Conflicting data this week showed that the housing market, like a bull in the ring, is wounded yet still powerful. It takes an experienced toreador to discern whether the beast will succumb to the knife or come charging back. The course it takes may hinge on which matters more to buyers: falling interest rates [a big positive] or fear of falling prices [a big negative].

For now, at least, housing construction is clearly in a localized recession. The freshest evidence came on Nov. 17 from the Census Bureau, which announced that starts on construction of single-family homes plunged 14.6% in October, to the lowest level since July, 2000. On top of that, permits fell 6.3%, to the lowest level since December, 1997, indicating that construction could dip even further in the months ahead [see BusinessWeek.com, 11/17/06, "An Awful October for Housing Starts"].

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