The housing market continues to be sluggish and recent regional upticks in sales spurred by the homebuyer tax credit will decline across the country going forward, according to the latest edition of the Federal Reserve's Beige Book. In addition, reports on employment conditions — arguably the sector to have the most impact on future growth in the housing market — reported mixed, but moderate improvement. The Beige Book — formally called the "Summary of Commentary on Current Economic Conditions" — is a report on overall economic conditions, according to comments received from business and other contacts by the 12 Federal Reserve district banks. While the Boston and St. Louis districts reported increased home sales year-over-year in May and June, the Boston, Philadelphia, Atlanta, and Kansas City districts said future sales will be weak. New construction continues to struggle, particularly in the Atlanta district, where weakened construction dropped even further since the last Beige Book, published in early June. "Homebuilders in the Cleveland District do not expect a turnaround in new home construction any time this year. Builders in the Chicago District are not introducing new inventory without a signed contract on a home," the report said. "Housing starts were expected to decline for the second half of the year in the Dallas District and to increase slightly over the next three months in the Kansas City District." Employment reports were mixed, with gradual improvements in most districts. New York, Chicago, Minneapolis, Richmond, and Atlanta all reported improvements, while Boston and Dallas reported steady conditions. Temporary employment is on the rise in the Philadelphia, Atlanta, Richmond, Chicago, and Minneapolis districts, as employers continue to to rely on temporary staff over permanent hires. In the commercial real estate sector, contacts reported flat or slightly increased vacancy rates, putting downward pressure on rents. In addition, construction remains weak system-wide. The Philadelphia District reported projects funded with federal stimulus money were near completion, and there are no prospects for additional major construction. The Chicago District reported public infrastructure construction picked up. Outlook for commercial construction ranged from further declines in activity to slow growth across the districts. Developers reported difficult credit conditions in the Cleveland, Richmond, St. Louis, and Kansas City Districts, the report said, adding that in the Dallas District, a few developers are going out of business. The banking outlook was mixed, with noticeable but modest increases in activity and demand by the Richmond and Kansas City districts. "Demand for commercial loans was flat to increasing in the Philadelphia, Cleveland, Richmond, Chicago, and Kansas City Districts," the report said. "In contrast, St. Louis reported a decrease in commercial loans outstanding, while New York, Atlanta, and San Francisco reported restrained or decreasing demand in this lending category." Credit standards remain tight, but credit quality improvement was observed in the Philadelphia, Richmond and Chicago districts. In the Dallas District, nonperforming loans have stabilized and are not expected to worsen, the report added. Write to Austin Kilgore.