Overall national economic activity has been on the upside in the early months of this year, the latest version of the much-studied Beige Book is reporting, with supply chain disruptions easing and consumer spending holding steady.
That optimistic survey was somewhat qualified by the survey results of half of the dozen Federal Reserve Bank districts which continued to register concerns about high inflation and high interest rates.
Published by the U.S. Federal Reserve, the Beige Book is published eight times a year and serves as a compilation of views on the economy by market experts, bankers, business contacts, and economists, among others.
Reports from the 10th District, which includes all of Colorado and the northern half of New Mexico, indicate that “developers of multifamily housing indicated further deterioration of conditions from already depressed levels.”
Rising interest rates in the 10th District “continue to be a challenge to financing multifamily housing projects, but contacts also highlighted recent volatility in rental rates as an additional headwind.”
In the 11th District, which includes all of Texas and the southern half of New Mexico, activity in the single-family housing market has improved in recent weeks: “Buyer traffic picked up, and sales, particularly for new homes, were exceeding expectations.”
While the demand for office space in the 11th District has remained flat, “activity in the industrial market continued to be solid,” although concerns were expressed about the “elevated construction pipeline.”
The higher cost of capital in the 11th District, along with tighter lending stands and overall economic uncertainty, “has made it difficult to price deals, diminishing investment sales activity.”
Reports from the 12th District, encompassing all of Arizona, indicated that demand for single-family homes has continued to soften. “Properties took longer to sell, and prices were lowered.”
But “multifamily housing demand remained steady, though contacts reported that asking rents or the rate of rent increases declined.”
The demand for office space in the 12th District has additionally continued to show “weaknesses with low rents and high vacancies.”
By Garry Boulard
