Recent Economic Oulook by Chicago Tribune

In the aftermath of two hurricanes that helped push the price of gasoline beyond $ 3.00 per gallon, Americans are taking a seat-of-the-pants approach to fighting back. Namely, they are staying home.

Not only are they driving less and buying fewer new cars, their ability to cut back on trips to the mall is casting a pall over retailers, who fear that the holiday spending season will be a bust.

One area that appears exempt from any buyers' strike, however, is housing. The love affair between home buyers and ultra-low mortgage rates, which has fed a 10-year construction boom, seems unimpaired.

A fresh test comes Wednesday, with a report on September housing starts. Economist Lynn Reaser is looking for a tiny decline, to an annual rate of 2 million units from 2.01 million a month earlier.

"Although there are some signs of cooling, especially among sellers of high-end homes who have been forced to reduce prices, builders remain relatively optimistic," said Reaser. of Bank of America's investment strategies group in Boston.

The fact that long-term mortgage interest rates pushed above 6 percent last week, to their highest level in seven months, suggests that construction is headed toward a soft landing, but no crash, she said:

"Because job growth remains on track, and interest rates are rising only moderately, the outlook for real estate remains positive."

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