Housing, Lending Activity Modest in Latest Beige Book

The last two months saw continued economic growth at a modest to moderate pace, according to reports in the Federal Reserve's latest Beige Book, released Wednesday.

Since the last report in July, the 12 Fed districts each reported an expansion in economic activity around the country, though none indicated a shift in the overall rate of growth, the central bank reported.

Growth was described as "modest" in the New York, Cleveland, Chicago, Minneapolis, Dallas, and San Francisco districts, while Philadelphia, Atlanta, St. Louis, and Kansas City reported “modest” growth.

Looking ahead, contacts in about half of the districts "generally remained optimistic about future growth," while most of the other districts saw ongoing optimism in specific sectors.

Since the previous Beige Book report, "barely half" of the reporting districts said they have experienced stability or growth in home sales and new construction, which each grew modestly, though market conditions have varied at the local level, the Fed reported. Boston, New York, and Dallas each reported higher levels of ongoing multifamily construction, while Chicago and San Francisco posted more moderate growth.

On the lending side, demand for home mortgages was "less robust" than it was for other kinds of loans. Out of all the districts, only Philadelphia, Richmond, Chicago, and Dallas reported increases, which were typically slight.

Meanwhile, New York, Cleveland, St. Louis, and Kansas City reported no change or slight decreases, though Cleveland and Richmond did see increases in refinancing.

Among other home loan categories, Philadelphia and San Francisco reported increased use of home equity lines of credit, while Cleveland reported slightly less usage.

With lending volumes on the decline, competition picked up for what business was left. According to the Beige Book report, "the Richmond and San Francisco Districts described intense competition among lenders for customers with high-quality credit. ... Philadelphia and Cleveland also reported heated competition."

Across most districts, credit standards remained generally unchanged, though contacts in Atlanta reported "especially rigorous" standards for first-time homebuyers.

Credit quality improved in several districts, the Fed reported. The Philadelphia, Dallas, and San Francisco districts all reported improvements in credit quality, and New York and Cleveland both stated that delinquency rates were down across all loan categories.