The Federal Reserve’s September Beige Book, which surveys national economic conditions, reports that for the mid-July through August period, economic growth slowed compared to earlier in 2010.
The survey found that consumer spending increased, but that consumers on the whole remained cautious. Many sectors experienced growth but slower growth than was realized earlier in the year. These sectors included manufacturing, professional services, agriculture, and finance.
With respect to residential real estate, the Fed found slowing activity with the expiration of the homebuyer tax credit, although some areas of the Midwest experienced gains.
Activity in residential real estate markets declined further. Most District reports highlighted evidence of very low or declining home sales, which many attributed to a sustained lull following the expiration of the homebuyer tax credit at the end of June. Some Districts, such as New York and Dallas, noted that the expiration of the tax credit created especially weak conditions for lower-priced homes, while others, including Philadelphia and Kansas City, identified the high end of the market as the primary weak spot. Residential construction activity declined in most areas in response to weak demand.
Cleveland, St. Louis, and Minneapolis were the exceptions to this pattern of declining activity, with reports from their contacts indicating that residential construction activity improved of late. Inventories of available homes rose in general, although the availability of new homes in Atlanta was held down by the slow pace of new home construction.
Price movements were mixed, with most Districts reporting stability or declines of late; a few, notably Boston, Minneapolis, and San Francisco, noted that prices rose in some areas compared with the previous reporting period or last year. Richmond reported that recent home sales were “dominated by foreclosure and short sales,” and Chicago reported an increase in the supply of foreclosed homes for sale.