Buyers continue to beat down the doors of housing market.

• Position: North Carolina - Illustration - Statistical Data Included

Thomas Lawing Jr. picked a good year to serve as president of the North Carolina Association of Realtors. With home sales galloping along at a breakneck pace in 1999, the head of T.R. Lawing Realty Inc. in Charlotte ministered to a contented flock. "When I meet Realtors and I say, 'I am having the best year of my life, how about you?' I am getting a round of applause," Lawing says. "People are saying it can't get much better than this."

Yes, but it can always get worse. The big question for the residential real-estate industry has remained the same for nearly a decade: How long can the good times last?

Bernard Helm, president of Market Opportunity Research Enterprises in Rocky Mount, is among a number of analysts who have been warning of a slowdown for at least the last three years. But consumers keep proving him wrong. "We are riding on a bubble that is so big you can no longer see the curve," he says. "Either things will fill in and it's no longer a bubble or it's going to break." He's predicting a modest slowdown in new-home activity in 2000 as rising interest rates dampen demand. He's also worried about the potential for a sudden, sharp downturn in sales and a rise in inventories if builders aren't careful.

Builders, though, don't seem particularly worried. Rick Bell, marketing director of Fortis Homes Corp. in King, estimates it pulled permits for 780 homes in 1999, 5% more than in 1998. The company expects to build even more in 2000, boosting its projects under way to about 40 from 35 last year.

The main challenge for builders, Bell says, is keeping profit margins healthy, because stiff competition has kept price increases in check. Fortis cut costs by eliminating once-standard items such as molding on all four sides of windows. The company also has finally embraced computer technology to help improve efficiency. "Home building, as an industry, is really fairly backwards," Bell says. "We are just starting to use electronic scheduling techniques and software. It is looking much more like a manufacturing business."

A few years ago, subcontractors showed up at building sites on their own mysterious schedules. Now big production builders such as Fortis use time-management and scheduling software to put people and materials in place at the right moment, reducing downtime and cutting expenses.

To Helm, a key indicator of a market's strength is the price difference between new homes and resales. As a rule, resale prices should average about...