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Fed Reports Slowdown in Real Estate Amid Modest Economic Growth

""Modest to moderate"" economic growth continues to be the theme at the ""Federal Reserve"":http://www.federalreserve.gov/, which released on Wednesday its ""Beige Book"":http://www.federalreserve.gov/monetarypolicy/beigebook/beigebook201312.htm tracking expansion across its 12 districts from October through mid-November.

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The Fed reported improvements in residential real estate activity in Boston, Philadelphia, Chicago, St. Louis, Minneapolis, and San Francisco, with slower single-family home sales softening real estate in most of the remaining districts.

Meanwhile, increased demand, ""low to declining"" inventory levels, and slowly improving new home construction were cited by most districts as factors contributing to rising home prices, though increases have slowed. Inventory levels were reported as being particularly low in Philadelphia, Richmond, Kansas City, Dallas, and Chicago, with the last city reporting a record low in the number of homes for sale.

In financing, banking conditions reportedly remained stable in a majority of districts:

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""Loan volume showed a modest increase in Philadelphia, Chicago, and San Francisco, while Boston and Atlanta reported a moderate rise. Dallas noted that loan demand softened across most lines of business during the reporting period,"" the Fed reported.

Lower residential mortgage activity was reported in many districts, attributed by some banks to increased interest rates.

On the brighter side, ""[s]everal Districts reported increased credit quality, as delinquencies have continued to decline and fewer problem loans have been reported.""

Commercial real estate activity was mixed at the local level, though many districts said activity was stable or had improved slightly. Demand for space was driven according to regional interests:

""Philadelphia, Cleveland, Richmond, Chicago, St. Louis, and Minneapolis all saw gains in industrial construction, while Boston, Chicago, and St. Louis cited a rise in hotel construction,"" the Beige Book said. ""The technology sector drove demand for commercial real estate in the San Francisco District, and Cleveland saw gains in affordable housing and shale-gas-related activity.""

According to the Fed, market participants in Philadelphia, Atlanta, Kansas City, and Dallas maintain a forecast of continued improvement in commercial real estate, while ""contacts were cautiously optimistic in Boston and Cleveland.""

Finally, builders in several districts continue to face labor problems, indicating a possible drag in construction over the coming year. High-skilled trade labor has been particularly scarce in the Philadelphia, Cleveland, Kansas City, and San Francisco districts.

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