. Information for New Hampshire is not available. The median sales price also declined relative to August of last year for single family homes and condominiums in at least four states. The exception is Massachusetts, where prices for single family homes increased year- over-year for the twenty-third consecutive month and condominium prices rose for the fifteenth consecutive month. Massachusetts contacts say the sales decline and price increases are driven primarily by a shortage of inventory, as demand is steady; inventories have been falling on a year-over-year basis for more than two years. Contacts say affordability is a concern: “With prices on the rise, it’s becoming more difficult to save the down payment, especially with rents as high as they are. We are hearing that buyers are approaching their threshold for what they are willing to pay.” In contrast, Maine is seeing inventory increases and contacts expect to be busy in the fall market. In Connecticut and Maine, contacts report a need for higher paying jobs in their states to help sell the inventory of non-starter homes. As one contact in Maine stated, “We need the middle class to feel better. Right now they question what the next few years will be like.” Notwithstanding declines in closed sales and median sales prices, residential real estate contacts say they are cautious but optimistic.

Second District – New York

The District’s housing markets have been steady to stronger since the last report, while inventories have risen from unusually low levels in some areas. Rents have leveled off in Manhattan and Brooklyn—in part reflecting extensive luxury rental development coming on line—while rents in Queens have continued to increase briskly. New York City’s co-op and condo market was generally steady in the third quarter. Resale prices for apartments were little changed in Manhattan but continued to rise moderately in Brooklyn and Queens; sales volume was down more than 10% from the extraordinarily high levels of a year earlier but little changed from the second quarter.

Northern New Jersey’s housing market has continued to be mixed. Demand for single-family homes has remained sluggish, and so has new single-family construction, as builders remain reluctant to build for inventory. In contrast, a strong rental market has continued to spur multi-family construction, especially in areas easily accessible to New York City. Housing markets in western New York State flattened out in August and September, as both sales volume and prices leveled off.

?Multiple offers have become less common, as the inventory of available homes has increased from low levels.

Third District – Philadelphia

Third District homebuilders have continued to report slight growth in new home construction since the previous Beige Book period. Contacts credited lower gas prices for improving sales traffic and lower interest rates for improving contract signings. Construction activity is expected to continue at modest levels, as builders are starting some homes on spec to boost their inventory of move-in-ready homes before the end of the year. Residential real estate brokers reported little change in sales this period from the prior Beige Book period. On a year-over-year basis, sales have fallen in most major markets. Brokers noted that more deals are falling through now than prior to the recession, and bankers noted that fewer people are qualifying for mortgages. These observations have been borne out by recent monthly reports from Third District multilists that have seen positive year-over-year growth of pending contracts evolve into negative growth of contracts closed one month later. Brokers also reported that the months’ supply of inventory has begun to increase again. Still, brokers remain optimistic for some improvement in 2015.

Overall, nonresidential real estate contacts have reported little change since the previous Beige Book period in the pace of growth of construction and leasing activity, which remains slight. Construction activity continues to be greatest for industrial/warehouse building projects; however, some major office and residential projects have broken ground in Center City Philadelphia, and construction activity will accelerate next spring when the buildings begin to go vertical. An architecture and engineering firm reported that its business continued to exceed its plan, and it will be hiring again. Demand for the firm’s services has been especially strong from energy-related sectors. Contacts also reported improved leasing activity in downtown Philadelphia and suburban Philadelphia, especially for Class A office space. Strong demand continued in Center City Philadelphia for office, residential, and retail space. In the suburban

Philadelphia market, a developer noted that a “flight to quality” from older properties has driven rents higher for Class A office space and prompted ongoing renovations to upgrade older offices into Class A space.

Fourth District – Cleveland

Sales of new and existing single-family homes showed a modest decline in many parts of the District since the last report. Year-to-date sales through August were lower compared to a year ago. Most builders expect that activity will stabilize at current levels, though some expressed concern about the impact of a potential rise in interest rates combined with continued strict lending standards. Multifamily development (market rate, affordable, and senior) was characterized as very strong, with occupancy rates greater than 95%. In August, single-family construction starts across the District were at their highest level so far this year. However, the number of starts year-to-date remains slightly lower compared to the same time period in 2013. New-home contracts were mainly in the move-up price-point categories, though activity in the first-time buyer category continues to slowly improve. Some builders anticipate a modest rise in new-home prices before year’s end, which they attribute to rising material and labor costs. The upward trend seen in sale prices of existing homes has leveled off, but the average price remains higher than the average level for 2013 as a whole.

Fifth District – Richmond

District housing market activity grew at a somewhat slower pace since the previous report. Most brokers indicated that buyer traffic was steady, on a seasonally adjusted basis. Most Realtors reported a slight increase in home prices, although one South Carolina broker reported a small decrease in both single-family and condominium sale prices. A contact in the Hampton Roads region of Virginia stated that the number of condominium sales was only slightly higher; apartment rental activity remained steady. Inventory reports were mixed. Realtors in South Carolina, North Carolina, and Virginia saw seasonal declines in inventories, while District of Columbia and northern Virginia brokers reported steady or rising inventories. Days on the market varied by location. Average market times decreased for Realtors in Richmond, Charlotte, and Myrtle Beach, but contacts in the nation’s capital and Greensboro reported no change; a northern Virginia Realtor noted a slight increase. Construction across the District increased slightly for custom homes. A South Carolina Realtor saw no new multifamily construction and a Virginia Beach broker stated that multifamily growth is slowing down because of overbuilding. In contrast, an agent in Asheville stated that multifamily construction has “ramped up.”

