The federal Beige Book reporting concludes construction and real estate activity is staying a strong course, but there are continuing signs that activity is cooling - an assessment that may help to offset the region's third-quarter "at risk" for overbuilding charge from the FDIC.
All but Houston is showing a slowdown in residential markets. Builders claim rising interest rates have sidelined some would-be homebuyers and precipitated a surge in apartment demand. Some regions reportedly are experiencing 20-year lows. Despite the demand, the highly competitive market is still courting prospective tenants with offers for incentives and rent concessions.
The nonresidential market remains at a high level, but some builders are voicing concern about a leveling off in demand for retail property. Meanwhile, 11th District commercial space demand is triggering jumps in construction costs and rents.
The November reporting concludes the construction industry is back to normal as is cement and concrete inventory, which had been in short supply earlier this year. Prices are predicted to fall as new capacity comes online and more so in Houston where imports are being blamed for plummeting prices. Lumber and wood product prices too are dropping, with some areas reporting plywood costs have dipped as much as 25% and lumber as much as 35% percent from a previous peak.
A manufacturing sector slowdown is causing some concern as demand drops for producers of cement, concrete, glass, paper, petrochemicals, primary metals, lumber and other wood products. Some say it's slower than normal this season, a possible indication this year's holiday shopping season won't be up to par although retail sales have remained static from the last reporting. In the financial sector, loan demand too is constant from the last period, but activity is not as brisk as a year ago.
There is marginal relief in the state's labor market as a result in the shake-up of Internet-related companies, putting more skilled high-tech workers in the available workforce. Despite that, more industries are reporting employees are working longer and demanding more in wages. Overall, the labor market is still strapped, according to the report based on data from industries in each of the nation's 12 Federal Reserve District Banks.
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