Real Estate according to the Federal Reserve Bank of Dallas

Construction and Real Estate

Housing market activity varied, with some contacts reporting strong sales that met or exceeded expectations, while others experienced weaker demand. To attract buyers, homebuilders continued offering incentives. Housing inventories saw a slight increase, while high mortgage rates and home prices remained significant barriers to affordability. Despite these challenges, outlooks were cautiously optimistic.

Commercial real estate remained stable throughout the reporting period. Apartment leasing slowed seasonally, with rents holding steady or declining as operators prioritized occupancy. Office leasing demand improved in select markets but remained generally subdued. Meanwhile, industrial real estate continued to perform well, with moderate rent increases.

Financial Services

Loan volume surged in December, despite ongoing credit tightening. Loan pricing declined at a steady pace compared to six weeks prior, and while loan nonperformance increased, it did so at a slower rate. Bankers noted a significant rise in overall business activity—the first notable pickup in over two years. Optimism grew among financial institutions, with expectations of strong loan demand and business activity in the coming months, along with only mild deterioration in loan performance over the next six months.