The economy continued to grow in the first weeks of fall, despite a “widespread cooling” in residential real estate markets, the Federal Reserve said in an economic report Thursday.
Reports from the Fed’s 12 districts cited lower asking prices, rising inventories of homes on the market and softening sales in the majority of areas. Financial institutions also reported that residential mortgage lending had tapered off.
“Most districts reported higher home inventories, and several said that home builders and sellers continued to offer incentives to attract buyers,” the Fed said in it’s “beige book” report. “Softer home demand in San Francisco led to layoffs for mortgage brokers and real estate agents.”
A number of reports, however, indicated that residential housing activity was up in some markets, the Fed said. While overall housing activity was mixed in the New York and St. Louis districts, the report noted that condo sales in Manhattan showed “signs of resilience,” and that housing sales were up in Memphis. Both districts, however, noted overall weakness in most markets.
Other districts with mixed housing reports included Richmond, which reported generally weaker housing activity but also noted increases in some markets.
Meanwhile, the Atlanta district reported housing activity increased in its Mississippi Gulf market and Minneapolis’ Sioux Falls market stayed on pace with 2005 levels. And Dallas also saw robust home sales in the Houston, Austin and El Paso markets, according to the report.
In the new-home market, “Residential construction remained weak in the St. Louis and Minneapolis Districts except in western North Dakota where residential construction was described as ‘robust,'” the Fed reported. Inventories of new homes rose in the Dallas and Boston Districts.
Overall labor conditions “remained taut” since the Fed’s last report, and wage growth around the country was “generally modest.”