Although an uptick in covid-19 cases earlier in the year appeared a cause of worry, overall economic conditions have been positive since January, notes the latest of trends in the nation’s twelve Federal Reserve districts.
Published eight times a year, the Beige Book is a collection of anecdotal information gathered by Federal Reserve directors with business contacts, economists, and market experts, among other sources.
The most recent report notes that the “demand for residential real estate was generally strong, although many Districts reported no change in home sales due to seasonal trends and low inventories.”
Manufacturing activity has continued to grow at a modest pace, with every district noting that “supply chain issues and low inventories continued to restrain growth, particularly in the construction sector.”
The document says that a demand for new construction in commercial real estate “grew robustly in January and February” in the 10th Federal Reserve District, which includes all of Colorado and the northern half of New Mexico.
But contacts in the 10th District also reported that while contractors say the level of projects is now at or above the pre-pandemic level, “difficulties in sourcing materials are leading to costly redesigns or delays for their customers. As a result, recent contracts have eschewed commitments on delivery dates and committed only to a price, unable to guarantee both.”
In the 11th District, which takes in all of Texas and the southern half of New Mexico, “home sales continued to be solid, and contacts said that rising mortgage rates have not yet impacted demand. Builders reported capping sales and/or holding off putting homes on the market until they had more clarity regarding their costs.”
Prices in the 11th District, “continued to trend upward, in part due to climbing material costs, particularly lumber,” with “operational challenges preventing builders from being able to finish as many units as planned.”
Meanwhile, “Office leasing was picking up, the retail market was on a stable footing, and industrial construction and demand remained elevated.”
In the 12th District, which includes all of Arizona, the residential real estate market has “increased robustly.” Residential construction and sales remained strong in both single-family and multifamily housing sectors.
Even so, as with all the Federal Reserves other district, the Beige Book notes that for the 12th District, “ongoing shortages for material, workers, and land, as well as increased costs for lumber in particular, continued to delay construction projects’ completion time.”
Commercial real estate activity witnessed a slight increase since January in the 12th District, with the sale and rental of commercial and office space up over late 2021, while “new business investment in commercial real estate remained generally lackluster.”
This most recent Beige Book report, notes the Wall Street Journal, shows that the national economy continues to grow, even though the “pandemic dealt a setback to the economic recovery in recent months.”
By Garry Boulard
