Overall economic activity increased in nearly all parts of the country, with many districts reporting increased activity in residential housing markets, according to the latest edition of the Federal Reserve’s Beige Book.
The St. Louis district was the only one to not report an increase in overall economic activity, indicating a thaw may be in the works since the March edition of the Beige Book showed the toll taken by harsh winter weather.
While many districts reported improvement in the residential real estate sector in this month’s edition, the commercial market remained weak. Activity in the banking and finance sector was mixed in a number of districts, as loan volumes and credit quality decreased, the Fed added.
The increase in the residential sector was from low levels, but spanned across almost every district except St. Louis, where it was mixed, and San Francisco, where it was flat. However, there is concern in many districts — notably, Philadelphia, Cleveland and Kansas City — where sales are feared to be impacted by the impending expiration of the first-time homebuyer tax credit.
Home prices were stable across most districts, with decreases experienced in the New York and Atlanta districts. In addition, the New York, Kansas City, Dallas and San Francisco districts noted sluggish sales for high-end homes. In new residential construction, activity increased slightly in New York, Atlanta, St. Louis, Minneapolis and Dallas, but remained weak in Cleveland, Chicago and San Francisco.
Activity was slow in the commercial real estate sector, with the exceptions of Richmond, which saw an uptick in commercial leasing, and Dallas, where the sector was mixed and might be nearing bottom.
In the Boston district, leasing activity consists largely of renewals, with many renewing tenants leasing less space, the Fed said. In Manhattan, prime office rents were down as much as 25% from last year’s levels. This may be due to a downward pressure on rents caused by landlords lease concessions, as reported by the Philadelphia, Richmond, Kansas City and Dallas districts. Commercial construction continues to be weak in most districts, with Cleveland seeing some increases in construction by the energy and industrial segments.
The April Beige Book, formally called the Summary of Commentary on Current Economic Conditions, is the third of eight editions published throughout the year. The book reports anecdotal information on current economic conditions in each of the 12 Fed districts through reports from bank and branch directors and interviews with key business contacts, economists, and other market experts.
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