In an update released by the Federal Reserve Bank of Dallas, today’s Houston Purchasing Managers Index dropped by 3.6 points as sales, production and lead times fell sharply as tax incentives expired and local unemployment remained high. Existing homes sales, rose slightly in May for the third consecutive month, up 19.1% from a year ago; however, the Federal Reserve of Dallas noted a cooling trend since the expiration of the tax credit incentive. New homes sales plummeted 48% between April and May as new home construction also diminished, with builders anticipating the decline in new home purchases. Lisa Marquis Jackson, vice president of John Burns Real Estate Consulting, said that new home community sales dropped another 17.5% from June to July. Commercial real estate also continues to lag the economic recovery. Even as bottom-fishing investors close deals and expand origination activity, new office, industrial and retail construction is at or near record lows. A new mezzanine financing program from Freddie Mac is helping by keeping multifamily financing active. The energy industry is undoubtedly going through changes in Houston, but the Fed reported some positive numbers. The U.S. oil rig count rose by 32 over the past six weeks despite a drop of 39 rigs in the Gulf of Mexico. Oil-directed drilling continues to grow as a share of domestic activity, climbing to 37.8% while natural-gas directed drilling continues to hold steady even amid continued strong production of natural gas. Employment near the coast is being effected by the oil spill as well as many Houston workers are currently stagnant under the government’s deepwater drilling moratorium and layoffs are widespread. Jackson is telling Houstonians not to fear, however, as she predicts that the cleanup of the oil spill alone will create jobs.  The Fed said oil producers are considering the redeployment of capital to land or shallow water. Write to Christine Ricciardi.