Metro Atlanta housing futures dinged in two new federal reports

By David Pendered

Two federal reports released Wednesday dashed chilled water on the housing market in metro Atlanta and across the Southeast. One report predicted a continuing status quo of modest growth, and another forecast a weakening market due to the new federal tax law.

Southwest Atlanta restoration 2017

The restoration of blighted homes in Atlanta may face a slowing market in light of consumer sentiments about the housing market. Credit: David Pendered (2017)

The Federal Reserve’s Beige Book that came out Wednesday afternoon revealed signs of a cooling real estate market in Alabama, Florida and Georgia, and portions of Louisiana, Mississippi and Tennessee. That could resonate across everything from furniture shops to lawn maintenance services.

Fannie Mae released a report earlier on Wednesday that showed the nation’s new tax law is beginning to weigh on consumer confidence in the housing market. Fannie Mae is a federal financier for mortgage lenders that aims to keep mortgages affordable to all buyers.

The Beige Book portrayed the nation’s economy as fairly buoyant, based on anecdotes related by various contacts across the Southeast region. Here’s the overview of metro Atlanta and the Southeast that’s contained in the main report:

  • “Economic conditions continued to improve modestly. The labor market remained tight and wage growth was balanced. Non-labor input costs edged up slightly. Retailers cited flat sales, while auto sales were sluggish. Home prices increased modestly. Demand for commercial real estate continued to improve. Manufacturers noted solid activity and steady production levels.”

The Southeast region also earned high marks in the overview citation of a strong tourism sector:

  • “Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector.”

These lofty outlooks seem to have less traction at the granular level portrayed in the regional report on the Fed’s 12 districts. The report on Construction and Real Estate in the report released Wednesday observes of the residential sector in metro Atlanta and the Southeast:

Capitol View 2017

Residential construction continued apace in 2017, as exemplified at the Gateway Capitol View project. Credit: David Pendered (2017)

  • “Reports from District residential real estate contacts signaled continued modest growth. Builder reports on construction activity in January compared to one year earlier were mixed. Builders and brokers indicated that home sales activity was flat to slightly down from the year-ago level. Many brokers reported buyer traffic was flat to down slightly, while builder reports were mixed. Most builders and brokers said inventory levels were down from one year ago.
  • “Builders and brokers noted that home prices increased in January. Looking ahead, brokers and builders expect home sales activity over the next three months will hold steady or increase slightly relative to the year-ago level. Many builders expect the pace of construction activity over the next three months to remain unchanged or to increase slightly.”

The Fannie Mae report presents a different slice of data. It shows, for instance, that a growing proportion of Americans who aren’t in fear of losing their jobs fell 2 percentage points, to 71 percent.

Still, the overall Home Purchase Sentiment Index has dropped from a year ago, down 2.5 points compared to this time last year to 85.8 percent.

Here is a sampling of the Fannie Mae findings:

  • “The net share of Americans who say it is a good time to buy a home decreased 5 percentage points to 22 percent;
  • “The net share of those who say it is a good time to sell fell 2 percentage points to 36 percent;
  • “The net share of Americans who say home prices will go up decreased 7 percentage points to 45 percent in February;
  • “The net share of those who say mortgage rates will go down over the next 12 months fell 7 percentage points to (negative) 57 percent.”

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

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