It's like listening for the other shoe to drop. The markets are all watching new Fed Chief Ben Bernanke for signs of a slowing economy. The stock market is teetering and home prices are pausing. Will he or won't he raise short-term rates again?

But as we learned last year, when the Fed raises short term interest rates to banks, it doesn't necessarily mean long-term rates follow. Low mortgage interest rates could continue to decline, sparking renewed buyer interest in homes just in time for the spring selling season.

Here's how it works. In order to slow inflation, the Fed raises overnight rates on money it loans to banks. The banks loan out the money at a higher rate. With money costing more, spending slows down, cooling products and services that overheat, in theory, anyway.

Once in a while, as happened recently, short-term interest rates can actually rise above long-term rates. This made the financial markets very uneasy because there's more risk associated with long-term rates. Banks can't make money on the yield if they're paying more to borrow money than they can make loaning it out.

That's called an inverted yield curve, and many economists consider it a predictor of an economic slowdown. It's also a signal that the Fed could be slowing the markets a little too much, particularly the housing market.

Although the National Association of Realtors doesn't expect housing prices to fall, it's obvious that buyers are starting to gather by the sidelines. Chief economist David Lereah said that homes sales should slide by about five percent. But that's nothing to panic about. Home sales in 2006 could still match the record breaking year set in 2003. He also says housing starts for new homes will fall a little under 10 percent, which will also give a slight boost to existing home sales.

Keep in mind that housing sales have reached new records every year for the past five years. To fall back to the rate of sales of a couple of years isn't a bad thing. Also, home prices are still expected to rise, but not by the double-digits we saw last year. You'll see a much more modest 5 or 6 percent gain nationwide, except in the areas that are benefiting from Lereah's "rolling boom." That's where housing prices are going up in areas that have been tepid until now. Think Utah, Texas, and Tennessee where prices in some communities are expected to rise 8 to 14 percent or better.

Realty Times believes that homebuyers won't sit on the sidelines for long. With rising inventories, there are a lot more dream homes on the market. Buyers will take advantage of temporary dips in mortgage interest rates. So, sellers, put your best foot forward, get rid of clutter, slap on some fresh paint and clean those carpets, closets and cupboards. Don't let the other shoe drop on your dream of buying or selling your home.