A new report issued by an organization of banks and other lenders says that the dramatic increase in housing prices in parts of the country is not so much evidence of a bubble as it is a result of a fundamentally healthy and growing economy.

		On the Internet Read more about the Mortgage Banker Association report

The 32-page report, produced by the Mortgage Bankers Association, points to growth in population, employment and income as primary drivers of demand behind the rapid appreciation of homes in such places as California and Florida.

In a conference call yesterday afternoon, Doug Duncan, the association's chief economist, said that the organization issued the report to provide "proper perspective" on the nation's housing market in light of ever-increasing speculation that there may be a housing bubble -- or a series of regional housing bubbles.

Duncan said that consumers "are not well served by the term 'bubble,' " which is most appropriate when describing a market driven by speculation, such as the stock market that soared in the 1990s only as the 20th century gave way to a new century.

"The [housing] market is fundamentally sound and working," he said.

In addition to job, population and income growth that fuel demand, the report said such supply-side factors as increasing costs for land acquisition and construction, as well as regulations that restrict building, also are pushing up prices.

Duncan also cited the increase in non-traditional mortgage products such as interest-only loans as a sign of a healthy housing finance market, rather than a cause for concern.

Many commentators have suggested such products as interest-only mortgages, which allow a buyer to pay only interest for a period of years before beginning to make payments that include the principal, and adjustable-rate mortgages, which are likely to become more expensive as interest rates rise from historic lows, could lead to a rash of delinquencies and foreclosures when homeowners face higher monthly payments.

While acknowledging that consumers need to aware of the risks involved in some of the newer financing options, Duncan said the range of mortgage options "is a benefit to the consumer."

As for delinquencies, Duncan said that "the most important factors in both house price and delinquency are employment" and that his organization's projection for job growth -- 180,000 to 200,000 new jobs a month through 2006 -- makes a rash of delinquencies unlikely.

Echoing the report, he also noted that a majority of homeowners would not be directly affected by an increase in interest rates because 35 percent of homeowners have no mortgages on their homes and another 50 percent have fixed-rate mortgages.