The U.S. economy is continuing to show signs of recovery, according to the Federal Reserve Beige Book published this week – the third in a series of eight to be released over the course of 2010. Based on information collected across the country from businesses and contactsoutside the Federal Reserve, residential real estate activity has begun to pick up speed. The snapshot of commercial real estate, on the other hand, was a bit more dismal, described by the central bank as “weak” across the country.

Since the March 3rd report, overall economic activity “increased somewhat” across 11 of the 12 regional districts, the Federal Reserve said. The one exception was the St. Louis district, which reported “softened” economic conditions.

Most districts reported increased sales activity in housing markets, albeit from previously low levels, the Fed report noted. St. Louis was again the exception, where residential real estate was “mixed,” along with San Francisco, which reported housing activity as “flat” over the past six months.

Some contacts, particularly in Philadelphia, Cleveland, and Kansas City, expressed concern that the sales momentum might be diminished after the expiration of the first-time homebuyer tax credit. Buyers must be locked into a contract by the end of this month in order to take advantage of the tax break.

Sellers of high-end homes continue to see little demand, particularly in the districts of New York, San Francisco, Dallas, and Kansas City, where sales of homes in the upper price echelon were described as “sluggish.”

In general, home prices were reported to have remained stable since the March account across most districts. However, in parts of the New York and Atlanta districts, prices dropped.

Commercial real estate activity was characterized as “slow across the nation.” Notable exceptions were Richmond, which saw an uptick in commercial leasing, and Dallas, where the sector was mixed and “might be nearing bottom,” the Fed said.

In Boston, leasing activity consists largely of renewals, with many renewing tenants leasing less space, the report said, while Manhattan Class A office rents were down 20 percent to 25 percent year-over-year.

Contacts in Philadelphia, Richmond, Kansas City, and Dallas expressed concern that lease concessions from landlords were putting downward pressure on rents.

Bank lending activity was reported as “mixed” across most districts, as both loan volumes and credit quality decreased.