“Reports from the 12 Federal Reserve Districts suggest that the national economy continued to expand during the survey period of October through mid-November but at a reduced pace compared with the previous survey period,” the Fed reported in the latest “Beige Book,” an informal survey of businesses in the 12 Fed districts, referred to by their headquarters cities.

Among Districts, seven reported a slower pace of economic activity while the remainder generally pointed to modest expansion or mixed conditions….Demand remained weak or fell further for machinery and manufactured materials related to home construction, such as lumber and concrete….Chicago reported that steel production increased, in part because of reduced import competition of late, but Cleveland characterized steel shipping volumes as ‘flat’ in that District….The pace of homebuilding remained very low in general, and builders continued to shelve projects and lay off workers in many areas; contacts generally do not expect a significant pickup in homebuilding until well into next year at the earliest.

Among scattered positive signs, however, co-op and condo sales in New York City picked up during the survey period, Richmond reported favorable readings on home sales in a few areas, and Kansas City reported that home inventories fell a bit in the Denver metro area….Demand for commercial, industrial, and retail space generally remained at high levels and expanded further in some areas, although signs of leveling off were evident in several Districts.

A few Districts reported emerging signs of declining demand for commercial space: this included assorted indicators of weaker demand in the major metro areas in the Boston District, reduced leasing activity in Philadelphia, commercial construction activity that was described as "flat to down slightly compared with a year ago" in Atlanta, and reduced transactions and rising vacancy rates in some parts of the San Francisco District. Construction of commercial and public buildings and infrastructure projects remained high in most Districts, however, partly offsetting low residential building activity and helping to limit losses in overall construction employment. “Lending standards for construction projects and commercial real estate transactions tightened further in the New York and St. Louis Districts, and they remained tight more generally and reportedly held down the volume of lending for these categories in the Boston District.”

Several indicators show house prices and sales continue to tumble. The National Association of Realtors reported that total existing-home sales (including single-family, townhouses, condominiums and co-ops) fell 1.2% in October, seasonally adjusted, and 20% from October 2006. The inventory of unsold houses climbed 1.9% to 10.8 times the October selling rate, up from 10.4 times the September rate. Nevertheless, the Realtors reported on November 21 that 93 out of 150 metro areas showed increases in median existing single-family house prices in the third quarter from a year earlier, “including six areas with double-digit annual gains and another 21 metros showing increasing of 65 or more; 54 had price declines, and three were unchanged….Only two states showed annual gains in [the number of] existing-home sales from the third quarter of 2006 [North Dakota, 2.9%, and Vermont, 0.8%], while complete data for two states were not available. The biggest decline in sales appears to be concentrated in areas that had significant levels of speculative investment, including Nevada, Florida and Arizona.”

Price changes from one year earlier ranged from 15% in Bismarck, N.D., and 14% in Salt Lake City and Yakima, Wash., to -10% each in Sarasota-Bradenton-Venice, Fla., and Sacramento-Arden-Arcade-Roseville, Calif., and -12% in Palm Bay-Melbourne-Titusville, Fla.

The S&P/Case-Shiller home price indexes reported declines through September for the U.S. as a whole, for 10 large metro areas and for 15 of the 20 largest metros. Robert J. Shiller, Chief Economist at MacroMarkets LLC, said, “the 3rd quarter decline, at 1.7%, was the largest quarterly decline in the index’s 21-year history. And…the year-over-year decline posted its second consecutive record low at -4.5%....All 20 metro areas were in decline in September over August. Even the five metro areas that still have positive annual growth rates—Atlanta, Charlotte, Dallas, Portland and Seattle—show continued deceleration in returns. While Tampa remains the metro area with the largest annual decline, at -11.1%, Miami surpassed Detroit in September, reporting a decline of 10% over the past 12 months. Detroit and San Diego followed with -9.6% each.

While the mix is slightly different, once again eight of the 20 metro areas reported their lowest recorded annual returns—Atlanta, Chicago, Las Vegas, Miami, Minneapolis, Phoenix, San Diego, Tampa and Washington.”

In October, 306 metro areas reported year-over-year increases in nonfarm payroll employment, 54 reported decreases, and seven had no change, the Bureau of Labor Statistics reported. Employment trends affect numerous types of private and public construction. The largest percentage increases were in Danville, Va., 7.5%; Billings, Mont., 6%; El Centro, Cal., and Jacksonville, N.C., 5.6% each; and Provo-Orem, Utah, 5.3%. The largest percentage decreases were in Atlantic City, N.J., -2%; Saginaw, Mich, -2.7%; Anderson, Ind., -3%; and Bay City and Flint, Mich., -3.1% each.