Residential real estate activity was mixed across the country, with reports of low inventories and increasing home prices coupled with varying levels of demand, according to the new Beige Book from the Federal Reserve.

The Beige Book, the Fed’s comprehensive look at the economy, recapped the economy’s performance since the last Beige Book was released in June.

In the last Beige Book, residential real estate activity was also mixed, with some reports of low inventories constraining sales, with home prices continuing to increase, driven by investor purchases.

Since the last Beige Book, the Boston, New York and St. Louis districts reported home sales were below year-ago levels, while Chicago noted a decrease in home sales since the last survey period. Home sales in other districts remained steady or increased.

Residential construction rose for single-family homes in the Cleveland, Chicago, Kansas City, and San Francisco districts, while New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco reported increases for multifamily construction.

Additionally, loan volumes rose across the nation, with slight to moderate increases reported in most districts. Credit quality remained stable or improved slightly in most districts, while San Francisco noted a slight decline.

National Sales

Residential real estate activity continued to vary by Federal Reserve District, reflecting generally low inventories and mixed levels of demand. Specifically, Boston, New York, Atlanta, Kansas City, and Dallas noted that residential home sales were constrained by low or dwindling inventories. Nevertheless, despite decreasing inventories, residential home sales in the Atlanta and Kansas City Districts rose at a slight to modest pace.

Philadelphia, Cleveland, and Richmond also noted a slight to modest increase in sales since the previous survey period, while San Francisco reported that home sales in the recent reporting period were below year-ago levels. Boston, New York, Chicago, and St. Louis indicated that residential sales activity softened, with Chicago attributing some of this decline to an increase in prices.

Home prices continued to rise across most of the districts, especially within urban areas, but contacts in the San Francisco District noted a slightly slower pace of home price appreciation. New York and Dallas reported robust activity in multifamily sales and leasing.

Residential Construction

Residential construction activity generally increased across the districts, with only St. Louis and Minneapolis reporting a decline in overall activity. Chicago and San Francisco reported increased construction of high-end urban single-family homes, and Cleveland and Kansas City continued to see growth in low- to medium-priced single-family construction. Cleveland and San Francisco reported that a shortage of vacant lots was holding back further growth in both single-family and multifamily construction; however, growth remained positive.

New York, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco noted that multifamily construction activity increased since the previous survey period. Contacts in the Cleveland District reported that they were seeing greater willingness to finance multifamily projects.

First District – Boston

Realtors report steady foot traffic at open houses and multiple contacts insist that demand remains strong despite year-over-year declines in sales in May in four of five reporting states: Connecticut, Massachusetts, Rhode Island, and Vermont. In Maine, sales rose over the same period. To help explain the falling sales, realtors cite inventory shortages, perceived lack of job security, and economic uncertainty. Lack of inventory continues to hamper sales in Massachusetts, where listings have fallen on a year-over-year basis for 27 consecutive months.

At the same time, contacts in that state report seeing increases in new listings in selected areas. Despite declining sales, the median sales price of single-family homes in May continued to rise on a year-over-year basis in Rhode Island and Massachusetts. For the same period, median sales prices were flat in Connecticut and down in both Maine and Vermont. Condominium sales in May are down relative to a year ago in Connecticut, Massachusetts, and Rhode Island, while Vermont contacts report increased condo sales over the same period.

The median sales price for condos in May increased from a year ago in Connecticut, Massachusetts, and Vermont; by contrast, the median condo sales price fell in Rhode Island over the same period. Looking forward, contacts in both Maine and Connecticut note that they are busy with pending deals, while pending sales figures for June are below year-earlier levels in Massachusetts, Vermont, and even Connecticut. Nonetheless, realtors across the region are hopeful that closed sales numbers for June will show improvement from a year ago.

Second District–New York

The district’s housing markets have been generally stable since the last report. Across both New York and New Jersey, existing home sales were down nearly 10% from a year ago in May, as the number of homes on the market declined; prices were reported to be flat to up slightly. Contacts in the Buffalo-Niagara region indicate that housing demand remains brisk, but that sales activity continues to be constrained by a dearth of available homes. One industry contact in New Jersey notes that the inventory of available new and existing homes remains low, as a large number of distressed properties remain off the market.

New York City’s co-op and condo market remains robust, with prices up moderately from a year ago in Manhattan and Brooklyn. Sales volume was up moderately from a year ago in Manhattan and up briskly in Brooklyn. In Queens, both prices and sales volume retreated from high levels, reflecting a pullback in new development, which was quite robust in 2013.

The inventory of available homes moved up in Manhattan but remains quite low; one contact remarks that some of the apartments recently being put up for sale are priced unrealistically.

Third District–Philadelphia

Third District homebuilders reported little change in sales from the last Beige Book period when a general malaise had dampened hopes for a strong spring season; however, construction has picked up. A New Jersey builder reported that he had salvaged May with end-of-month contract signings and was seeing a little increase in sales activity in June but from very low levels.

One Pennsylvania builder continued to report slow sales and cited the overall weakness in the resale market. Despite low sales, builders from both states stated that their construction crews were now pretty busy; the poor winter weather had held up most of their active jobs.

Residential real estate brokers reported slight improvements in sales in June. Although May sales were still negative in most major markets on a year-over-year basis, a major Philadelphia-area broker reported doing significantly better than plan in June and expressed hope that he might yet end even for the year. The broker stated that at least part of the ongoing difficulty stemmed from the tightness of inventory of lower-value homes.

