Economic activity continues to grow but the pace has moderated in many parts of the country, weighed down by a persistent weakness in the residential real estate sector, according to the latest market-gauging ""Beige Book"":http://www.federalreserve.gov/fomc/beigebook/2011/20110727/default.htm from the ""Federal Reserve"":http://www.federalreserve.gov.
Beige Book findings are based on anecdotal commentary and observations collected by the 12 Fed districts from businesses and contacts outside the Federal Reserve. Data included in the latest version covers the reporting period from late May to mid-July. The Fed describes the report as an informal review of current market conditions across the country.
Housing markets Ã¢â‚¬Å“remain in the doldrums,Ã¢â‚¬Â according to the FedÃ¢â‚¬â„¢s regional report. While most New England states posted significant annual declines in home and condo sales influenced by last yearÃ¢â‚¬â„¢s tax credits, contacts in some states noticed increases in home sales compared with two years ago. Housing inventories continue to rise, but most contacts say current supply levels Ã¢â‚¬Å“are not troublingÃ¢â‚¬Â because inventories in the region have been low, limiting the selection for potential buyers.
""*New York District*"":http://www.federalreserve.gov/fomc/beigebook/2011/20110727/2.htm
Prices of existing homes have continued to drift down with more distressed sales. The inventory of existing homes remains elevated -- as high as 16 months of sales if foreclosures and other distressed properties are included. Buffalo-area Realtors say while foot traffic has been fairly brisk, few people have made offers. A New York City appraisal firm reports that the high end of the market is accounting for a larger share of sales than last year.
Agents and builders continue to report stronger sales among mid- and low-priced homes, but sales of high-priced homes are increasing. Reports of multiple offers for condos in center city Philadelphia were noted by one agent. Most market participants do not expect the year as a whole to be markedly different from last year. In most parts of the district, sale prices of existing homes continue to fall slightly.
The Cleveland report only included details on the market for newly constructed homes. There, contractors expect single-family construction to remain depressed until potential buyers can more easily sell their existing homes and the job market begins to gain traction. The use of discounting on list prices of new homes is growing.
Residential Realtors indicated that low-to-medium priced homes across the district were generally lifting market activity, if only slightly. A pickup in sales of higher-priced[COLUMN_BREAK]
homes, however, was evident in the D.C. area. One agent there reported the best sellers were properties in the $800K to $1.25M price range. Real estate practitioners in the Carolinas stated that prices were holding steady.
Reports from brokers in the district indicated that home sales were slightly ahead of last year's weak levels. Gains continued to be driven largely by reports from Florida brokers. Contacts throughout the region continued to cite declining home inventory levels as fewer homes enter the market. Home prices were flat to slightly down compared with a year earlier. The outlook among Florida brokers was somewhat positive, but elsewhere sales are expected to remain weak.
Residential real estate conditions remained weak. The spring and early summer season saw a slight uptick in new home sales, which, according to contacts, tends to be a leading indicator of the sales volume for the remainder of the year. Although more potential homebuyers are qualifying for mortgages, contacts noted that downward pressure on existing home prices continues to restrict the availability of credit.
""*St. Louis District*"":http://www.federalreserve.gov/fomc/beigebook/2011/20110727/8.htm
Home sales continued to decline throughout most of the region. Compared with the same period in 2010, May 2011 year-to-date home sales were down 15 percent in Louisville, 13 percent in Memphis, and 21 percent in Little Rock and St. Louis. Residential construction also continued to decline throughout the District.
Increased activity was noted in the residential real estate sector overall, but details in the regional report concentrated on new construction activity. Residential construction increased from last year. The value of residential building permits in June increased 19 percent from a year earlier in the Sioux Falls, South Dakota area; in Minneapolis-St. Paul, the value of June permits increased significantly from a year ago.
""*Kansas City District*"":http://www.federalreserve.gov/fomc/beigebook/2011/20110727/10.htm
Real estate firms reported flat existing home sales, higher home inventory, and lower home prices in June and early July. Contacts reported an increased share of existing home purchases by investors in all-cash transactions. Expectations for improvement in the housing sector were subdued. Entry-level homes sold well, along with high-end homes in some Colorado mountain resort communities.
Single-family home sales remain weak, particularly in the lower priced segment of the market. Contacts say demand is choppy from month to month, but most expect some improvement in the second half of the year. Apartment demand, on the other hand, remains strong and rents continue to increase.
""*San Francisco District*"":http://www.federalreserve.gov/fomc/beigebook/2011/20110727/12.htm
Home demand in the region was essentially unchanged at very low levels. The pace of home sales remained sluggish across the district, putting downward pressure on prices, although sales of existing homes picked up some in parts of California. In contrast to homeownership, demand for rental space continued to grow, prompting rent increases and rising construction activity for multifamily units in some areas.