Lending was up and home sales increased in most of the 12 Federal Reserve districts, according to the latest Beige Book released Wednesday by the central bank.

Here’s what the book says about the real estate and mortgage finance space, with a little spice from free, stock photography provided by soon-to-be released movie "Unfinished Business."  The back story on that movie promotion is found here.

Reports from the twelve Federal Reserve Districts indicate that economic activity continued to expand across most regions and sectors from early January through mid-February.

Home sales increased in most Districts, while reports on residential construction were mixed. Commercial real estate market conditions remained stable or improved across the Districts.

Banking conditions generally improved, and credit quality remained largely unchanged.

Payrolls remained stable or expanded across the Districts, and contacts noted employment gains in a broad range of sectors. Wage pressures remained moderate and were limited largely to workers in skilled occupations.

Residential real estate conditions were mixed across the Districts. Home sales and prices increased in most Districts; construction activity was mixed, with some Districts reporting disruptions due to severe weather. Residential sales increased in Boston, Philadelphia, Richmond, St. Louis, Dallas, and San Francisco. Sales fell in Cleveland and Kansas City. Contacts in New York, Philadelphia, and Cleveland partially attributed lower construction to inclement weather conditions.

Contacts in Boston noted low levels of inventory due, in part, to inclement weather. Reports noted that low levels of inventory and lack of desirable lots continue to slow the market: Contacts in Boston, Cleveland, Kansas City, and San Francisco cited a lack of available inventory, while contacts in Cleveland and Richmond noted a lack of available lots. Single-family building permits increased in St. Louis and San Francisco. Contacts in Cleveland, Atlanta, Kansas City, and Minneapolis reported flat to declining real estate construction.

Reports on banking conditions were mostly positive across the Districts. Overall loan demand increased in all reporting Districts, with the exception of Kansas City, where loan demand was mixed. Reports on the pace of increase varied from slight in Richmond and Dallas to strong in Atlanta and New York. Commercial real estate loan demand was strong in Philadelphia and Cleveland. Commercial loan demand increased in New York, was particularly strong in Cleveland and Atlanta, was steady in Kansas City, and was mixed in Richmond. Residential lending was positive at all reporting banks, with bankers in Cleveland, Richmond, Chicago, and San Francisco noting an increase in refinancing activity.

First District-Boston

December saw a strong end to 2014, with closed sales of single family homes increasing in all six New England states compared with December 2013. Condominium sales also increased in every state except Massachusetts. The median sales price for single-family homes continued to rise in every state except Connecticut (where prices decreased), while condominium prices rose in Massachusetts and Vermont but declined in Rhode Island, New Hampshire and Connecticut. Contacts in Connecticut and Rhode Island emphasized that while Realtors are feeling very positive, the housing market will not be fully "normal" until shadow inventory and distressed sales are reduced further. In other states, lack of inventory remains a concern. In Massachusetts, for example, December was only the second month of the past six with a year-over-year increase in home sales, while prices have increased 26 out of the last 27 months. Contacts in Massachusetts believe these patterns are driven primarily by a shortage of inventory. The level of inventory heading into January in Massachusetts is the lowest in a decade, with only 3.7 months of supply for single family homes and 2.3 months of supply in the condominium market (Realtors say the market is balanced when a 6- to 7-month supply is available).

First District contacts express concern about the possible lasting impact of the unusually harsh recent weather. In Massachusetts and Connecticut, where January data are available, pending and closed sales were down. Contacts across New England report that demand, despite the weather, remains strong but that new listings and hence inventory will decline as homeowners continue to dig themselves out. As one contact in Massachusetts says "the weather will likely only exacerbate the supply-and-demand imbalance in our market and put upward pressure on prices," Longer term, Realtors remain optimistic about the coming year and are hopeful that interest rates will remain low to help potential buyers.

Second District-New York

The District's housing markets have strengthened somewhat in early 2015. New York City's residential rental market has firmed slightly: rents in Manhattan and Brooklyn are reported to be up moderately from a year ago, while they have been steady at an elevated levels in Queens. The inventory of available rentals has risen at the high end of the market–especially in Brooklyn–reflecting new development, but remains fairly tight overall. Rents across the rest of the District are up roughly 2 percent over the past year.

New York City's co-op and condo market has been fairly brisk thus far in 2015, despite harsh weather: sales volume was down moderately from the unusually high levels of a year ago, but still high, while selling prices were up moderately and have roughly recovered to pre-recession peak levels. Housing markets across the rest of New York State and New Jersey have mostly been sluggish, in part due to the inclement weather, though Buffalo area Realtors note solid market conditions in January and early February, despite the weather.

