While tight inventory combined with increasing home prices have caused some concern about affordability as of late, the Federal Reserve reported in its December Beige Book released Wednesday that housing markets improved at a “moderate” pace on balance since the previous Beige Book was issued in mid-October.
Rising home sales in seven of the Fed’s 12 districts—Boston, New York, Philadelphia, Cleveland, Richmond, Chicago, and Kansas City—were largely responsible for the Fed’s reports of moderate growth in housing markets, though the Philadelphia district reported a “slow growth” market in which supply was at a low but stable level. The Boston, Cleveland, Richmond, and St. Louis districts all reported year-over-year declines in housing inventory, the Fed reported.
Other contributors to the moderate improvement in housing markets were an increased demand for mortgage lending in several Fed districts, notably Richmond, Atlanta, St. Louis, and San Francisco; a slight decline in mortgage lending was reported in the Philadelphia district. Meanwhile, the Dallas and Richmond and Dallas districts reported rising demand for home equity loans and lines of credit, according to the Fed.
The December Beige Book reported a modest to moderate pace of residential construction growth since the previous Beige Book was issued, with growth seen in the New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, and Kansas City districts. Residential construction in the Dallas and Minneapolis districts remained flat since the previous report, however. New York, Philadelphia, and Chicago all reported improvements in residential real estate at a “mild” pace; however, in New York the Fed’s contacts indicated weak sales activity at the high end of the single-family home market, particularly the co-op and condo market in New York City.
Overall, the 12 Fed districts reported that economic activity had increased at a “modest” pace in most regions since the previous Beige Book. Districts that reported modest economic growth were Cleveland, Richmond, Atlanta, Chicago, St. Louis, Dallas, and San Francisco.
Click here to see the entire Fed Beige Book for December 2015, the eighth and final report of the year.