Economic activity in New England continued its modest, if sometimes uneven, expansion ahead of the winter months, which dampened growth last year.
According to the Federal Reserve’s latest Beige Book, the First District, which encompasses all of New England except for Connecticut’s Fairfield County, saw year-over-year sales and revenue increases in retail and manufacturing contacts, net hiring in more robust fields and pay levels rising somewhat for temporary workers.
Most commercial real estate in the First District improved modestly, while residential real estate remained unsettled, the Fed said.
"A regional banking contact saw a modest increase in commercial real estate loan inquiries, including an uptick in loan demand for industrial properties in the Boston area; at the same time, he reports that the flow of lending activity at his bank is below its year-ago level," the Fed said of commercial real estate in the First District.
According to the Fed, the outlook for the Boston commercial real estate market was largely positive, boasting declining vacancy rates, modest rent increases and robust investor demand for office and multifamily properties.
Meanwhile, contacts in Hartford predicted slow-to-negligible growth in economic activity and slow improvement in real estate fundamentals. Market fundamentals were unchanged since the last Beige Book report, with leasing fundamentals flat and a dearth of new construction activity.
According to the Fed, closed sales of single-family homes increased year-over-year in four of six New England states, but Massachusetts was not one of them, seeing declining year-over-year sales with prices that remained flat. That put an end to 23 consecutive months of year-over-year price increases. Contacts told the Fed that buyers are not willing to overextend themselves financially as home prices move higher, and contacts were split amongst expecting a decline in prices, an increase in prices or a plateau in prices over the coming months. Massachusetts contacts told the Fed that inventory is a concern, with those numbers declining year-over-year and contacts reporting that new listings cannot meet demand. They emphasized a need for new construction and for more sellers to list properties.
Condo sales increased year-over-year in Connecticut during September, while median prices declined year-over-year in both Connecticut and Massachusetts, representing the first decrease in condo prices in 15 months. Inventory of condominiums was also a concern in Massachusetts.
Winter is coming, however. In March of this year, the Fed reported that the long, harsh winter had depressed economic activity in sectors like manufacturing and tourism.
