From the Fed:
Construction and Real Estate
Housing markets across the District have shown further signs of modest improvement since the last report. The housing market in the Buffalo area continued to show strength through mid-July, though activity has dropped off in recent weeks–to a greater extent than the seasonal norm. Northern New Jersey’s housing market has bottomed and is showing scattered signs of improvement, according to an industry expert. This contact also maintains that internal market fundamentals are favorable: low and declining inventories, pent up demand, high affordability and a steady reduction in the foreclosure pipeline Manhattan’s co-op and condo market has been fairly active since mid-year, relative to the normal seasonal pattern of slowing. In particular, there has been strong activity at the very high end (for “trophy properties”) and also for entry-level apartments, driven in part by low mortgage rates. There has been more significant improvement reported in Brooklyn and especially in Queens, where an inventory glut has evaporated surprisingly quickly, according to one contact. New York City apartment rents have continued to rise across all segments, and Albany’s rental market has strengthened noticeably, with rents running 7 percent higher than a year ago.
Small- to medium-sized banks in the District report a noticeable pickup in overall loan demand. Particularly widespread increases in demand were reported for both residential and commercial mortgage loans, while demand for consumer loans was little changed. As was the case in the last report, demand for commercial & industrial loans decreased. Bankers also indicate steady demand for refinancing. Virtually all contacts report no change in credit standards across all loan categories. Respondents indicate continued decreases in spreads of loan rates over costs of funds for all loan categories–particularly commercial & industrial loans and commercial mortgages. Respondents also note continued declines in the average deposit rate. Finally, bankers report declining delinquency rates, particularly on commercial & industrial loans and residential mortgages.