Florida Housing Market Dominates New Fed Report

Business activity expanded modestly in late November and December in the Federal Reserve’s Sixth District, although Fed officials made note of continued weakness in housing markets, especially in Florida.

The Florida housing market reported the largest declines in sales and new home construction, the Atlanta Fed said in its January 17 “Beige Book” report, a summary of economic conditions in six states, including Alabama, Florida, Georgia, and parts of Louisiana, Mississippi and Tennessee.

Sales were more mixed elsewhere in the district, although inventories remained high across much of the region. Most Florida real estate agents reported price reductions on existing homes for sale, while there were scattered reports of price declines in other parts of the district as well.

Non-residential development in the district remained at healthy levels, and commercial real estate markets improved late in the year as statewide office occupancy and rental rates both increased, according to the report.

Residential Florida home loan demand also remained weaker in most parts of the state, the report said. While banking conditions stayed stable and overall credit quality was good, there were some reports of increases in consumer loan delinquency in parts of the district.

Reports concerning the overall economy were generally positive, with some Florida real estate industry contacts noting that the 2006 holiday season was stronger than last year and business is protected to rise considerably in the first quarter of 2007.

Most district retailers said sales in December rose modestly compared with a year ago, too. Vehicle sales were below year-ago levels in most areas, however. Factory activity remained up and down, with the big slowdown in residential home construction affecting producers of building materials.

The Fed also said hiring trends remained positive, while reiterating its belief that Florida mortgage rates will remain at current levels as the risk of inflation has been kept at bay (barring unforeseen issues in the energy sector, of course).