"True housing busts are a relatively rare event," Federal Deposit Insurance Corp chief economist Richard Brown said at a congressional hearing on the housing market.

Mounting evidence of sharp slowdown in the long-hot U.S. housing market prompted the Senate Banking Committee to call in experts to talk about the implications of a potential "bubble" bursting.

The slowdown has put a damper on home price gains, which have flattened out considerably after several years of double-digit growth in many parts of the country.

Noting the dramatic change, Democratic Senator Charles Schumer of New York mused: "To paraphrase Shakespeare: Is there a bubble or isn't there a bubble? That is the question."

"Contrary to many reports, there is not a 'national housing bubble'," he said. Instead, Stevens said the slowdown reflected cooling in some overheated markets, while other regions had never even known a real warm spell.

Earlier this month, the National Association of Realtors predicted the nation's median existing home price would be up 2.8 percent in 2006 - compared to 12.4 percent last year. 
The housing sector burned especially bright during a two-plus year period leading up to its peak in mid-2005. Seiders said the cool-down should last just as long.

"Markets in Florida, California, Arizona, Nevada, Virginia and Maryland have exhibited trends far above the local historical norm," he said, referring to areas that have seen some of strongest sales and biggest price increases during the recent boom.

"Because of these exceptional trends, it would not be surprising for these markets to experience a price adjustment," Stevens added.

David Seiders, chief economist for the National Association of Homebuilders, predicted the housing market would bottom out "around the middle of next year."

Still, he said the slowdown should not impact the nation's economic expansion, unless there was a further spike in energy prices or interest rates.

The FDIC's Brown said that, after a boom, housing prices are more likely to stagnate rather than drop sharply.

Those housing doldrums can be "fairly painful" for homeowners, builders and real estate brokers, Brown said, but they fall short of causing distress for the overall economy.

Edwina Baniqued