Federal Reserve Beige Book, Real Estate Market

The Federal Reserve Board said in its latest Beige Book—a summary of the U.S. economy—that the American economy is growing at a slower pace while demand for residential real estate remains “quite depressed.”

The Fed’s report blames tightening credit conditions and turmoil within the mortgage market for causing some of the slow down in the real estate sector.

The Federal Reserve says, “Most districts pointed to further increases in the inventory of available homes, with the earlier tightening of credit conditions for mortgage lending continuing to create barriers for some buyers. Consequently, prices on new and existing homes sold were reported to be down on a short-term or year-earlier basis in most districts.”

The Beige Book results arrive at a time when the markets are buzzing about another potential federal interest rate cut in early December. A report from MarketWatch Thursday quoted Federal Reserve Vice Chairman Donald Kohn as saying something to the effect of the central bank will not be bullied into teaching speculators lessons when decisions need to be made for the benefit of the entire economy.

In the southwest region of the economy, Richard Fisher, president of the Federal Reserve Bank of Dallas, announced that while he does not foresee a recession, he worries about the potential for inflation.