Beige Book Finds Housing Market Relatively Unchanged

The Federal Reserve Board’s latest Beige Book report found national home sales and prices unable to show significant growth, despite steady economic expansion in other markets.

Real estate and residential construction made no real gains, but the rental markets and rental construction strengthened. Most Federal Districts reported a decrease in home prices, while some remained steady. The central bank, however, reported that commercial real estate stabilized and loan demand held strong with improved credit quality.

One reason why residential real estate remains stagnant could be consumers’ lack of confidence in the market. A Rasmussen Report survey from May 17 found just 15 percent of homeowners believed their house will gain value over the next year, and 27 percent believed their house will lose value. When asked about the value of their homes in five years, 16 percent said their home would lose value, and 33 percent thought it would stay the same.

While the majority of the Districts experienced some economic expansion in manufacturing and non-financial services such as information technology, no Districts indicated a general increase in home prices.

Commercial and industrial real estate markets remained steady, with a few signs of potential growth, and many Districts reported a positive outlook for the second half of 2011.  

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