Assuming that a war doesn't engulf the Middle East, the United States isn't attacked again or the flow of oil isn't disrupted, the chances for a rebound in the housing market in 2002 and 2003 are "quite good," says the National Association of Home Builders.

Meanwhile, the Meyers Group, an independent real estate research firm that specials in the new home market, forecasts that housing will remain strong in many markets. But, the group cautions, markets that are highly dependent on the airline industry and travel can expect housing demand to soften due to the loss of jobs in the affected regions.

"Markets such as Chicago, Boston, New York, Las Vegas and San Francisco are markets that are highly sensitive at this time," said John Burns, a principal for the Meyers Group.

One of those "sensitive" markets, San Francisco, saw some 9,202 new and resale houses and condos sold in the nine-county region in August. That was up 8.8 percent from July and down 15.8 percent from August of last year, according to DataQuick Information Systems.

Last month's sales count was the strongest since October, when 9,789 homes were sold. The total sold so far this year is down 15.9 percent from the same eight-month period last year.

"These numbers obviously precede the tragic events of September 11. What remains to be seen is what effect those events and the U.S. response to them will have on home sales. Uncertainty and turbulence may give the market pause, or people may move assets into real estate as a safe haven. Nobody knows," said Mike Ela, president of DataQuick.

And real estate officials in Massachusetts told the Boston Herald (see "Attacks Menace Real Estate Market," Sept. 26, 2001) that homes there "appear to be staying on the market a little longer" in the wake of the Sept. 11 attacks.

Paul Harrington, president of the DeWolfe Cos. in Lexington< MA told the Herald that as recently as last summer, the average home took about 55 days to sell. Now sales take an average 60 days, he said.

"We have seen a little bit of backtracking by some buyers," Harrington said. "It is certainly a small minority."

Overall, Harrington believes the Boston area real estate market has gone from a seller's market to one more evenly balanced between seller and buyers.

"I think people are just uncertain on where the economy is going," he said.

Fred Meyer, owner of University Real Estate in Harvard Square, said he has seen some fallout in high-end home sales due to turmoil in stock markets.

And in Phoenix, a thriving market for new homes that is not as heavily connected to travel and tourism, the Arizona Republic reported that valley home construction and sales of existing homes were up in August, keeping the local housing market seemingly on track for a record year (see "Valley housing market still on pace for record year," Sept. 26, 2001).

One Phoenix-area housing analyst is predicting that the market could suddenly stall, even with lowered interest rates, the Republic reports.

"The housing industry reacts instantly to consumer confidence," said R.L. Brown, who publishes the Phoenix Housing Market Letter. Brown predicts that housing construction not only will miss the record but also will fall below last year's level.

Meanwhile, David Seiders, NAHB's chief economist, said there will be "downward pressure" on the economy and the housing market as shockwaves resonate in the coming weeks and months of 2001. The new forecast for housing starts in the fourth quarter in the wake of the attacks is 13 percent lower than before Sept. 11.

"But the chances for a substantial rebound in 2002 and 2003 are quite good, particularly for the housing sector where transactions that are lost in the short term generally are regained down the line," he said.

An NAHB poll taken Sept. 19 and 20 found that home sales held up well and cancellations had not spiked. However, the number of prospective buyers fell by 10 to 20 percent, speculative building was being scrutinized closely, and options to buy land were extended up to eight weeks.

The Meyers Group in its analysis also expects the next few weeks to continue to be slow for new home sales.

"Unlike some economists, however, we do not believe there will be a significant crash in the housing market," Burns said in a newsletter.

While builders resorted to significant price discounts 11 years ago on the heels of the Gulf War, the Meyers Group expects prices to hold steady "because speculative inventory levels across the U.S. are very low."

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