Small- to medium-sized banks across the District report increased demand for residential mortgage loans, commercial mortgages, and commercial and industrial loans, but a slight pullback in demand for consumer loans and for refinancing.

Third District-Philadelphia

Third District financial firms continued to report modest increases in total loan volume since the previous Beige Book. Volumes decreased seasonally for credit card lines as consumers pay down for several weeks following their holiday spending. Strong growth was reported for other consumer credit lines, including auto loans, and for commercial real estate loans. Moderate growth was reported for commercial and industrial lending, while modest growth was reported for home mortgages. Only slight growth was reported for home equity lines of credit. Increasing numbers of contacts expressed concerns that competition has lowered lending standards, undercut margins, and is beginning to lower overall credit quality. Many indicated that they saw no signs of inflationary pressures.

Third District homebuilders provided mixed reports. A New Jersey builder was encouraged by good levels of new contract signings in January and February on the heels of a strong end-of-year close. One central Pennsylvania builder was close to budget in January but reported a slowdown in February. Generally, builders reported that housing starts have slowed with the cold and snow. Also, builders reported that regular price increases of construction materials leaves little room within their own tight margins for addressing wage pressures from their subcontractors. Builders anticipate a better year in 2015. Brokers reported that existing home sales were greater in December and January on a year-over-year basis; sales growth was the greatest in central Pennsylvania, while sales were essentially unchanged along the Jersey shore. Contacts noted that the positive comparisons are made with a 2013 sales season pounded by winter storms. Contacts continued to report slight overall increases in home prices, except in the city of Philadelphia where sales and prices are rising faster. Brokers are generally more optimistic for a return to growth in 2015.

Fourth District-Cleveland

Sales of new and existing single-family homes for all of 2014 were slightly below levels seen in the prior year, while the average sales price was 4 percent higher. Home builders were evenly split in their assessment of market conditions since the start of the year. Softening was attributed to cold weather and a shortage of desirable lots against a backdrop of stringent mortgage standards. New-home contracts were mainly in the move-up price-point categories. The first-time buyer market remains weak. There was a large drop in the number of single-family construction starts since our last report. Nonetheless, as the spring season approaches, homebuilders are fairly optimistic in their outlook. They believe the potential for higher interest rates might serve as an impetus for potential buyers to sign a purchase contract. Most builders have not raised prices since the beginning of the year.

Bankers reported that demand for business credit showed moderate growth during the past six weeks. While demand was described as broad based, it was strongest for commercial real estate, and commercial and industrial loans. Consumer credit demand moved slightly higher, primarily for home equity products.

Fifth District-Richmond

Loan demand increased slightly since the previous Beige Book. Residential mortgage demand rose in Virginia and West Virginia, especially for refinancing. According to a Virginia banker, consumer lending increased as customers financed home improvement projects, cars, and luxury goods like boats. Commercial and industrial lending increased in Maryland, South Carolina, and Richmond, Virginia. In West Virginia, a banker reported that commercial lending rose in some sectors but was not robust overall.

Residential real estate activity increased moderately in recent weeks. Realtors in Virginia and North Carolina reported increased sales, especially for higher end homes in North Carolina. Buyer traffic picked up in several locations, which a Virginia Realtor attributed to lower interest rates. In contrast, a West Virginia contact said first-time home buyers are hesitant because closing costs and fees have gone up. Average days on the market varied by location and sales prices were generally reported as flat to rising slightly. Inventories decreased in Washington, D.C., Northern Virginia, and Charlotte, North Carolina. In Northern Virginia, custom home builders were looking for building lots. A North Carolina Realtor said that land availability was an issue.

Since our last Beige Book, activity in commercial real estate markets increased at a modest pace. Realtors in Maryland, North Carolina, South Carolina, and Virginia reported a moderate increase in retail leasing, especially for smaller spaces and grocery stores. Office space leasing was unchanged according to contacts in North Carolina and Virginia. However office leasing picked up Charleston, West Virginia, and a real estate contact in the Wilmington, North Carolina area said that class A and class B office space was being absorbed at a faster pace. He also said that the market for industrial space had improved. A South Carolina Realtor reported that the office sector slowed slightly in Charleston due to lack of available space and the industrial market is growing even though much of the inventory is functionally obsolete. Office and industrial vacancy rates declined in other areas of South Carolina, but were unchanged elsewhere. Several contacts throughout the District reported new construction projects, especially for supermarkets, groceries and grocery-anchored shopping centers, medical centers, and apartment buildings.

