Economic activity across the Federal Reserve’s First District steadily ticked upward across most sectors measured in the Fed’s most recent Beige Book report.
Business contacts across the First District, which includes all of New England save Connecticut’s Fairfield County, reported ongoing demand in manufacturing, robust growth in staffing services and revenue growth at most software and information technology services firms the Fed talked to. Some retail contacts told the Fed of softer year-over-year sales beginning in June or July, but didn’t express much concern about it, possibly because the holiday shopping season is just around the corner. Prices remained stable, and aside from staffing firms, no contacts reported wage increases.
Residential and commercial real estate markets across the region improved, the Fed said, although of course some spots were brighter than others.
Notably, Boston office rents continued to climb, vacancies continued to fall, and investors continued to push commercial properties to near all-time highs. Leasing activity in Hartford was light, but investment sales remained strong and have recently attracted interest from foreign buyers. A regional commercial real estate lender told the Fed that his bank experienced a spike in loan payoffs – the result of increased property sales among borrowers. Though most commercial real estate contacts were optimistic about the future, the Fed described one Hartford contact as “modestly pessimistic.”
Single-family home and condominium sales increased year-over-year across all six states, the Fed said. Median sales prices increased in half the First District states, but fell in Connecticut, Vermont and Maine. Massachusetts contacts told the Fed the price appreciation in the Bay State was modest, which The Warren Group’s statistics confirm. Inventory fell in every state but Connecticut, and contacts said the low inventory had created a strong sellers’ market. Massachusetts contacts in particular complained that building and zoning laws made new construction difficult.
While the Fed said that most contacts were generally optimistic about the market’s recovery from the unseasonably slow winter, the report’s authors also noted, “Many are weary of the inventory shortage and express concern that rising prices and potentially increasing interest rates will begin to present financing issues for buyers.”
