The Federal Reserve released a new rendition of its popular Beige Book this week. Reports from all 12 Fed districts indicated that overall economic activity continued to expand at a modest to moderate pace in January and early February, but all said housing activity remains a key risk – a point reiterated by Fed Chairman Ben Bernanke in his semiannual report to Congress this week.

“More recently…we have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold,” Bernanke told lawmakers, however he said, “the housing sector remains exceptionally weak.”

Bernanke added, “The overhang of vacant and foreclosed houses is still weighing heavily on prices of new and existing homes. Although mortgage rates are low and house prices have reached more affordable levels, many potential homebuyers are still finding mortgages difficult to obtain and remain concerned about possible further declines in home values.”

The Fed describes its Beige Book as an informal review by the Federal Reserve banks of current economic conditions in their districts. Its findings are based on anecdotal commentary and observations collected by the 12 Fed districts from businesses and contacts outside the Federal Reserve. Data included in the latest version covers the reporting period from early January through mid-February.

In regard to overall economic activity, both Kansas City and San Francisco noted that their economies have expanded further since the January report. Boston and Philadelphia cited conditions as improving. New York, Cleveland, Richmond, Atlanta, and St. Louis described activity as modestly improving, while Minneapolis and Dallas experienced moderate growth. Chicago reported that although there was an increase in activity, it was at a pace not quite as strong as during the previous reporting period.

Recent activity in residential real estate varied, but overall sales, as well as residential construction, remained at “low levels across all districts,” according to the latest Beige Book findings.

The Richmond, Atlanta, and Chicago districts reported a slight improvement in the level of recent activity, while Boston noted that activity was mixed across New England. New York described the housing market as stable with some pockets of improvement.

Homebuyer demand was unchanged according to reports from the San Francisco district. Philadelphia, Kansas City, and Dallas described recent activity as sluggish, and St. Louis noted sales continued to decline.

As relayed in the report, Atlanta and Kansas City observed persistent downward price pressure. Home prices continued to fall according to Philadelphia reports, but mainly at the high-end of the market. Cleveland and Chicago contacts described prices as little changed.

The central bank says the outlook for residential sales improved marginally, although activity is expected to remain at low levels. Kansas City contacts anticipate a seasonal surge in sales activity this spring. Atlanta, Dallas, and San Francisco also expect modest improvement, while little to no sales growth is in the cards, according to Philadelphia contacts.

According to the Beige Book report, demand for residential real estate loans increased in Philadelphia, Atlanta, and Dallas but was weaker in New York, Cleveland, St. Louis, and Kansas City. Most districts reported that credit standards were unchanged to tighter.