Click below for the sixth through twelfth districts (and more photos!)

Sixth District-Atlanta

Since the last report, District brokers' reports on home sales activity improved a bit. Most contacts reported that home sales were flat to up slightly compared with the year earlier level. Brokers continued to report modest home price appreciation. The majority of brokers indicated that inventory levels either remained flat or had fallen from the prior year's level and noted that buyer traffic was flat to slightly up compared with a year ago. Brokers noted that they expect home sales activity to increase over the next three months.

Incoming signals from District builders have dampened a bit since the last report. Builders characterized construction activity and new home sales activity as flat to down slightly from the year earlier level. Many builders indicated that their inventory of unsold homes was flat to slightly up from a year ago, and noted that buyer traffic was flat to slightly down compared with the year-ago level. However, most builders continued to report some degree of home price appreciation. The outlook among builders for new home sales and construction activity over the next three months was fairly positive, with most indicating that they expect activity to increase modestly.

Credit conditions were largely unchanged from the previous reporting period. Overall, credit remained readily available and small businesses reported more access to credit. Loan demand was strong among most lines of business, particularly commercial and mortgage lending. Bankers noted increased lending to businesses such as hotels and restaurants. Loan pricing and structure remained competitive. Banking contacts indicated their lending standards remained fairly conservative.

Seventh District-Chicago

Construction and real estate activity increased modestly over the reporting period. Demand for residential construction was mostly unchanged, but with some additional growth in single-family building in urban markets. Home prices and residential rents both increased, while home sales held steady. Solid income growth and expanding credit availability for first-time homebuyers has led real estate contacts to revise up their sales forecasts for 2015. In addition, several contacts observed that markets in low-income areas are finally showing signs of improvement. Nonresidential construction grew moderately, driven primarily by demand for industrial buildings. Commercial real estate activity expanded broadly–vacancies declined, rents rose, and leasing of industrial buildings, office space, and retail space all increased.

Credit conditions improved on balance over the reporting period. Equity markets moved higher and volatility declined. In contrast, interest rate volatility ticked up. Business loan demand increased, driven by new equipment purchases and expansions of existing facilities. Credit line utilization by middle-market firms increased slightly and business banking contacts generally noted a better than expected start to the year. Consumer loan demand increased across multiple segments. Mortgage refinancings surged and new applications rose in response to lower mortgage rates. Demand for auto loans remained strong and growth in new credit card applications increased. One banking contact noted that downward pressure on auto loan rates was leading to increased competition for sub-prime borrowers.

Eighth District-St. Louis

Home sales increased in the Eighth District on a year-over-year basis. Compared with the same period in 2013, December 2014 monthly home sales were up 5 percent in Louisville, 11 percent in Little Rock, and 29 percent in St. Louis; home sales remained the same in Memphis. December 2014 monthly single-family housing permits increased in the majority of the District metro areas compared with the same period in 2013. Permits increased 26 percent in Louisville, 49 percent in Little Rock, 13 percent in St. Louis, and 17 percent in Memphis.

A survey of District banks showed that overall lending activity during the past three months increased moderately. For commercial and industrial loans, credit standards continued to be slightly lower, creditworthiness of applicants improved, demand was stronger, and delinquencies were lower. For standard residential mortgage loans, credit standards were mostly unchanged, creditworthiness of applicants improved, demand was somewhat stronger, and delinquencies were slightly lower. For credit cards, standards were unchanged to slightly lower, creditworthiness of applicants was slightly higher, demand was unchanged, and delinquencies were lower. For auto loans and other consumer loans, creditworthiness of applicants was unchanged, demand was unchanged to slightly higher, and delinquencies were lower; credit standards decreased slightly for auto loans and remained unchanged for other consumer loans.

Ninth District-Minneapolis

Commercial construction activity increased. Recent industry reports noted increased interest in building new hotels across many parts of the District. In Sioux Falls, S.D., the value of January commercial permits increased from a year ago. In Billings, Mont., commercial permits decreased in value in January from a year earlier. Residential construction activity in the District was down compared with a year ago. In the Minneapolis-St. Paul area, the value of January residential permits decreased 19 percent compared with January 2014. The value of January residential permits in Sioux Falls decreased from a year earlier. However, January residential building permits in Billings increased in value from the previous year.

