Fed Beige Book: Pace of growth slowed since Aug

The economy grew at a slower rate in five Fed districts from late August through October 5, the Fed said in its Beige Book of anecdotal economic conditions. In the other seven districts, economic growth was steady.

"Residential real estate markets continued to weaken, and most districts reported additional declines in home sales, prices and construction," the Fed said in the report.

Fed officials have been anticipating slower growth as the combined effects of the prolonged housing slump and the sudden tightening of credit over the summer work their way through the world's largest economy. Policy-makers slashed interest rates by a surprisingly large half-percentage point to 4.75 percent September 18. Their next rate-setting meeting is on October 30-31.

Some would-be home buyers were unable to get financing or sell their current homes, and new home inventories remained elevated, the Fed said. Rising inventories of existing homes added to uncertainty about the housing market.

Financial institutions reported a rise in delinquent loans and many lenders tightened credit conditions, the Fed said.

The Fed has remained concerned about inflation, and the Beige Book reported high costs for energy, raw materials and food in most districts. However the ability of businesses to pass costs through to consumers was mixed, and competition held retail price rises back, the Fed, the U.S. central bank, said.