Most Federal Reserve Districts across the country reported declines in home sales and construction activity, “substantial increases in the inventory of unsold homes” and a general expectation of continued weakness in the housing market, according to an informal review prepared by the Federal Reserve Bank of New York.

The review, known as the Beige Book, is a collection of comments from businesses and other outside contacts submitted by the nation’s Federal Reserve banks.

The banks are divided into 12 districts: Atlanta, Boston, Chicago, Cleveland, Dallas, Kansas City, Minneapolis, New York, Philadelphia, Richmond, San Francisco and St. Louis.

“Housing markets and home construction activity weakened throughout the nation, but commercial real estate and construction strengthened in most districts,” according to this latest review, which includes information collected on or before Aug. 28.

The Philadelphia, Cleveland, Atlanta and Kansas City districts reported that housing market were expected to continue to remain weak, “if not weaken further.” The Kansas City district reported that “sizable numbers of foreclosures” contributed to a rise in unsold inventory.

New York, Richmond and Kansas City districts reported flat or declining home prices, and decelerating prices were reported in the Philadelphia and San Francisco districts.

The high-end real estate market was described as particularly weak in the Richmond, Chicago and Kansas City districts, according to the report, and in parts of the Minneapolis district. Meanwhile, the high-end real estate market in the Dallas area and the high-end co-op and condo market in the New York district “were reported to have experienced less softening than the more moderately priced segments.”

New York and Chicago districts reported a “fairly strong demand for apartment rentals” since the last Beige Book report in July, while the Dallas district reported a continued strong demand for condos.

“Commercial real estate markets were uniformly described as strong and, in most cases, increasingly so,” while office markets improved in the Boston, New York, Philadelphia, Atlanta, Chicago, Minneapolis, Kansas City, Dallas and San Francisco districts, according to the report. Commercial real estate market conditions were described as mixed in the Richmond and St. Louis districts.

Philadelphia, Richmond and Atlanta reported some firming in the market for industrial space while Minneapolis noted softening, and industrial markets were described as generally steady in the New York and St. Louis districts.

Banks reported mixed but generally slowing trends in lending activity during the summer, with a pronounced softening in demand for home mortgages. The New York, Cleveland, Atlanta and Chicago districts reported declines in overall loan demand, while the Philadelphia and Kansas City districts reported increases.

New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago and San Francisco districts reported soft and/or weakening demand for residential mortgages. Although refinancing was generally described as soft, both Richmond and Chicago reported an increase in refinancing activity, “which was attributed to homeowners looking to lock in fixed rates.”

Demand for commercial and industrial loans rose in the Philadelphia, Chicago and San Francisco districts but weakened in the New York and Kansas City districts, the report states.

Credit quality was generally described as good, with little change in delinquency rates, “though a few noted scattered increases.” The New York and Philadelphia districts reported an increase in delinquencies on home mortgages, and Cleveland noted a slight increase in commercial delinquencies. Credit standards were reported to be holding or slightly tighter.

While the report indicates that overall economic activity continued to expand since the last report, five districts reported deceleration in economic activity while the remaining seven reported little change in the pace of growth.

Some slowing in economic growth was seen in the Boston, New York, Philadelphia, Kansas City and Dallas districts, according to the report, and the Atlanta district described activity as “mixed,” while Richmond reported “slow” growth and San Francisco noted a “solid” growth rate.

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