Nearly two-thirds of the 12 Federal Reserve banks reported in early January that home sales and construction activity in their districts are cooling.The Fed's Beige Book reported "some cooling" of housing markets in the Boston, New York, Cleveland, Richmond (Va.), Atlanta, Chicago, and Minneapolis Federal Reserve bank districts. In addition, the hottest real estate markets in Southern California and the San Francisco Bay area "have cooled," the Beige Book says. However, Federal Reserve banks in Kansas City and Dallas continued to see "strong housing markets." And construction and repair work in the hurricane-stricken areas of Louisiana and Mississippi "remained brisk." Meanwhile, commercial real estate markets continued to improve, and reports of new construction activity are increasing, according to the Beige Book.

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