Fed Beige Book shows economy grows modestly as home sales lag

Economic activity grew modestly over the last six weeks as increased uncertainty restrained housing sales in most areas, according to the Federal Reserve. All but four of the Fed’s dozen regional districts reported stable or slowing home sales, the central bank said in its latest Beige Book, which summarizes anecdotal economic activity across the nation. Several districts cited rising economic uncertainty as cause for continued weakness in residential real estate markets. The sluggishness extended to commercial real estate as well, and consequently, loan activity remained weak, according to the Fed report. However, credit standards remained stable and loan quality improved. The regions reporting increased home sales over the previous year’s weak levels were Boston, Minneapolis, Dallas, and Atlanta, where gains were concentrated mostly in Florida. Home construction was stagnant in most areas, except the Minneapolis and Kansas City Fed districts. “A growing backlog of foreclosures in New Jersey continued to weigh down the housing market,” according to the the report, which also noted rising inventories in several areas as home prices were mostly flat or on the decline. Aside from an increase in home remodeling activity in some regions, the remaining bright spots on the residential front related to rental activity, with demand for apartment rental space rising in the San Francisco and Dallas districts. Demand for multifamily housing projects increased in New York, Philadelphia and Cleveland. Labor markets were generally stable, with some regions reporting employment growth, and price pressures eased. Worries about the economy were cited multiple times by the Fed districts. “Banking contacts in several districts also referenced concerns about the economy,” the central bank said. “The Chicago district cited recent volatility in financial markets and reduced expectations for economic growth, while Kansas City district contacts listed a weak economic recovery and uncertainty about financial regulations.” Those concerns “led many contacts to downgrade or become more cautious about their near-term outlooks.” Write to Liz Enochs.