From the Federal Reserve:
Economic growth in the Second District has continued at a moderate pace since the last report. Contacts indicate some increase in cost pressures, though selling prices continue to be steady to up slightly. Labor market conditions have shown further signs of improvement, and there are scattered reports of wage pressures. General merchandise retailers indicate that sales were generally steady in September and close to plan, while new auto sales have been increasingly robust. Tourism activity has shown some signs of picking up since the last report. Commercial and especially residential real estate markets have shown signs of firming. In contrast, contacts in the manufacturing sector report a pause in growth, and the climate in the financial sector is described as downbeat. Bankers report softer loan demand from the household sector, no change in credit standards, little change in loan spreads, and continued widespread declines in delinquency rates. More broadly, some contacts express concern about potential disruptive effects of a prolonged federal government shutdown.
Construction and Real Estate
Residential real estate markets in the District have been steady to stronger since the last report. Buffalo-area contacts continue to describe market conditions as robust in both August and September, with brisk sales volume, moderately rising prices, and continued reports of bidding wars. Sales activity in New York City’s co-op and condo market was exceptionally brisk in the third quarter–the highest since 2007 and the 2nd highest in 24 years. Sales of smaller (one bedroom) apartments were particularly strong. The inventory of available apartments for sale has fallen to new lows, as completed transactions are outnumbering the flow of new listings. Whereas Manhattan prices have risen only modestly, prices for Brooklyn apartments are reported to be up 10-15 percent over the past year. New York City’s rental market has been mixed: while Manhattan rents have stopped rising and are down slightly from a year ago, Brooklyn rents have been rising at a more than 10 percent pace.
A contact in New Jersey’s housing industry reports continued gradual improvement in market conditions. Prices continue to rise modestly, held back by a persistent overhang of distressed properties. The Jersey shore sales market remains tepid, with prices still well below their pre-recession peaks–particularly in areas hard hit by Sandy last October.
Office markets were steady to stronger in the third quarter. Manhattan’s vacancy rate declined to 7.3 percent–its lowest level in more than four years–while asking rents continued to rise, particularly on Class B properties. Long Island’s office vacancy rate also edged down below 8 percent, though asking rents were little changed. In the northern New Jersey and Westchester/Fairfield markets, however, vacancy rates were unchanged at much higher levels, while asking rents were little changed. A New Jersey real estate contact maintains that non-residential construction activity is almost strictly limited to renovations and improvements on existing properties.