Fourth District–Cleveland

Sales of new and existing single-family homes improved during the past six weeks, when compared to earlier in the second quarter. However, year-to-date purchases of new and existing homes through May were somewhat lower than in 2013. One builder pointed to a lot shortage, which may be a contributing factor to softer sales in his service area.

Another builder is concerned about a lot shortage putting upward pressure on home prices. Single-family construction starts across the district are on a slow upward trend and slightly ahead of year-ago levels. New-home contracts were mainly in the move-up price-point categories. A few builders noted a small resurgence in interest from first-time buyers.

There was little change in new-home pricing during the past six weeks, although some builders said that they are considering raising prices in the second half of the year. Existing-home prices are trending slowly higher. Homebuilders’ outlooks for the remainder of 2014 varied widely.

Fifth District–Richmond

The district’s housing market improved modestly since the last report. A Northern Virginia broker reported normal buyer traffic, but expects a seasonal slowdown in the next few weeks. A Realtor in South Carolina saw steady demand for mid-range homes. However, demand declined for entry-level homes. Home prices rose across the board in Asheville, Charlotte, Columbia, and Raleigh.

In Northern Virginia, Maryland, and Washington, D.C., larger price increases were reported for higher-end homes compared to other types of homes. Housing inventory varied according to contacts, with mild growth in Fairfax, Myrtle Beach, and Washington, D.C., while a broker in Charlotte reported a slight decline.

Single-family residential construction increased moderately since the last report in Raleigh and Charlotte; real estate contacts in Washington D.C. reported no change. In contrast, a Realtor in Myrtle Beach observed a decline in sales and construction. Multifamily new construction and leasing remained strong.

Sixth District–Atlanta

Fewer district brokers cited growth this period than in the previous report. Just over half of brokers indicated that home sales had increased from the year earlier level, down from nearly two-thirds in June’s report. Most indicated that inventories either remained the same or declined on a year-over-year basis.

The majority of contacts continued to report that home prices remained above last year’s level. The outlook among brokers about future sales activity was less optimistic relative to our last report.

On the other hand, reports from district builders remained fairly positive. Most contacts felt that recent activity either met or exceeded their plan for the period. The majority of builders indicated that construction and new home sales were ahead of the year earlier level.

Builders noted that the inventory of unsold homes remained unchanged from a year ago. The majority of contacts continued to report modest home price appreciation. The outlook among builders for construction and home sales was positive.

Seventh District–Chicago

Real estate contacts indicated that access to mortgage credit has improved. Nonetheless, home sales declined modestly over the reporting period, while rents and prices were somewhat higher. Both builders and realtors noted that higher prices and mostly stagnant incomes have weighed on affordability and held back a broader pick up in housing markets.

Eighth District–St. Louis

Sales of new and existing homes have decreased in the largest metro areas of the District. Compared with the same period in 2013, May 2014 year-to-date home sales were down 6% in Little Rock, 4% in Louisville, 5% in Memphis, and 11% in St. Louis.

May 2014 year-to-date single-family housing permits decreased in the majority of the District metro areas compared with the same period in 2013. Permits decreased 25% in Little Rock, 17% in Louisville, 1% in Memphis, and 3% in St. Louis.

Ninth District–Minneapolis

Residential real estate market activity was mixed. In the Sioux Falls area, May home sales were down 7%, inventory increased 7% and the median sales price increased 4% relative to a year earlier. May home sales were down 10% from the same period a year ago in Minnesota; the inventory of homes for sale increased 3% and the median sales price rose 7%.

However, in Eau Claire, Wis., May home sales were up 9% from the same period a year ago and the median sales price dropped 3%. May home sales increased relative to a year ago in the Bismarck area.

Residential construction decreased from last year. In the Minneapolis-St. Paul area, the value of June residential permits decreased slightly compared with a year earlier. The value of permits issued in May decreased in the Bismarck, N.D., area from a year ago.

Tenth District–Kansas City

District real estate activity increased moderately in late May and June, while construction activity rose slightly. Residential home sales expanded modestly, particularly for low- and medium-priced homes, which continued to outsell higher- priced homes.

Residential home inventories continued to decline, and home prices increased further. Residential real estate contacts expected additional improvement in the coming months, with moderately higher sales and prices.

Mortgage activity picked up slightly, but remained lower than a year ago as a decrease in refinancing activity continued to weigh on overall activity.

Eleventh District–Dallas

Single-family housing activity was flat to slightly down since the last report. Sales and buyer traffic held steady, but some contacts reported a seasonal slowdown in activity. Low inventories and higher construction costs continued to push up home prices.

Contacts were optimistic that demand will remain strong this year. Robust apartment demand pushed up occupancy rates, and increases in rents were strong in several major metros. Construction activity remained brisk, and contacts are optimistic in their outlooks through year-end.

Twelfth District–San Francisco

Activity in real estate markets advanced, but growth in the residential sector has slowed since the start of the year. The rate of increase of home prices has slowed in many areas. Several contacts reported that, except at the very high end, the level of home sales also is down from a year ago.

Residential construction activity picked up, especially for multifamily units and higher-priced projects. However, various contacts reported that activity has been constrained due to shortages of available lots, construction materials, and workers.