Fed's Beige Book: Housing Softens as Mortgage Rates Bite
The Federal Reserve's October Beige Book, released Wednesday, describes an economy growing modestly with rising price pressures, and a housing market that is weakening. The report draws on contacts across 12 Fed districts and information gathered through October 5.
What did it say overall?
Residential real estate softened slightly nationally, alongside agriculture and financial services, while commercial real estate was stable.
What did the districts report?
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San Francisco: residential conditions softened modestly. Rising mortgage rates, elevated asking prices and limited supply curtailed single-family sales. Multifamily supply still outpaced demand, though a large Mountain West developer saw vacancies slowly absorbed and concessions easing
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Boston: home sales saw moderate declines. Closed sales fell moderately in August year over year, with a small decline in Massachusetts and a sharp one in Maine
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Philadelphia: rising mortgage rates in September slowed housing activity even further
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Chicago: weaker residential demand and construction, with builders increasing promotions to attract customers
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Florida: sellers offered buyer incentives, according to coverage of the report
Why does it matter?
The Beige Book is anecdotal, but it shows the rate shock reaching builders and sellers, not just buyers. That fits with NAR data showing the two slowest months for sales this year.
What happens next?
The Fed meets October 27-28, and the September CPI report raised the odds of another hike.