Beige Book Indicates Continuing Economic Expansion

Representatives from the ""Federal Reserve's"":http://www.federalreserve.gov/ 12 districts reported moderate economic expansion across most of the country through the end of last year, with indicators pointing to more steady growth ahead.

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The Fed released on Wednesday its latest ""Beige Book"":http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201401.htm summarizing economic conditions in all of its districts. Out of the 12 reporting districts, nine indicated the local economy was expanding ""at a moderate pace,"" with the Atlanta and Chicago districts seeing improved conditions. Meanwhile, Boston and Philadelphia cited ""modest growth,"" while the Kansas City district reported the economy held steady.

Real estate markets ""generally continued to improve,"" according to the Fed, with most districts experiencing increase home sales activity and construction along with rising home prices. Atlanta, Cleveland, and Kansas City indicated that annual sales growth had slowed compared to recent reports, while Boston, Philadelphia, and Minneapolis said at least some areas within those districts were experiencing a decline in sales.

""Reporting Districts indicated that residential real estate contacts remained optimistic looking forward, while voicing concerns about declining inventory and potential changes in the mortgage market,"" the Fed said in its release.

District reports on commercial real estate (CRE) were also largely positive, with leasing activity increasing or [COLUMN_BREAK]

holding steady in all areas but the Cleveland district. CRE investment strengthened in numerous districts: Boston, Chicago, and Minneapolis reported ""brisk sales activity,"" and Richmond and Kansas City joined them in reporting rising prices.

Those improvements are having an effect on local economies. Multiple districts reported increased demand for construction materials spurred by the recovering housing market, with in-demand items ranging from raw materials to finished products.

Among those districts reporting on banking activity, none posted significant changes in loan volume, the Fed reported:

""Philadelphia, Richmond, Atlanta, Chicago, Dallas, and San Francisco reported slight to moderate growth. The Cleveland, St. Louis, and Kansas City Districts reported no change, whereas New York cited a moderate decline in loan volume.""

Residential real estate loans declined in the New York, Cleveland, Atlanta, Chicago, and Kansas City districts, ""mostly due to slowdowns in refinancing activity rather than in new purchase loan applications."" Meanwhile, the Fed noted applications for purchase loans are up in some districts.

Credit standards were largely unchanged in most districts, though Philadelphia, Chicago, and San Francisco ""cited instances where financial institutions relaxed their underwriting standards.""

""Some contacts attributed this relaxation to increased competition in lending markets,"" the Fed explained.

Tight standards may have helped hold the line on credit quality, which held steady or increased in most districts.

Looking ahead, however, hopes aren't so bright, with some sources fretting about the Consumer Financial Protection Bureau Qualified Mortgage guidelines and other recent changes:

""Contacts in some Districts expressed concern about new banking regulations and their potential negative impact on lending and operating costs.""