Sixth District – Atlanta

Many District brokers reported growth in activity since the previous report. Most brokers indicated that home sales met or exceeded their plan for the reporting period, but a growing share of contacts reported that sales fell short of their plan. The majority of brokers indicated that inventory levels remained flat or continued to decline on a year-over-year basis and home prices were ahead of their year-earlier level. Regarding the outlook, optimism about future sales activity waned from earlier reports with most brokers expecting home sales to remain flat or decline slightly over the next three months with some of the expected decline being attributed to seasonal factors.

Reports from District builders remained fairly positive. The majority reported that recent construction activity either met or exceeded their plan for the period. Many builders noted that construction activity and new home sales were ahead of their year-ago levels. Half of contacted builders indicated that their inventory of unsold homes was down from a year ago. Builders also continued to report modest home price appreciation. The outlook among builders for new home sales and construction activity remains positive.

For Districts 7-12, click below.

Seventh District – Chicago

Construction and real estate activity also increased moderately over the reporting period. Residential construction continued to expand in both the single- and multi-family markets. An industry contact noted that with homebuilders beginning to exhaust their existing inventories of vacant in-fill lots, single-family construction might slow in some areas of the District until planned projects start to come online. Builders also noted improved availability of financing for new projects, but indicated that difficulties in finding skilled labor have often delayed construction. Home sales were somewhat lower, and growth in home prices and residential rents slowed. Real estate contacts expected sales to return to normal levels in the coming months, pointing to recent increases in online and open-house traffic. Nonresidential construction increased, driven in large part by demand for industrial and office buildings. Automotive parts manufacturers, in particular, remained a source of demand for industrial buildings. Commercial real estate activity continued to expand, with contacts noting strong demand for medical office buildings. Vacancies ticked down, rents rose, and leasing of industrial buildings, office space, and retail space all increased.

Eighth District – St. Louis

Home sales decreased in the Eighth District on a year-over-year basis. Compared with the same period in 2013, August 2014 year-to-date home sales were down 3% in Little Rock, 2% in Louisville, 8% in Memphis, and 5% in St. Louis. Residential construction declined in the majority of the District’s metro areas. August 2014 year-to-date single-family housing permits decreased in the majority of the District’s metro areas compared with the same period in 2013. In particular, permits decreased 29% in Little Rock, 8% in Louisville, and 3% in St. Louis. In contrast, permits increased 2% in Memphis.

Ninth District – Minneapolis

Residential real estate market activity decreased since the previous report. In the Sioux Falls area, August home sales were down 8%, inventory increased 11%, and the?median sales price increased 5% relative to a year earlier. August home sales were?down 5% from the same period a year ago in Minnesota; the inventory of homes for?sale increased 13%, and the median sales price rose 4%. Several Minnesota real estate professionals and investors recently noted that out-of-state investor groups are paying above-market prices for single-family rental properties in Minneapolis. Meanwhile, August home sales in western Wisconsin were up 8% from a year ago; the median sales price was flat.

Tenth District – Kansas City

On balance, District real estate activity increased slightly in late August and September with residential real estate activity flat and commercial real estate activity increasing moderately. Residential home sales were unchanged compared to the previous survey period and were similar to year-ago levels. Sales of low- and medium-priced homes continued to run ahead of sales for higher-priced homes. Home prices increased modestly, and inventories continued to rise slightly. Most residential real estate contacts expected home sales to decrease in the coming months primarily reflecting typical seasonal declines. Housing starts and construction supply sales edged down since the previous survey period. Residential construction activity was expected to pick up slightly as builders anticipated a slight increase in traffic of potential buyers. Commercial real estate activity increased moderately relative to the previous survey period as contacts continued to report a decline in vacancy rates, an increase in absorption, higher sales, and increased construction activity. The commercial real estate market was expected to strengthen at a moderate pace over the coming months.

Eleventh District – Dallas

The District’s housing sector remained solid overall. Single- family home sales were flat to down over the reporting period. Land prices continued to trend upward at the same pace; however, the pace of home price appreciation slowed, with one respondent noting a slight pushback in pricing from buyers. Contacts said a few homebuilders were expanding production of more- affordable high-density housing. Robust apartment demand kept occupancy high and rent growth solid despite elevated levels of multifamily construction activity. Single- and multifamily housing contacts were optimistic in their near-term outlooks.

Twelfth District – San Francisco

 Real estate activity in the District advanced, but growth trends in the residential sector were uneven across the District. Contacts reported that in a few areas, prices of single-family homes accelerated, while in other areas the pace of price increases declined. In a few areas, year-to-date single-family housing starts were down compared with the same period in 2013. Sales of single-family homes were stable during the reporting period. Overall, multifamily construction and development activity remained strong. Commercial office demand was robust in San Francisco and Silicon Valley, and rents increased compared with the previous reporting period. In Los Angeles, commercial real estate construction picked up.

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