Fed Sees Pockets of Improvement in Housing, Mortgage Markets
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- Kirk Haverkamp | October 21, 2010
The Federal Reserve’s most recent snapshot of the economy shows housing and mortgage markets that are generally stagnant, although with a few areas showing signs of improvement.
The Fed’s Beige Book, released this week, says that overall, the nation’s economic activity continued to rise over the past six weeks, although at a modest pace. Housing markets were described as weak, with most metropolitan areas described as either sluggish or declining, although with certain areas reporting small increases in demand and easing credit.
Issued eight times a year, the Beige Book provides an update on economic conditions across the nation and in the 12 Federal Reserve Districts the country is divided into. The current issue covers the period from September through mid-October.
Consumer lending was reported to be stable in most districts, with reports of slightly increased demand in some areas. An overall improvement in credit conditions was reported throughout the Chicago District, while the Richmond and Dallas districts reported increased competition for quality loans, with pressure for slightly more aggressive loan pricing. An increase in demand for nonconforming mortgages was reported in the San Francisco District.
Housing inventories appear to be rising across the nation, although without depressing prices, which have remained stable in most areas. Although most housing markets were described as sluggish or declining, an increase in existing home sales was reported in the Philadelphia District, while a rise in sales of higher-priced homes were reported in the Dallas, Kansas City and Richmond districts.
Highlights from around the country
The following are selected mortgage and/or real estate market highlights from each of the 12 districts:
Boston – The real estate market remains in doldrums, with home sales below levels of one year ago, as they have been since the expiration of the homebuyer tax credit.
New York – Compared to one year ago, median home prices are up everywhere but New Hampshire. Inventories of homes for sale are on the rise throughout the region, which sources interpret as a sign of increased confidence among home sellers.
Philadelphia – Some increases in sales of existing homes are reported, particularly at the lower end of the price range.
Cleveland – New home sales are expected to remain very sluggish, with most activity in the move-up buyer range. Builders report increased use of discounts to close sales.
Richmond – Some bankers report an increase in mortgage lending in September, with most new home loans attributed to people moving into the area. Realtors report length of time needed to close home loans increasing sharply.
Atlanta – Persistent downward pressure on prices is reported, with a large number of distressed properties coming to market. Mortgage financing has recently become more difficult to obtain, although all-cash purchases remain strong, particularly in Florida.
Chicago – One source reports that a few large home builders are resuming construction of single-family homes to replenish their inventory after a recent rise in sales contracts. Low prices appear to be generating interest among potential buyers, based on showroom traffic, but limited availability of conventional mortgage financing remains an obstacle.
St. Louis – Residential construction continued to improve throughout the district, with most metro areas showing annual gains in single-family permits compared to Aug. 2009. Little Rock, St. Louis and Memphis reported annual gains of 14-16 percent. Existing home sales remain mixed, however.
Minneapolis – Mixed activity was seen on residential construction permits, with the value of permits issued in September up 70 and 40 percent in Fargo and Minneapolis, compared to one year earlier, versus declines of 78 and 30 percent in Rochester and Sioux Falls.
Kansas City – A further weakening of residential and commercial real estate was reported, although with some improvement in upper-end home sales. In contrast, residential builders reported increases in housing starts, traffic, and new home prices. Demand for residential real estate loans also increased, apparently due to refinancing as the number of home purchase loans declined.
Dallas – New home sales appear to have bottomed out following the expiration of homebuyer tax credit, although builders report rising buyer cancellations. Home mortgages were up slightly, although no distinction provided between refinancing and home purchases.
San Francisco – Home sales were largely unchanged, although with variation among different metropolitan areas. A slight increase in home repairs and remodeling was reported, as was an uptick in demand for nonconforming mortgage loans. Some loosening of credit standards for certain types of borrowers was seen.
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