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Economic Conditions by Federal Reserve District

Reports from the twelve Federal Reserve Districts indicate that the economy continued to expand across most regions from early October through mid-November. Activity in the Boston, Minneapolis, and San Francisco Districts grew at a moderate pace, while Atlanta, Chicago, St. Louis, and Dallas cited modest growth. Philadelphia, Cleveland, and Kansas City cited a slight pace of growth. Richmond characterized economic activity as mixed, and New York said activity has remained flat since the last report. Outlooks were mainly positive, with six Districts expecting moderate growth.

Commercial Real Estate

Commercial construction activity moved higher in the New York, Cleveland, Richmond, Atlanta, St. Louis, Kansas City, and San Francisco Districts. In contrast, Minneapolis noted a slowing in commercial construction. The Boston, Richmond, Minneapolis, and San Francisco Districts reported increases in leasing activity, while Philadelphia noted a lull in nonresidential leasing growth compared with the prior period. Dallas reported leasing activity as mostly unchanged. Commercial sales activity continued to be robust in Minneapolis and grew modestly in Kansas City. Ongoing multifamily construction has been steady at a fairly high level in New York. Multifamily construction varied in the Atlanta District and slowed somewhat in Richmond, Minneapolis, and San Francisco.

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Eleventh District – Dallas

Economic activity in the Eleventh District expanded modestly over the past six weeks. Manufacturing activity rose, and demand for nonfinancial services increased. Retail sales fell, and automobile sales softened. Real estate activity continued to expand in most markets. Loan demand was stable, and the energy sector saw slight improvement. Agricultural producers faced mixed conditions, as low commodity prices pressured farm revenues, despite higher crop yields and good pasture conditions. Upward price pressures remained limited. Employment increased and wage pressures were more widespread. Outlooks were mostly positive but cautious.

Construction and Real Estate

Home sales rose over the reporting period. Sales of lower-priced homes remained solid, and contacts in Dallas-Fort Worth cited a pickup in demand at mid-price points. New home starts rose in Austin and Houston in the third quarter. Land prices remained elevated, although some contacts in Houston noted a decline in lot prices in selected submarkets.

Apartment occupancy remained fairly stable at high levels and rents rose in most major metros except in Houston, where persistent declines were noted. Contacts expect apartment construction and rent growth to moderate next year. Office leasing activity was mostly unchanged from the previous report, with continued strength in Dallas-Fort Worth and ongoing weakness in Houston.

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