Despite existing-home sales falling to their slowest pace in 19 months in November, the 12 Federal Reserve Districts reported mixed but slightly improved housing markets for the six-week period leading up to January 4, according to the Federal Reserve’s first Beige Book of 2016 released on Wednesday.
In the previous Beige Book report issued in December, housing markets reported “moderate” improvement amid concerns that tight inventory and rising prices were adversely affecting affordability. Though inventories are still low, the Fed reported in the Beige Book released Wednesday that the home resale market in New York has been particularly strong, driving by strong demand.
Distressed property inventory remains elevated in New Jersey, one of the states hit hardest by the foreclosure crisis, though it has come down as of late. Like most areas, the inventory of non-distressed residential homes for sale is low in New Jersey. The Garden State continues to have the highest foreclosure inventory rate, with 4.4 percent of residential mortgage loans in the state in some state of foreclosure in November—nearly a full percentage point higher than second-place New York, according to CoreLogic’s latest report. Contacts in more than half of the 12 districts reported rising rents while vacancy rates were mixed, according to the Fed.
Part of the reason that inventories remain low is that residential construction in the single-family home space “remains sluggish, with developers reluctant to build inventories,” according to the Fed. Multifamily construction, on the other hand, “continues to be brisk,” as most of the 12 districts reported modest or moderate growth in commercial construction—particularly the Dallas District. Several other districts, namely Philadelphia, St. Louis, Minneapolis, and Richmond, reported that they expect at least modest strengthening in commercial real estate activity.
Generally, contacts in the Fed districts reported that residential and commercial real estate activity improved, with “Stronger activity tended to be cited for multifamily construction and commercial real estate. House prices and commercial rental rates also rose somewhat in most districts.”
Overall, economic activity expanded in nine of the 12 districts since the previous Beige Book was issued in December; contacts in New York and Kansas City reported “essentially flat” economic activity, while contacts in Boston were upbeat about economic growth.
Click here to view the full Beige Book report. The next Beige Book report will be published on March 2.