Fed Beige Book: Commercial Real Estate Activity Consistent with Previous Reports
Current Economic Conditions by Federal Reserve District- November 2017
Overall Economic Activity
Economic activity continued to increase at a modest to moderate pace in October and mid-November, according to anecdotal reports from contacts across the 12 Federal Reserve Districts. There was a slight improvement in the outlook among contacts in reporting Districts. Pre-holiday reports of consumer spending on retail and autos were mixed but largely flat; still, the outlook for holiday sales was generally optimistic. Many Districts highlighted growth in the transportation sector, although the New York District reported a slight softening and the San Francisco District noted that Northern California wildfires temporarily reduced shipping volumes. Residential real estate activity remained constrained, with most Districts reporting little growth in sales or construction. By contrast, nonresidential activity was consistent with previous reports of slight growth. Loan demand was steady to moderately stronger. All Districts reported that manufacturing activity expanded during the reporting period, with most describing growth as moderate. Among reporting Districts, manufacturing contacts predominantly expected activity to continue to pick up, although the Philadelphia and St. Louis Districts noted signs of a slowdown.
Tenth District- Kansas
Real Estate and Construction
District real estate activity continued to expand at a slight pace in October and early November. Residential home sales remained steady since the previous survey period, but expectations for home sales were modestly negative in the coming months. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential home prices rose modestly, while inventories fell further. Residential construction activity edged up, as construction supply sales increased modestly while new home starts were flat and traffic of potential buyers fell moderately. Commercial real estate activity continued to expand at a modest pace as absorption, completions, and sales rose, while vacancy rates declined. Activity in the commercial real estate sector was moderately above year-ago levels, and expectations were positive moving forward.
Banking
Bankers reported steady overall loan demand for the month of October. A majority of respondents indicated a stable demand for commercial and industrial, commercial real estate, residential real estate, agricultural and consumer installment loans. Most bankers indicated loan quality was unchanged compared to a year ago. In addition, most respondents expected loan quality to remain essentially the same over the next six months. Credit standards remained largely unchanged in all major loan categories. Finally, results for the trends in deposits were varied with no discernible majority.
Manufacturing and Other Business Activity
Manufacturing activity expanded at a strong pace in October and early November, and the majority of other business contacts reported moderate to strong sales increases. Manufacturers reported sustained growth in production, particularly for metals, plastics, and electronics products. Shipments, new orders, and order backlog grew at a solid pace, and activity was higher than a year ago. Manufacturers’ capital spending plans rose moderately, and firms’ expectations for future activity remained favorable.
Outside of manufacturing, transportation firms reported strong sales increases, while professional, high-tech, and wholesale trade contacts indicated more moderate growth. All firms expected a strong improvement in sales in the next six months. Professional, high-tech, and wholesale trade firms reported modest growth in capital spending plans, while transportation firms anticipated a moderate decrease in capital expenditures heading forward.
For more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy
For more information about Commercial Real Estate Conditions in Wichita, Kansas check out our Q3 2017 Market Report