From the Fed:
Construction and Real Estate
Residential construction has remained depressed and housing markets across the District have remained sluggish since the last report, although there has been further improvement in the rental market. An authority on New Jersey’s housing industry reports that the resale market has remained weak, and that the level of optimism appears to have waned. Prices of existing homes have continued to drift down, largely reflecting a preponderance of “distressed” sales; otherwise, prices across northern New Jersey are generally flat. While the inventory of unsold new homes is fairly lean now, the inventory of available existing homes remains elevated–as high as 16 months of sales if units in foreclosure and other distressed properties are included. Buffalo-area Realtors also report some weakening in market conditions in May and June; while foot traffic has been fairly brisk, few people have made offers. More generally, sales activity across New York State has been steady to weaker. A major New York City appraisal firm reports that both sales and prices of co-ops, condos, and single-family homes remain flat overall–both in Manhattan and in the outer boroughs–with the high end of the market accounting for a larger share of sales than last year.
In contrast with the weakness in home purchase markets, rental markets have shown increasing strength. Manhattan’s apartment rental market has strengthened since the last report. Rents on new leases were reported to be up 6 percent in June from a year earlier in June. In addition, one contact notes that landlords have pulled back on concessions, which are now reportedly being offered on fewer than 5 percent of new leases, down from 60 percent in mid-2010. Separately, the Jersey shore summer rental market is reported to be fairly strong this year, though the sales market for rental units remains sluggish. More broadly, many New Jersey landlords are reported to be pushing through rent increases for the first time since the recession.
Commercial real estate markets have been steady to somewhat weaker since the last report. Office vacancy rates and rents were generally stable across the District during the second quarter: market conditions improved slightly in the Buffalo and Rochester metro areas and in Manhattan, but they weakened moderately in northern New Jersey and metropolitan Albany. However, industrial real estate markets weakened modestly across most of the District, with vacancy rates edging up and rents drifting down.