Beige Book: Home sales increase in New England, except Mass.

ACCORDING TO THE BEIGE BOOK REPORT released by the Federal Reserve Bank of Boston, business activity continued to expand in the First District in recent weeks, although at a modest pace. / BLOOMBERG FILE PHOTO/BRENT LEWIN
ACCORDING TO THE BEIGE BOOK REPORT released by the Federal Reserve Bank of Boston, business activity continued to expand in the First District in recent weeks, although at a modest pace. / BLOOMBERG FILE PHOTO/BRENT LEWIN

BOSTON – Single-family home sales increased on an annual basis in every state in the First District, except Massachusetts, where the number of sales declined, according to the Federal Reserve’s latest Beige Book report that notes economic conditions from early April to late May.
“While closed sales in Massachusetts have been lower than a year earlier in seven of the last 11 months, the number of pending sales increased year-over-year in 25 of the last 26 months. Contacts attribute this pattern to an inventory shortage and strong consumer demand,” the report said.

House inventory decreased in every state in the First District except Connecticut, the report said. However, pending sales increased in all six states, suggesting that closed sales will continue to grow in coming months.

The median sales price increased in Maine, Massachusetts, New Hampshire and Vermont, but declined in Connecticut and was unchanged in Rhode Island – compared with last year at the same time.

“Connecticut contacts state that decreases in the median sales price may be due to sales of distressed homes, which continue to work their way through the judicial system. Massachusetts contacts say that consumer demand plus inventory shortages have driven year-over-year increases in the median sales price for 29 out of the last 30 months,” the report said.

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The condominium market saw closed sales decrease in five of the New England states, with New Hampshire being the exception.

The median sales price for condominiums rose in Massachusetts and New Hampshire, remained unchanged relative to a year ago in Connecticut, and decreased in Maine, Vermont and Rhode Island. Declining sales and increasing prices for condos in Massachusetts also are attributed to inventory shortages. Condominium inventories decreased year-over-year in every state in New England.

“Contacts describe housing markets across the First District as very active. They say they expect buyer demand to persist through the spring market and into the summer,” the report said.

As for commercial real estate, reports from business contacts were mixed.

In Greater Boston, office leasing activity is “holding steady at a solid pace” while construction activity also is steady; the outlook calls for increased construction activity in the health care sector. Boston’s office construction activity also consists mostly of build-to-suit projects rather than speculative structures. In Providence, office leasing volume was described as “decent and business sentiment is improving.”

The report said that one contact reported that a shortage of skilled construction labor relative to demand in the region, as well as associated wage increases, “are starting to hinder additional construction activity.”
Other highlights from the report:
Retail and tourism

  • New England retailers reported year-over-year comparable-store sales increases between 1 percent and 5 percent, which some contacts said indicated better consumer sentiment. Most contacts are still planning for additional hiring and capital spending, as they continue to expect improvement in the U.S. economy.
  • Boston-area hotel occupancy rates increased 3.5 percent year-over-year in the first quarter. Although April figures are not yet available, analysts expect strong hotel revenues based on the Boston Marathon and continued strength in business and leisure travel; forecasts for the high summer travel season are very strong.

Manufacturing and related services

  • Eleven of 12 responding manufacturers reported stronger sales compared with the same period a year earlier. The only firm to report weaker sales was a manufacturer of health and fitness equipment which attributed part, but not all, of the decline to strengthening dollar.

Software and information technology services

  • First District software and information technology services contacts report mixed business activity in recent months, with total revenue ranging from down 4 percent to up 9 percent year-over-year. Looking forward, contacts either maintain the same level of optimism or are slightly less optimistic than three months ago, expressing concern about the continued strong dollar and volatility in the overall macroeconomy.

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