While labor markets continued to tighten in several areas, signs of loosening were noted in the energy-producing region. Business owners in South Dakota noted difficulty finding workers to fill openings for skilled construction and manufacturing positions. In western Montana, business owners in several sectors noted difficulty finding qualified workers. A Minnesota staffing firm reported that finding workers was difficult and that competition for those workers increased recently. A representative of a Minnesota information technology firm noted relatively low worker turnover despite the strength in the sector. However, a retailer in Minnesota announced 550 job cuts, and a plant that salvages electronics parts closed, affecting almost 80 jobs.

Decreased oil- and gas-drilling activity in western North Dakota and eastern Montana has led to reduced hours and layoffs of oilfield workers. The number of job postings in the region has also decreased, but several companies in a variety of sectors are still looking for employees. Businesses in and around the energy-producing region have noticed an increase in the number of job applicants for open positions.

While wage pressures in the energy-producing region moderated, wage pressures rose in other areas, as reports of wage increases above 3 percent were noted more frequently during the past couple months. Nevertheless, wage increases generally remained moderate.

Price pressures were subdued, as oil and gasoline prices decreased during January. Minnesota gasoline prices in mid-February were over a dollar per gallon lower than a year ago. Copper prices decreased since the previous report.

Tenth District-Kansas City

District real estate activity increased slightly as moderate growth in commercial real estate activity was partially offset by modest declines in residential real estate sales. Residential sales decreased modestly since the previous survey, partially due to typical seasonal sales patterns and low inventories. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Home prices made strong gains, and inventories continued to decline. Expectations for sales and prices remained positive, and inventories were expected to fall further. Residential construction activity was flat in January and early February. Builders and construction supply contacts expected moderate growth in residential real estate activity in the coming months supported by higher home prices, sales, and starts.

Bankers reported mixed loan demand across sectors in January and early February, while loan quality and deposit levels were stable. Respondents indicated increased demand for residential real estate loans, and demand for commercial and industrial and consumer installment loans was mostly steady. However, respondents reported a slight decrease in demand for agricultural loans. Most bankers indicated loan quality was unchanged compared to a year ago, while a slight majority of bankers expected the outlook for loan quality to improve over the next six months. Credit standards remained largely unchanged in all major loan categories. In addition, deposit levels were stable for a majority of bankers.

Eleventh District-Dallas

Housing activity remained solid, and outlooks were mostly positive. Home sales rose during the reporting period, although reports on the pace of growth were mixed. Contacts in Dallas-Fort Worth noted a strong, earlier-than-normal pickup in traffic and sales, while demand in Houston held steady. Home prices continued to edge upward. Land prices were elevated, and several contacts reported decreased builders' appetite for land. Apartment demand stayed strong, particularly for class B space. Rent growth remained solid in Dallas-Fort Worth, but slowed in Houston.

Loan demand increased slightly over the past six weeks. Growth in consumer lending remained robust, and commercial real estate, as well as construction and industrial lending, continued to provide a healthy pipeline of work. The quality of loans previously made to oil and gas firms remained high, although contacts expressed concern about the future because of low oil prices. Deposit volumes grew over the reporting period, despite expectations for a slight seasonal decrease. Outlooks were optimistic, but more cautious compared with the previous report. Interest rates on loans remained at historically low levels, and deposit rates continued to hover just above zero.

Twelfth District-San Francisco

Real estate activity advanced during the reporting period. Multifamily residential real estate construction activity remained strong in many areas of the District. Some areas anticipate that single-family home construction will soon pick up, as the pace of building permit issuance has climbed notably. In other areas, the pace of new construction remained slow, and single-family housing inventories continued to drift down.

One contact commented that single-family home construction in their area has been limited to only pre-sold homes. In some relatively fast-growing areas, shortages of skilled labor are contributing to the tepid pace of construction. Several contacts reported a pick-up in the pace of single-family home sales but little change in prices. Commercial rents in the San Francisco Bay Area continued to rise even in the face of significant new construction, and rents for restaurant space in the Los Angeles area crept up. In other areas, commercial rents remained stable.

Lending activity in the District increased modestly during the reporting period. Demand for commercial real estate loans continued to climb, and demand for agricultural loans picked up. Some contacts reported that demand for small business loans strengthened, with owners beginning to expand and purchase new equipment. Demand for consumer loans other than for autos remained somewhat weak. Some contacts observed that, even with low interest rates, consumers are more cautious about taking on additional debt than at this time last year. Several contacts stated that recent declines in mortgage interest rates contributed to a small wave of refinancing activity. Deposit growth was strong in many areas, and banks have ample liquidity. Stiff competition for high-quality borrowers exerted downward pressure on loan interest rates. Overall credit quality remained good, but some contacts reported that lenders in their area appear willing to relax credit standards to imprudent levels in order to capture customers.




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