Thursday, August 30, 2012

Kansas City Fed: District expanded at "moderate pace"

The Kansas City Fed released its Beige Book yesterday, and noted that growth continues in the Tenth Federal Reserve District, which includes Colorado.

Real estate activity was one of the more active sectors. The Agriculture sector, for example, has suffered due to drought, and wages remain only "stable."

From the report:

Real Estate and Construction
Residential and commercial real estate activity continued to improve in July and early August, and construction activity strengthened. Residential home sales and prices rose, and home inventories fell. Contacts reported multiple offers on homes and expected continued housing market improvements in coming months. Homes under $300,000 sold particularly well, while homes priced over $500,000 and condos were slow to sell in some markets. Several contacts reported that a large inventory of homes in foreclosure has been held back and could put downward pressure on prices when the homes come onto the market. Builders reported an increase in housing starts and a rise in new home prices as well as improvement in the traffic of potential buyers. Land prices and the cost of building materials rose during the survey period as demand improved. Commercial real estate conditions also improved. Construction and sales of commercial real estate properties rose, real estate prices and rents increased, and vacancy rates continued to fall. Several commercial real estate contacts expected uncertainty surrounding the presidential election to slow activity until late in the year. Developers reported that access to credit remained unchanged.
In the recent survey period, bankers generally reported slightly stronger loan demand, improving loan quality, and little change in deposits. Overall loan demand improved slightly as most respondents reported stable loan demand for commercial and industrial loans, commercial real estate loans, and consumer installment loans, while demand for residential real estate loans improved. Credit standards remained largely unchanged in all major loan categories, and the majority of respondents reported stable deposits. The majority of bankers reported improved loan quality compared to a year ago, and nearly all banks expected loan quality over the next six months to remain steady or improve.