Multifamily Leasing Rates Showed Signs Of Decline According To Fed’s Beige Book

Mortgage News March 22, 2023

The latest report on economic activity indicates a slight increase in early 2023. While six Districts reported little or no change in economic activity, the other six reported modest expansion. Supply chain disruptions continued to ease, and consumer spending remained steady, with a few Districts reporting moderate to strong growth in retail sales despite rising inflation and interest rates impacting consumers’ discretionary income and purchasing power.

Auto sales were stable, but inventory levels improved, and travel and tourism activity remained strong in most Districts. Manufacturing activity stabilized, and while housing markets remained subdued due to low inventory, some Districts saw unexpected growth beyond the seasonal norm.

The commercial real estate sector maintained a stable level of activity, although the office market continued to exhibit weaknesses. Nonfinancial services saw consistent demand overall, but experienced an uptick in a few regions. On the other hand, loan demand decreased, credit standards became more stringent, and delinquency rates slightly increased.

Labor market conditions remained solid, with employment continuing to increase at a modest to moderate pace in most Districts despite some hiring freezes and layoffs. Labor availability improved slightly, but finding workers with desired skills or experience remained challenging. Lack of available childcare continued to impede labor force participation, and while labor markets generally remained tight, some firms are becoming less flexible with employees and reducing remote work options. Wage increases generally increased at a moderate pace, but some Districts noted that wage pressures had eased somewhat, and wage increases are expected to moderate further in the coming year.

Overall, the economic outlook remains uncertain, and contacts do not expect much improvement in economic conditions in the months ahead. The report highlights the ongoing impact of supply chain disruptions, inflation, and interest rates on consumer spending and the importance of addressing labor force participation barriers such as the lack of available childcare.

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