Fed Beige Book : CRE Activity Increased Slighty

Overall Economic Activity
Economic activity expanded at a modest to moderate pace across all twelve Federal Reserve Districts in July and August. Consumer spending increased in most Districts, with gains reported for nonauto retail sales and tourism, but mixed results for vehicle sales. Capital spending also increased in several Districts. Manufacturing activity expanded modestly on balance. That said, reports were mixed regarding auto production, and contacts in many Districts expressed concerns about a prolonged slowdown in the auto industry. Both residential and commercial construction increased slightly overall. Low inventories of homes for sale continued to weigh on residential real estate activity across the country, while commercial real estate activity increased slightly. Activity in the energy and natural resources sector was generally positive prior to shutdowns arising from Hurricane Harvey. Agricultural conditions were mixed overall, with drought conditions reported in multiple Districts. Business and consumer loan demand grew at a modest pace in most Districts, with a number of banks reporting rising competition from both other banks and non-bank lenders.

Tenth District- Kansas

Summary of Economic Activity
Economic activity in the Tenth District increased modestly in late July and August, and most sectors expected moderate growth in future months. Professional, high-tech, and wholesale trade firms reported a strong increase in sales, and manufacturing activity expanded at a moderate pace. District energy activity expanded modestly compared to the previous survey period, and bankers reported steady to improving overall loan demand, stable deposit levels, and unchanged loan quality. District real estate activity continued to increase at a slight pace, while consumer spending contacts indicated growth was unchanged since the previous survey period. Agricultural conditions weakened but at a slower pace, with subdued farm income and slightly lower farmland values. In addition, transportation contacts indicated slightly lower sales than the previous survey period. Employment and employee hours rose slightly in late July and August, and contacts in most sectors reported moderate wage growth. Input prices were up moderately over the previous survey period, while selling prices increased modestly in most sectors.

Real Estate and Construction
Overall District real estate activity continued to increase at a slight pace in late July and August. Residential home sales were flat since the previous survey period, and contacts anticipated no change in the coming months. Sales of low- and medium-priced homes continued to outpace sales of higher-priced homes. Residential home prices and inventories were modestly higher than the previous survey period. Residential construction activity continued to expand at a slight pace, as construction supply activity remained flat while new home starts and traffic of potential buyers rose. Expectations for overall residential construction activity were for a modest increase in the months ahead. Commercial real estate activity continued to expand modestly, as absorption, completions, construction underway, sales, and prices rose, while vacancy rates declined. Commercial real estate activity was expected to continue to increase at a modest pace moving forward.

For more information about District economic conditions visit: www.KansasCityFed.org/Research/RegionalEconomy