Economic activity in all 12 of the Federal Reserve districts improved in the period stretching from early April to late May, while residential real estate activity picked up in most regions, the Federal Reserve said in its latest Beige Book survey.
Lending standards also eased in some districts, leading to a modest uptick in new business within the mortgage sector. Still, it's not all good news. The Federal Reserve Bank of New York wrote on a blog that job cuts in financial services remain an ongoing risk and hiring is anemic in the industry. "There are ongoing layoffs in the financial sector, and a major employment agency reports that large financial firms remain reluctant to hire, and that hiring activity more generally is mixed. Reduced demand from the finance sector is also dampening office leasing activity a bit, though demand for space from firms in other sectors—especially the technology industry—is helping to keep vacancy rates low," the Fed Bank of New York said in a blog posting.
The Beige Book report provides insight into ongoing market trends within the Federal Reserve districts based on reports from industry insiders.
Real estate, while not back in full swing, saw a few silver linings in the latest Beige Book. For starters, several districts reported fragile improvement in the single-family housing market. The multifamily sector continued to improve with apartment demand ongoing and multifamily construction growing in several districts.
The Beige Book was in line with the old mantra that all real estate is local, especially with certain markets outperforming others.
"In particular, the New York, Cleveland, and Richmond districts noted a pickup in the pace of distressed sales," the Fed Beige Book said. "Residential brokers and some builders in the Philadelphia, Atlanta, and Dallas districts said home sales were exceeding expectations. Contacts in the Richmond district said homes were being snapped up as investors become more confident in the housing recovery, and the Atlanta report noted stronger sales to cash buyers and investors in Florida. Chicago said more sales had multiple offers."
The apartment rental market improved in New York, Atlanta and Dallas, while multifamily construction grew in Boston, Atlanta and Chicago.
Across most districts home inventory levels declined, although home prices remained unchanged in the majority of the Fed regions. Industry contacts said a few sellers are still lowering prices, leading to downward home price pressures in certain markets.
Most districts saw slightly stronger loan demand. Banks classified as smaller or medium-sized in New York saw the greatest broad-based uptick in loan demand.
The New York district reported stronger mortgage lending activity levels overall, but said refinancing demand eased. The Cleveland district also saw higher levels of mortgage demand, noting a shift from home refinancings to new purchases.
The Richmond district reported stronger mortgage demand, dominated by refinancings. Atlanta, on the other hand, saw more applicants put cash down for payments or use home equity to refinance.
In the Cleveland, Atlanta, Chicago, Dallas and San Francisco districts loan pricing remained competitive.
"Lending standards were relatively unchanged to slightly easier across districts and loan types," the Fed Beige Book said. "Bankers reporting on deposit growth indicated that deposits were steady or continued to increase. Credit quality remained solid, and there were several reports of improved loan quality. Most district banks said loan delinquencies continued to decline."