By Carolyn Weber. Uncertain fiscal and social times prevented most Americans from spending on discretionary items last year, but it didn't seem to affect the wealthiest segment of the population. In 2000, luxury homes--those over $500,000--accounted for 3 percent of homes sold; in 2001, they accounted for 4 percent of sales; in the first quarter of 2002, they represented 5 percent.

A bit surprised by how well the high-end market withstood the economic turmoil, Scott Campbell, an analyst with Raymond James Co. in St. Petersburg, Fla., expects the upsurge to continue. As the economy firms, and possibly picks up, he predicts more of a turn in favor of expensive products. "The bias now is for mortgage rates," he says, "and we'll see entry level gradually slow down on the margin, and that will be picked up by strength at the other end."