Wednesday, October 10, 2012

Kansas City Beige Book: District's economy "expanded at slightly slower pace"

The Kansas City Fed today released its Beige Book on economic conditions in the tenth district, which includes Colorado. 

According to the report:

The Tenth District economy expanded at slightly slower pace in late August and September compared to earlier in the summer. Consumer spending slowed somewhat, manufacturing growth was more subdued, and transportation firms reported flat conditions. Growth in commercial real estate activity slowed marginally, but remained on a positive trend.

Here's the report on real estate: 

Solid growth in residential real estate activity continued in late August and September, while expansion of commercial real estate activity slowed somewhat. Housing starts edged higher, and limited availability of workers was reported as an issue for some builders in states with low unemployment rates. Expectations for future homebuilding remained favorable, and building materials were generally available. Despite the improvement in housing starts, sales at construction supply firms were considerably slower, and many businesses were pessimistic about future sales. Home sales continued to grow at a solid pace, though slightly slower than in the previous survey. Residential realtors said mid-range homes sold well, while the luxury home market was still exceedingly slow. Several contacts noted a rise in sales to investors, as higher rental rates have increased profit potential. Expectations for future home sales flattened somewhat, but prices were generally rising and expected to increase further. Mortgage lending activity eased slightly, and one contact noted continued tightening of underwriting guidelines. Growth in commercial real estate activity slowed marginally from the previous survey, but was generally solid overall and most contacts remained optimistic about future months. Vacancy rates continued to fall, but absorption rates flattened out. Office prices and rents were also flat from the previous survey, although some increases were anticipated in coming months.