The Federal Reserve says "sluggish" activity in real estate markets contributed to slower growth in some areas of the country, in the last two months. In its latest survey of the 12 Federal Reserve Districts, known as the Beige Book, the Fed found that while "economic activity has continued to increase, on balance, " many districts reporting increased activity noted that it was only "modest."
Nearly all Districts reported sluggish housing markets in the months since the homebuyer tax credit expired on April 30. While some Districts, such as Boston and St. Louis, reported an increase in May and June home sales on a year-over-year basis, some contacts noted that these sales may reflect closings of homes under contract by the April tax credit deadline.
Commercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents. Construction activity remained weak in most Districts.
Areas that saw improvement include the manufacturing and service sectors.
The report is in line with comments made by Fed Chairman Ben Bernanke last week, during which he said he expected "moderate growth," but expected the housing market to remain "weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction."