Most Fed Districts Report Positive Residential Real Estate and Economic Activity

For the reporting period of July through mid-August, the Federal Reserve reported in its August 2015 Beige Book released Wednesday that economic activity continued to expand across most regions and sectors, while the majority of reports on residential real estate markets across the 12 Fed districts were positive.

Six districts reported moderate economic growth since the previous Beige Book was issued in mid-July, five districts (New York, Philadelphia, Kansas City, Atlanta, and Dallas) reported modest growth, and one district (Cleveland) reported only slight growth, according to the Fed.

The reporting period for the latest Beige Book found widely improved existing home sales and residential leasing, while most areas saw an increase in home prices. The Fed found improved residential real estate activity across all districts; home sales and prices increased in every district. In Richmond and Kansas City, sales of lower- and medium-priced homes outpaced sales of higher-priced homes, while the demand for multi-family homes was more robust in Cleveland, Richmond, and San Francisco.

Robust demand and declining inventory were the driving factors behind the increase in home prices, according to contacts in most Fed districts. Inventories in nearly all districts declined or stayed flat, except for Kansas City, where they slightly increased. Contacts in Boston, New York, and Richmond reported bidding wards among buyers due to low inventory.

"Overall, the residential outlook was positive, with the majority of Districts expecting this increased activity to continue."

"New York and Dallas both indicated that prices have climbed for low- to medium-priced homes but price pressures are softer for higher-priced properties," the Fed said in the report. "Rental markets remained strong nationwide. Overall, the residential outlook was positive, with the majority of Districts expecting this increased activity to continue."

Reports of residential construction activity were mixed; it increased for some districts but was moderate or flat in Boston, Philadelphia, Richmond, Minneapolis, and Dallas. In Cleveland, contacts attributed the increased construction activity to an expected rise in interest rates later in the year, improved labor conditions, and higher consumer confidence, according to the Fed. At the same time, the Cleveland contacts reported supply-side constraints and difficulty obtaining financing for construction, with similar reports coming from the Boston district.

Click here to view the entire Beige Book that covers the period from July to mid-August.