Widespread Improvement in Housing Market
The U.S. housing market showed broad improvement as the economy continued to expand modestly in late August and September, the Federal Reserve said in a report Wednesday.Noting strength in housing across all 12 Fed districts, the Fed’s “beige book” report reinforced a slew of recent data suggesting the housing market’s recovery is beginning to pick up steam. The report, which is based on anecdotes from business contacts and economists across the nation, noted that existing home sales had strengthened in all 12 districts, while selling prices rose or held steady.
“Residential real estate showed widespread improvement since the last report,” the beige book observed.
That’s in line with data showing a nascent firming in a sector once rocked by the collapse in housing prices and economic recession. Sales of previously occupied homes reached their highest level in more than two years in August, the National Association of Realtors said last month.
The Fed noted that shrinking inventories of houses helped push up prices in some districts. And some regions saw particularly robust growth in the construction of multifamily units. The commercial real estate market was “mixed,” with some softening in the office market.
The economic snapshot was prepared by the Federal Reserve Bank of New York based on information gathered on or before Sept. 28 and will be used for discussions at the Fed’s next policy meeting on Oct. 23 and 24.
Last month, the Fed took action designed to help boost the housing market. At its last policy meeting, the central bank launched a major bond-buying program, under which it will purchase an additional $40 billion of mortgage-backed securities each month until the labor market significantly improves. The Fed opted to buy mortgage-backed securities to help put downward pressure on mortgage interest rates.The jobs market saw little change since the last report, released in late August, according to the beige book. Some districts noted that uncertainty over the November presidential election, the U.S. budget outlook and the European sovereign-debt crisis were restraining some employers from hiring new workers.
That’s less encouraging than the Labor Department’s report last week showing the unemployment rate fell to 7.8% in September, the lowest level since January 2009, while U.S. payrolls increased by a seasonally adjusted 114,000 jobs last month.In general, the Fed noted that economic activity “generally expanded modestly” since its last report, with consumer spending ticking up slightly or staying level. Some districts reported that retail sales were being held back by rising gasoline prices, political uncertainty and “concerns about the fiscal cliff.” That’s a reference to the slew of tax increases and spending cuts scheduled to simultaneously go into effect at the start of 2013 unless Congress reaches a deal to avert them. Manufacturing conditions were mixed, but “somewhat improved,” while tourism remained steady at “robust levels.”The Fed found price pressures were contained.