Demand for housing remained "strong" in January and February, while commercial real estate markets remained "soft," according to a periodic Federal Reserve Board report on economic activity."Although cold temperatures and winter storms interrupted homebuilding in January, housing demand remained strong," the Fed's Beige Book says. "Overall builders and real estate agents in most [Federal Reserve Bank] districts expect home sales in 2004 to be close to the 2003 sales record." Home price appreciation remained steady in most bank districts with the exception of San Francisco, where "the rate of increase was said to have slowed somewhat recently," the report says. Meanwhile, mortgage lending declined in Atlanta, Dallas, and San Francisco and increased slightly in Chicago and Richmond, Va. Most CRE markets continue to deal with high vacancy rates and slow leasing activity. "In New York and San Francisco vacancies have moved down slightly and rents have begun to recover," the Beige Book says. "Leasing activity picked up in the Washington, D.C. area."

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