Florida Housing Market will Impact Regional Economy

The Federal Reserve Bank of Atlanta said Thursday it expects moderate economic growth for the United States and the Southeast region in the coming year, with the impact of Florida’s housing market counting as a major factor.

In its outlook for the economy in 2007, the Atlanta Fed said the housing sector will be a drag on economic performance this year if Florida mortgage activity does not pick up; and energy price developments will be a source of uncertainty for the national and regional economic outlook.

Additionally, the bank expects business spending to continue at a moderate pace, consumer spending to remain relatively solid, and inflation pressures to be in check.

Florida’s economy slowed in 2006 compared with previous years, but still outpaced the nation in employment growth.

But the boom in the housing market from 2002-05 ended abruptly in 2006. Home prices in Broward County and other areas dropped significantly. The Florida Association of Realtors reported a 34 percent decrease in the sale of existing single-family homes in the third quarter, and home builders have reported a decline in new home sales.

Services and tourism, meanwhile, remained strong, with employment growing at 3 percent compared to 1.5 percent nationally. But the outlook for tourism remains clouded, affected by a slower national economy and higher gasoline prices.

While some experts predict an improved 2007, signs such as an abundance of late mortgage payments around the region and nation are not as encouraging.