Homebuilder confidence sank to two-year lows recently, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), confirming Realty Times' projection that housing will likely pause for a breather.

Among the reasons cited for the decline were uncertainties in a post-Katrina economy, rising interest rates, higher gas prices, and some buyer resistance to strong house-price appreciations. Some buyers are worried that they are buying at the top of the market and won't be able to sell when they need to.

In August, the Census Bureau report showed that housing starts fell to a 2.01 million annual pace from the 2.04 million rate set in July, still well ahead of 2004's 1.95 million units. Building permits for single-family homes dropped 1.3 percent to a 1.668 million pace.

Seasonal slowdowns aside, the costs of doing business is going up for builders, many of whom do business in the suburbs. They're starting to report lot shortgages in some areas, as well as higher impact fees which are assessed to provide roads and utilities to new communities. The builders say consumers are also beginning to think twice about moving far away from epicenters, as gas prices climb to new highs.

This situation could produce a countertrend, affording city leaders the opportunity to woo builders and homebuyers back to the inner city with incentives so the urban landscape can be renewed.

The interruption of supplies and materials by Hurricanes Katrina and Rita is also impacting many areas of the country where homes are under construction or being remodeled. Homebuilding supply centers have been known to ration such supplies as plyboard to customers, in case more is needed on the East coast as hurricane season draws to a close. Some reports suggest that consumers may be hoarding supplies.

Any cooling of the housing industry has economists worried, especially if builders start cancelling starts, as the housing industry accounts for approximately 16 percent of the gross domestic product.

The hottest homebuilding markets are concentrated in California, Florida and Texas, not nationwide. According to Standard and Poor, low mortgage rates and lending standards have driven home-ownership levels to record highs of nearly 70 percent. But, most price appreciation is concentrated in California, Florida and the Northeast. For example, on both coasts, housing costs have risen at least 30 percent above the normal home price-to-income ratio.

But despite regional differences, S & P Chief Economist David Wyss predicts that it would take a 30 percent decline in national home prices, combined with a 50 percent drop off in new home starts to drive the economy into a recession.

Published: September 21, 2005

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.