Economic activity expanded at a modest-to-moderate pace in most districts, although activity was sluggish in residential real estate markets, the Federal Reserve reported Jan. 11 in its latest Beige Book. Commercial real estate markets remained somewhat soft, although districts reported signs of improvement.
While most districts indicated little or no change in overall business loan demand, Cleveland, Dallas, New York and San Francisco showed increases. Consumer lending was largely flat compared to the previous report, but Cleveland, New York and Philadelphia reported greater demand for refinancing of residential mortgages.
Meanwhile, credit quality improved in several districts. New York reported a decline in delinquency rates for all loan categories, while Dallas, Kansas City, Philadelphia, Richmond and San Francisco all reported general improvement in loan quality.
The Fed reported that residential real estate activity was largely steady at depressed levels, with sluggish single-family home sales. However, Dallas reported a modest increase in home sales compared to the previous report, while Atlanta and Boston rose above rates reported a year ago, which fell significantly following expiration of the homebuyers' tax credit in mid-2010.
Home prices were largely stable on a short-term basis in most districts, but in many instances were below their levels from 12 months earlier. Boston, Chicago, Richmond and San Francisco reported that extensive inventories of distressed properties were restraining home prices.
Construction of multifamily residences increased but construction of single-family homes remained at depressed levels in most districts, with Kansas City, Minneapolis, Philadelphia and St. Louis reporting further declines. However, Cleveland reported an upswing in single-family construction over the past couple of months.
The Beige Book reported that demand for commercial real estate remained somewhat soft, with only a few districts reporting improvements. Conditions for office space remained relatively unchanged in Boston, Cleveland, Philadelphia, Richmond and St. Louis. However, New York saw vacancy rates edge down and rents go up. Meanwhile, Atlanta, Chicago, Dallas, Kansas City, Minneapolis and San Francisco all reported stronger demand for commercial real estate compared to rates seen at the beginning of 2011.