The Federal Reserve reported in its Beige Book on Current Economic Conditions for May 2015 that residential real estate activity and construction has expanded in most districts since the previous Beige Book report in mid-April and that outlooks were "largely positive."
For the reporting period from early April to late May covered in the latest Beige Book report, the Fed reported that overall economic activity has expanded. Fed districts where economic activity grew at a moderate pace were Richmond, Chicago, Minneapolis, and San Francisco, while districts that saw modest economic growth were New York, Philadelphia, and St. Louis. In Cleveland and Kansas City, only a slight pace of economic expansion was reported. In Atlanta, the economy held steady while it slowed slightly in Dallas. The Boston District reported mixed economic conditions.
In the Minneapolis District, residential home sales rose "strongly" on a year-over-year basis. All of the remaining districts reported modest to moderate gains in home sales except for Philadelphia, where builders reported mixed conditions for new home sales. In the Philadelphia District, brokers reported existing home sales had slowed slightly on a year-over-year basis in April.
Boston reported a year-over-year rise in pending home sales despite tight inventory, suggesting an increase in closings for the month ahead, according to the Fed. In Kansas City, low- and medium-priced home sales outperformed sales of higher-priced homes. In the Dallas District, mid-priced new homes in Houston experienced declining sales, while new home sales increased in the Cleveland District.
"Home prices rose across much of the country, which contacts in some districts attributed to low inventories relative to demand," the Fed wrote in the report.
The Fed reported flat residential construction activity up to during the reporting period, although homebuilding slowed in some districts due to financing and capacity constraints (such as in Cleveland, where those factors have made it difficult to increase inventory) and severe weather (such as in Dallas, where heavy rainfall delayed lot deliveries and home starts). Contacts in the Chicago District reported a slight increase in residential home construction activity amid concerns that the strong pace of apartment construction was unsustainable.
While overall lending increased during the reporting period, reports on mortgage lending were mixed, according to the Fed. The San Francisco District reported a rise in residential real estate lending, while upticks were reported in Richmond, Chicago, St. Louis, Kansas City, and Dallas. In the Cleveland District, a rise in new home purchases was largely responsible for an increase in residential mortgage demand.