Real Estate Market

Beige Book: Housing market still blue

by Broderick Perkins

(11/5/2010) - The housing market is pretty much running in place, while the economy overall is taking a trot and on the rise, but at a "modest pace" according to the Federal Reserve's economic snap shot.

Not the views of Federal Reserve officials, the report, called the Beige Book, summarizes comments received from business and other contacts from each of the 12 Federal Reserve Districts.

Housing markets, in most cases, were best described as lackluster, sluggish and declining as the economy struggles with recovery. The end of the home buyer tax credit, tight credit and unemployment share the blame. Scattered reports indicated some improvement in sales in a few Districts.

Here are some of the report's residential real estate highlights, district-by-district.

Boston — Home sales in August were below last August's levels. Median prices of homes and condos rose in August compared to last year, except in New Hampshire where the median home price slipped 2.7 percent. Inventory continues to rise throughout the region, indicating some confidence in sellers.

New York — Housing markets were generally stable since the last report, as sales contacts said sales activity remained exceptionally weak without the usual September pick up. Prices were relatively stable or down.

Philadelphia — Contacts reported sales of existing homes increased somewhat, but new home sales were flat. For both categories of homes, sales remained below the year-ago rate. Lower-priced homes sold at a better pace than higher-priced homes. Existing home prices were unchanged.

Cleveland — New home sales have slowed during the past six weeks, and all of our contacts expect construction to remain very sluggish going into 2011. Even entry-level homes saw the least activity, as most sales occurred in the move-up buyer categories. Prices were relatively unchanged from the last report as new home builders said that they are increasing the use of discounting to close sales.

Richmond — "Soft" was the word for real estate activity. Prices were reported as stable. The number of homes under contract in some areas were down more than 20 percent from a year ago, while active listings were up in excess of 10 percent. The length of time needed to close a sale was increasing sharply. Heavily discounted luxury homes saw some action.

Atlanta — Home sales weakened further in September, as some brokers indicated that declines moderated. Potential buyers remained on the sidelines as mortgage financing tightened. Cash buyers, however, continued to purchase homes at a strong pace. Both brokers and homebuilders reported persistent downward pressure on home prices. Builders were concerned about the number of foreclosed and bank-owned properties coming to market, depressing prices. The outlook was week.

Chicago — Construction activity improved slightly in September and inventories were elevated. Attractive pricing led to higher showroom traffic, but contacts indicated that the limited availability of conventional mortgage financing remained a constraint for potential buyers.

St. Louis — Home sales were mixed. Compared with the same period in 2009, August 2010 year-to-date home sales were down 2 to 4 percent in some areas, but rose 2 to 14 percent in others. August 2010 year-to-date single-family housing permits were up 14, 15 and 16 percent in some areas, compared with the same period in 2009.

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 — Decreased sales volumes and lower home prices swept much of the area, with some movement noted in upper-end home sales. Housing inventories are expected to continue their rise. Builders reported some increases in housing starts, traffic, and new home prices
. Mortgage refinancing activity expanded but home purchase loans decreased.

Dallas — New home sales stabilized. Entry-level builders have pulled back on starts, but contacts say builders in higher price points are seeing some successful sales. More buyers were backing out of new home deals. Demand for new and existing homes, reportedly will remain subdued in the coming months.

San Francisco — Housing demand was little changed from the previous reporting period New home construction remained subdued, but there were some reports of improved activity for home repairs and remodeling.

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