As the stock market fell for the third year in a row -- something not seen since World War II -- it took with it some of the enthusiasm about the housing market.

As the clock struck 2003, fewer households were planning to buy homes and the stuff to fill them compared to a year earlier.

Amid fears of war, terrorism, inflation and rising unemployment, consumer confidence in home buying and other goods waned slightly with 14 percent of households surveyed in December 2002 considering buying a home in 2003 compared to 15 percent of those surveyed in December 2001 considering buying a home in 2002, according to Leo J. Shapiro and Associates in Chicago.

That consumer sentiment appears to be in line with the National Association of Realtors' projection for both resale and new home sales to drop off slightly in 2003 after enjoying record sales in 2002.

Each month, Shapiro conducts the "How the Consumer Feels" telephone survey among 450 new households.

In December 2002, 8 percent of the households surveyed were actively shopping for a home, unchanged from a year ago. Revealing part of the reason fewer were planning to buy in the future, however, 53 percent of those polled were afraid the cost of homes would be more expensive in six months, compared to only 44 percent a year ago, an increase of 9 percentage points.

The survey says active shoppers are those who are visiting resale homes and models, contacting real estate agents and reading home-for-sale advertisements. Expectations of price increases and price decreases are measured to determine consumers' outlook towards inflation.

NAR also says home prices should increase next year.

Households that plan not to buy because of higher costs could be making a mistake, some experts caution. They advise buying before prices rise, assuming they will continue to rise. "Bubble market" theorists -- those who believe some markets are over-priced and doomed to pop, like a bubble -- challenge that argument and suggest waiting for prices to take an inevitable tumble.

Purists challenge both arguments and say the home purchase is a more holistic decision that should be based on a household's specific economic factors, planning and goals rather than crystal ball gazing at the market's future.

Inflation fears

Fewer consumers expect lower overall inflation while more now think prices overall are going up in 2003.

The survey said those who expect lower inflation dropped from 76 percent in December 2001 to 67 percent in December 2002, while those who expect higher inflation nearly doubled from 9 percent in December 2001 to 16 percent in December 2002.

Likewise, the Conference Board reported declining consumer confidence on Dec. 31.

Manifesting their heightened fear of inflation, households were also less busy nesting -- buying appliances, carpeting and furniture.

The percentage of households with plans for buying items for the home dropped two percentage points from 40 percent in December 2001 to 38 percent in December 2002.

The percentage of households planning major appliance purchases revealed the biggest drop with 4 percent fewer households planning to buy them, compared to a year ago. The percentage of households planning to buy carpeting dropped 2 percent. The percentage of households planning to purchase furniture, likewise dropped 2 percent.

Households' plans to buy goods, indicate a continuing trend. Those who were actively shopping for household goods in December 2002 also dropped 4 percent from a year ago, the survey said.