Beige Book Cites Economic Growth but Weakness in Real Estate

The Federal Reserve released a new rendition of its market-gauging Beige Book Wednesday, which provides an assessment of regional conditions from those in the field. Beige Book findings are based on commentary and observations collected by the 12 Fed districts from businesses and contacts outside of the central banking system. The latest version covers the reporting period from August 26 through October 7. Fed officials say reports from the 12 districts indicate that overall economic activity continued to expand in September, although many districts described the pace of growth as “modest” or “slight” and contacts generally noted weaker or less certain outlooks for business conditions. Loan demand for the most part declined, however the one exception was an increase in mortgage refinancing in many districts. Loan standards were described as still tight for many classes of borrowers, but several districts indicated that strong competition among banks for high quality borrowers was leading to lower rates and fees for these customers. A few districts reported slight improvements in construction and real estate activity, nonetheless, overall conditions for both residential and commercial real estate remain soft. Home sales remained weak overall, and home prices were reported to be either flat or declining across the entire country. In contrast, rental demand continued to rise in a number of districts. Commercial real estate conditions remained weak overall, although commercial construction increased at a slow pace in most districts.