All twelve Federal Reserve Districts indicated expansion in economic activity, characterizing the pace of growth as modest or moderate, up from the previous report, according to December Beige Book.
Overall, loan demand was largely unchanged in the Philadelphia, Cleveland, Richmond, Kansas City and San Francisco districts, with most of these districts posting a continuation of slight to moderate growth in total volume.
The New York, Atlanta, Chicago, and Dallas districts posted stronger demand than previously, while the St. Louis district reported a slight decline.
Generally, demand for residential mortgages improved in Cleveland, Atlanta, Chicago, Kansas City, Dallas and San Francisco.
Commercial real estate lending was also noted as a particular bright point for the New York, Cleveland, Kansas City and Dallas districts.
However, lenders in San Francisco remained reluctant to lend to real estate investors outside of the multifamily residential sector.
Overall loan demand was significantly unchanged in the Philadelphia, Cleveland, Richmond, Kansas City and San Francisco districts, with most of these districts reporting a continuation of slight to moderate growth in total volume.
The New York, Atlanta, Chicago and Dallas districts posted stronger demand than previously, while the St. Louis district posted a slight decline.
The banks in the New York, Philadelphia, Cleveland, Kansas City and San Francisco districts posted improvements in asset quality.
Lenders in Philadelphia, Richmond, Atlanta and San Francisco were described as “competing aggressively” for highly qualified borrowers.
In particular, the Atlanta district the stiff competition could lead to loosening credit standards, as there was some indication that banks were more willing to increase tolerance for risk.
Chicago banks also posted some loosening of standards. In comparison, lending standards remained largely unchanged in New York, Cleveland and Kansas City.
Real estate activity expanded or held steady in 11 of the 12 districts for existing home sales and leasing.
Also, nonresidential sales grew in 11 districts and nine districts for nonresidential construction.
Overall loan demand was steady in five districts, rising in four districts and falling in one district. Six districts also reported improving credit quality and or falling delinquency rates.
For instance, manufacturing in the Chicago district grew with contributions from auto and housing-related sectors.
Product flowing into supply channels for auto production and housing construction also contributed to Philadelphia district gains.
Existing residential real estate activities expanded in nine districts, reporting moderate to strong growth rates.
For example, contacts in the Boston district attributed their strong sales growth to low interest rates, affordable prices and rising rents.
All districts reporting on pricing levels posted increases with New York and Chicago reporting only minor increases.
Five districts also reported falling housing inventories. New residential construction, including repairs, expanded in all but one district of those reported.
For instance, contacts in the Kansas City district posted that increased lumber and drywall cost limited construction, causing a decrease for January.