The third quarter of 2007 has been a transitional time both in construction and in the financial markets. The much anticipated burst of the housing bubble has led to not only a significant fall in construction of new houses, but also severe disruption of liquidity in the financial markets, both in the United States and in other countries around the world.  Of the two, the liquidity crisis could prove to be the more significant with respect to construction activity in the next two to three years. In the short term, most of the disruption will be transitory, as financial institutions disentangle the complex web of financial instruments, and sort out the magnitude and ownership of the losses. In the long term, however, there will be much greater scrutiny, and possibly greater regulation, of the structured debt instruments that have fueled a significant portion of the construction demand recently. This means that both in the short and longer term, there is likely to be less capital available to owners and investors for construction, leading to dampened demand in the United States for some time to come.