Real Estate Highlights:
Residential real estate activity remained slow with subdued growth prospects, while commercial real estate activity stabilized with expectations for improvement. Home building edged down since the last survey period, and construction supply sales were below expectations. Even with a seasonal upturn in residential home sales, the inventory of unsold homes grew substantially as more homes were placed on the market and real estate agents anticipated further home price declines. Driven by less demand for refinancing, mortgage loan activity plummeted, and builders noted the mortgage loan approval process was taking longer. After falling in the last survey period, commercial construction activity picked up modestly and was expected to hold steady over the next three months. District commercial real estate contacts reported an uptick in sales with stable prices and rents. Office and multifamily property leasing was particularly strong. Vacancy rates remained elevated but were expected to move lower as absorption rates gradually improved.
In the recent survey period, bankers reported weaker loan demand, but also rising deposits and improvements in loan quality. Overall loan demand decreased as demand for commercial and industrial, residential real estate, consumer installment, and commercial real estate loans declined. For the fifth straight survey, credit standards remained unchanged in all major loan categories. Deposits increased further in the recent survey period. Bankers also reported improvements in loan quality compared to a year ago, and they expected further improvements over the next six months.