Beige Book Reads Well for Sales, Less So for Construction

The homebuyer tax credit is stimulating home sales but residential construction is stagnant at best, according to Federal Reserve's Beige Book. The periodic report on regional economic activity noted the adverse weather in February hampered home sales and construction activity in the New York, Philadelphia and Atlanta Federal Reserve bank districts. Most district banks "attributed stronger home sales to the homebuyer tax credit with several contacts apprehensive about future sales once the credit expires on April 30," the Beige Book said. In the Dallas district, sales of lower priced homes were the strongest. "Sales of higher priced homes were weak, reflecting difficulties in obtaining financing for larger loans," the Dallas bank said. The San Francisco bank reported that home sales were largely unchanged since December but home prices "rose a bit further" in some areas of the district. "However, the number of available homes for sale remained elevated, which substantially offset builders' incentives to increase the pace of new home construction," the San Francisco bank said.