A year after Hurricane Katrina, the New Orleans area's housing market has grown by mostly fits, but also an increasing number of housing starts, leaving an unsettled market of rising rents and both home price increases and decreases.

Chances are, hope and determination will overcome despair and frustration and eventually pull New Orleans and the region back from the greatest natural disaster in U.S. history.

Right now, however, the mixed bag of blues in the housing sector mirrors the down beat in stalled recovery efforts that are likely to haunt the area for years like a trumpet playing taps.

"A tour of the city today confirms that not all neighborhoods are benefiting from the recovery. While tons of debris have been removed, endless blocks in Lakeview, the Lower Ninth Ward, Gentilly, and New Orleans East look just as they did six months ago. Whole swaths in St. Bernard Parish (one of the hardest hit) similarly seem untouched by recovery efforts," according to "Building a Better New Orleans: A Review of and Plan for Progress One Year after Hurricane Katrina", by Amy Liu, a deputy director at the Brookings Institution, which recently released a flurry of year-later reports about the devastated area.

Brookings says housing rehabilitation and demolition, are well underway, but slow rebuilding efforts are causing higher rents and home price inflation in some areas.

"Rent prices in the region have increased by 39 percent over the year and home sale prices have spiked in suburban parishes," according to "Special Edition of the Katrina Index: A One-Year Review of Key Indicators of Recovery in Post-Storm New Orleans" by Liu, Brookings fellow Matt Fellowes, and research assistant Mia Mabanta.

In Louisiana -- primarily New Orleans and the state's Gulf Coast area -- more than a half million occupied housing units suffered some level of damage from minor to total destruction caused primarily by Hurricane Katrina, according to federal counts, which also include the impact of Hurricanes Rita and Wilma.

The Office of the Federal Coordinator for Gulf Coast Rebuilding at the Department of Homeland Security, the Federal Emergency Management Agency, the Small Business Administration, and the Department of Housing and Urban Development compiled data to assess the full extent of housing damage due to Hurricanes Katrina, Rita, and Wilma.

With so many housing units lost, the fair market rent for a two bedroom apartment in the greater New Orleans metropolitan area rose from $676 a month before Hurricane Katrina to $940 a month a year later, according to Brookings.

Hardest hit in the New Orleans' area included St. Bernard Parish where 80 percent of the occupied rented and owned housing units were damaged with 78.4 percent of all occupied housing units suffering major or severe damage, according to the federal report.

Brookings says before Hurricane Katrina blew into town the average home price in St. Bernard was $107,207. A year later the average had plummeted to $35,880 -- yes, less than $36,000.

In New Orleans' own Orleans Parish, home of the French Quarter, 71.5 percent of all homes suffered damage with 55.9 experiencing major or severe damage.

Home prices before the storm averaged $273,032 in Orleans. A year later, the average was down to $247,436.

On the other hand, St. Tammany, suffering damage to 70.5 percent of its homes, with only 25.5 experiencing major or severe damage, reveals home prices in the parish's east are up from an average of $176,397 before the storm to $187,596 a year later.

Also in Jefferson Parish, where only 53.3 percent of the homes suffered damage and 19.5 experienced major or severe problems, home prices in the west area rose from $139,817 to $172,000, according to Brookings.

"If you think about how many properties were damaged you have an immediate supply constraint and when you have a short supply, it would make sense that properties in good condition and that are habitable are going to command a higher premium and that would be the same for rentals," said Mike Ela, president of San Juan Capistrano-based HomeSmartReports.com a real estate market analysis firm.

But even as the number of homes for sale in New Orleans has risen from 2,892 before the storm to 4,433 a year later, mortgage lenders see the Louisiana market as just about the riskiest in the nation.

HomeSmartReports.com says growing mortgage risk (based on property or collateral risk rather than applicant risk) for most of the nation has eased somewhat during the six-month February, 2006-to-July, 2006 period, compared to the earlier six-month August, 2005-to-January, 2006 period.

Nationwide, the index was down 9.8 percent during the period. In Louisiana, on the other hand, the index rose 38.2 percent, the greatest increase in the nation during the period.

Scammers buying homes and only cosmetically cleaning them up and trying to quickly resell damaged goods are part of the reason lenders may be skittish about the area, but appraisers and home inspectors can cover some of that risk.

Ela says it is more common to find lenders shaky about investing in disaster areas because there's a general pricing volatility in the market even when homes are being properly restored.

"Whenever you have a disaster, and disaster events are not indigenous to Louisiana, there is an element that swoops in to buy properties at inexpensive prices and then tries to bring them back into the market for a profit. That makes prices volatile and it creates an anomaly for a period," said Ela.

For some, those conditions may be the silver lining behind the clouds that hang over the Crescent City.

"This is also the perfect time to buy a gutted home for a great bargain in an excellent area. New Orleans will be fine. I know it will be rebuilt better than ever," said area Wayne Waddell Realtors, L.L.C real estate agent Geri Bowen, reporting to RealtyTimes.com's Market Conditions report for New Orleans.