As the nation's housing demand continues to cripple the supply, you'd think housing costs would be rising too far too fast, but the nation's real estate market instead reveals hope that a home remains within reach for many buyers.

During the first six months of 2000, the median price of homes nationwide increased an average of only 3.3 percent from a year ago, compared to 5.3 percent in the first half of every year since 1996, according to "The Real Estate Boom: Regional Revelry?" the first of a two-part report on the nation's economy and it's real estate market.

"With demand exceeding supply, and with ubiquitous inventory deficiencies, conventional wisdom would suggest dramatic price increases are just on the horizon," says the report's author Kevin J. Thorpe, an economist with the National Association of Realtors.

To explain the anomaly, Thorpe dissected the nation into four distinct regions and came up with some surprising results published in the August edition of NAR's "Real Estate Outlook" journal of economics.

Northeast

While the Northeast was the least economically fit region for most of the 1990s, it has emerged as the nation's economic stronghold in 2000.

Thorpe attributes the region's economic empowerment to its information technology sector in New England, bullish financial services in New York and the ever-growing, fearing-no-bear population of stockholders throughout the region.

High-quality, high-paying jobs from those sectors boosted household incomes while generating an insatiable appetite for homes.

Surprisingly, the tightest regional housing market for the past few years enjoyed only a 1.2 percent increase in median home prices, the nation's lowest regional gain.

West

"The West might be the only region currently capable of dethroning the Northeast as the strongest regional economy in the nation," says Thorpe.

Anchored by California and it's Silicon Valley of the Bucks, the West has shed the "Asian Flu" financial crisis and defense industry departure to also become a hot export region creating a plethora of high-paying jobs. While California has seen steady, dizzying increases in home prices, the region of the nation's 13 Western states, including Alaska and Hawaii, has been an uneven housing market.

Home sales for the region were down 5.3 percent, but appreciation is second only to the hot South region.

South

Median prices were up 4.9 percent during the first half of 2000 in the 16-state (and the District of Columbia) South region which spans from Delaware to Texas. Surprisingly (again), the price ride came on the back of a 6.9 percent drop in home sales.

"Appreciation in the South has generally been the strongest in the nation for the last decade," said Thorpe.

The South rises above other regions economically because of its consistency in job creation and home building, especially in the Carolinas, Virginia, Georgia and Florida. Also, Tennessee is economically diverse and Texas does things in a big way, ranking well ahead of the nation in job growth and income gains.

Midwest

Luckily the nation's heartland is also the nation's stronghold of home ownership. From the Great Lake States to North Dakota and Kansas, the Midwest lags the nation in all economic sectors.

"The region has the highest home ownership rate in the nation...a nice cushion in the event of an economic downturn," said Thorpe.

Not as wired with information technology-related jobs as the rest of the nation, the Midwest suffers emigration, labor shortages and a wilted farming sector.

Facing limited economic possibilities, the region suffered a 7.4 percent plunge in home sales in the first half of 2000, following record setting sales in 1999. Still, home price appreciation was 3 percent, compared to an average 5.3 percent during the decade of the 1990s.

"One bright spot in the overall picture, however, is the resurgence in the manufacturing sector, particularly from the automotive industry, which feeds directly into the Midwest's strength.

The prognosis? The nation's longest economic expansion on record includes four relatively healthy real estate regions poised for yet more growth.

"Despite six vaccinations by the Federal Reserve, existing single-family sales are still motoring along as if they had 'mortgage rate immunity,' " said Thorpe.

Published: September 1, 2000

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A journalist for 35-years, Broderick Perkins parlayed an old-school daily newspaper career into a digital news service offering editorial content and consulting services. Perkins' San Jose, CA-based DeadlineNews Group includes the flagship news site, DeadlineNews.Com, offering real estate, personal finance and consumer journalism, and a backshop, the Deadline Newsroom.