NEW YORK — Much of the nation has had a lovely real estate boom for the past five years, but the house party is almost over and the cleanup won't be pretty.

That's the word from economists and investors who have watched housing prices march ever higher.

"The collapse of the housing bubble will throw the economy into a recession, and quite likely a severe recession," warned a July report by the Center for Economic and Policy Research.

In recent weeks, many major investment firms have concurred. Said a Lehman Brothers report, "(A) turn in the housing market is central to our economic forecast."

"The demographic story behind the housing market boom, as we always thought, was a giant hoax," wrote Merrill Lynch & Co.'s North American Economist, David Rosenberg, in a recent report.

If housing prices decline sharply, the effects could be broad. Lehman estimates one-third of the past year's U.S. economic growth was a consequence of the housing boom. Housing construction is equal to 5 percent of the national economy.

A downturn in housing could mean more than 1.3 million lost jobs, Goldman Sachs Group Inc. predicts, bumping up the national unemployment rate by 1 percent and the unemployment rate in house-mad California by 2 percent. Those numbers don't include likely job cuts in housing-dependent businesses, such as banking, furniture and building materials.

The Center for Economic and Policy Research predicts worse, saying a bubble burst would mean the loss of 5 million to 6.3 million jobs.

The housing run-up has financed consumer spending, creating more than $5 trillion in bubble wealth, the center estimates. Consumers have used "cash-out" mortgages to pay for everything from new kitchens to college tuition.

A final nightmare scenario: A federal bailout of the mortgage market is likely if housing crashes, the center predicts. So, if corporate pension funds continue to falter and this dire prediction does come true, the Feds could conceivably be holding your mortgage and your pension.

While there's disagreement on what a downturn will mean, it's widely held that a number of factors could bring prices down. A decline in prices will track interest rates: If rates go up sharply, housing prices will plummet, said Mark Zandi, chief economist at Economy.com, an independent provider of financial research. If rates increase slowly, housing prices may ease gradually.

Others point to simple supply and demand. Bubbles have their own psychology — a neighbor tells you at a party that her house has tripled in value and you feel like an idiot for renting — but supply and demand operates on logic, which has to kick in at some point.

The supply and demand picture for housing looks out of whack. For six straight months, ending in September, builders started work on more than 2 million new homes. This has only happened three other times in the postwar period, according to Merrill Lynch: 1971 to 1973, 1977 to 1978 and early 1984.

Those periods were fundamentally different from today in at least one respect: More people were forming households. Household formation is the growth rate in the number of households and it's boosted by new immigration and twenty-somethings leaving their parents' homes. It is currently half what it was for most of those peak periods.

"At no time in the past three decades has the gap between household formation and housing starts been as wide as it has been over the past 12 to 24 months," Rosenberg wrote. "We've become accustomed to hearing about how housing is in a new paradigm, that the fundamentals are sound, so on and so forth. But please, just don't tell me that the sector has managed to divorce itself from supply and demand realities."

He points out that the number of households in the group most likely to buy a home, 25- to 44-year-olds, fell 2 percent last year, a record decline.

Another indicator, unsold homes sitting on the market, also points down. The ratio of inventories to sales has been rising rapidly in recent months and now stands at its highest level since 1996, according to Wachovia Corp.

Then, there's the problem of affordability. Affordability for first-time home buyers is the worst it has been in 20 years, which brings to mind an old parable about the stock market. A woman buys up a company's stock, driving up the price as she goes. Eventually, she tells her broker to sell.

His response: "To whom?"

"House prices are at the mountain top," Zandi said. "All roads lead down. It's just a question of how steeply."