There are no surprises here. There is some improvement while uncertainty remains.
Real Estate and Construction
Residential real estate activity improved during the most recent survey period, and commercial activity was solid. Housing starts were down compared to the previous survey, but builders expected new home construction to increase over the next three months. Housing materials were readily available, but several respondents had trouble finding skilled workers. Sales activity at construction supply firms surged during the survey period across all types of materials, and expectations for sales continued to be strong. Residential sales were much improved from the previous survey, and inventories continued to fall. Contacts reported that homes priced between $150,000 and $300,000 sold particularly well, but homes at the upper end of the market continued to be difficult to sell. Overall mortgage lending activity grew this survey period, but refinancing activity was flat. The majority of refinancing activity was due to lower payments in response to low interest rates. Commercial real estate activity was solid during the survey period, but there was some uncertainty about future activity. Vacancy rates fell, and contacts expected them to continue to fall over the next three months. Prices and rents were flat, but expectations were for some increases in the future. Several respondents believed that political uncertainty could create some weakness in the construction and commercial real estate markets.
In the recent survey period, bankers generally reported slightly stronger loan demand, improving loan quality, and increased deposits. Overall loan demand was improving as most respondents reported stable to increased loan demand for residential real estate loans, commercial and industrial loans, and commercial real estate loans. Demand for consumer installment loans remained steady. Credit standards remained largely unchanged in all major loan categories, and the majority of respondents reported steady or increased deposits. Most bankers reported improving loan quality compared to a year ago. Additionally, every banker believed the outlook for loan quality over the next six months would be steady or improving.