The Federal Reserve sees only modest growth in the US economy, with the long-depressed housing market as one of the few bright spots on the horizon, a report showed Wednesday. \"Overall economic activity continued to expand at a modest to moderate pace in June and early July,\" according to the Fed\'s Beige Book report, which will frame the central bank\'s policy meeting later this month. With employment levels improving at only a \"tepid pace,\" manufacturing expanding \"slowly\" and retail sales increasing \"slightly,\" there is little to no cheer in the regular report. But one bright spot was the housing market, which was at the epicenter of the financial crisis that plunged the world\'s largest economy into recession. After years that have seen low numbers of house sales, despite low borrowing rates and low prices, the Fed reported the first signs that the market may have hit bottom.\"Housing market reports were largely positive,\" the Fed noted. \"Sales and construction levels increased and home inventories declined. \"Demand for loans, particularly those related to real estate, grew modestly in most (Fed) districts.\" Earlier Wednesday, official data showed that construction of homes in the United States rose sharply in June from May to the strongest pace in almost four years. But the broader picture is far from rosy. Many investors are looking for the Fed to step in and announce further stimulus at its July 31-August 1 meeting. They worry that the US economy has reached stall speed, while Europe\'s economic crisis, China\'s slowdown and US politicians\' inability to tackle the country\'s debt could prompt a fresh recession.In two days of congressional testimony this week, Federal Reserve Chairman Ben Bernanke pointed to a gloomy outlook for the US economy, warning further drops in unemployment would likely prove \"frustratingly slow.\" With unemployment stuck above eight percent -- where it has been for more than three years -- Bernanke expressed the Fed\'s willingness to act if necessary, but gave no hints about concrete action. But since the 2008 economic crisis, the Fed has deployed an arsenal of measures to get the world\'s largest economy back on track, but has been left with just a few, unorthodox weapons. At its most recent meeting in June, the Federal Reserve\'s policy committee agreed to extend a bond-buying program to boost the recovery, while several participants pressed for new tools to be weighed.