But brace for leaner times as declines in home sales steepen nationally and ripple through the economy.

In the past few weeks, reports have shown home sales slowing, price increases easing and the number of homes on the market rising. On Thursday, the Commerce Department said housing starts, or the pace of home construction, fell almost 8 percent in February.

Locally, home sales have bucked the downward trend, and no one expects that to change. But that doesn't mean that the region will escape the wider fallout that could come with an economic slide.

How sharply the economy turns depends on how far and quickly housing markets fall or flatten. Many economists think they will find soft landings over the next two years and merely cool, rather than halt, the economy. Others predict a recession that would spur the Federal Reserve to lower interest rates to stimulate investment and job growth.

Whatever the case, the transition from a hot housing market to one that is not will bring pain, especially in markets where speculative buyers have bid up prices beyond sustainable levels.

Fewer home sales nationally will mean less dramatic increases in home prices and perhaps even price drops in many parts of the country, forecasters say. That could leave the average consumer with a lot less home equity to borrow against for major purchases such as cars, plasma TVs and remodeling kitchens and bathrooms. It would be a big blow, because consumer spending drives about 70 percent of the national economy.

"All that borrowing and spending is what propped us up in the past few years while job growth was relatively weak," said Joel Naroff, an economist in Holland, Pa. "If that spending drops off, there's got to be something to replace it or we'll see a steeper slowdown than expected."

Most economists think the U.S. economy will grow at a rate of 2.5 percent to 4 percent this year before slowing further in 2007.

If home values decline in major cities people may be less inclined to move or trade up when they can't get top dollar for their homes.

The resulting drop in home sales would hurt the construction, real-estate and financial-service industries. As revenues in those industries decline, so could the number of people employed as mortgage brokers, realtors, contractors and construction laborers, Naroff said.

The declines would likely be felt in home furnishings and appliance sales, too.

Add it up and nation's economy is in for a fall in 2007, said James F. Smith, an economist at the University of North Carolina at Chapel Hill.

If home sales and starts decline more quickly, "2007 could become a replay of 2001, without the terrorists," he said. That was the last time a hyperactive market fell sharply and brought the economy to a brief standstill. For some, the signs point in that direction.

Home sales fell in January for the fifth straight month, prices started to level off in certain cities and the number of homes on the market hit an eight-year high, according to the latest figures from the National Association of Realtors. More increases in interest rates could further dampen sales.

The average 30-year mortgage rate edged down from a 2 1/2-year high to 6.34 percent this week, the second-highest level since mid-November, Freddie Mac reported Thursday.

Meanwhile, the Commerce Department estimated that the construction of new homes and apartments fell 7.9 percent in February, to a seasonally adjusted annual rate of 2.12 million houses. That followed a surge in January that was attributed to warmer-than-usual weather. Falling home sales and the return of cold weather are being blamed for the decline.

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