The deflating housing market has finally caught up to Washington - at least most of it.

The latest statewide report shows that home sales volumes and new home construction continued to slide in the fourth quarter, and for the first time, the median resale price fell too. It dipped to $293,900 during the quarter, a drop of 2.5 percent from Q4 '06.

Granted, there are markets in some parts of the country where a 2.5 percent drop year-over-year would be cause for rejoicing. But we'll let some other online newsletter worry about them.

Instead, we'll worry about King County, which holds about a quarter of all the homes sold in the state last quarter. Seasonally adjusted, sales dropped 17.4 percent from the preceding quarter, and they're down 28.1 percent for the year. The median resale price was $439,000, down 0.2 percent from the year before.

We'll worry about some of the rural counties, like Clallam, where median prices fell 6.2 percent; Island, where they fell 4.7 percent; and Asotin and Garfield counties, which both recorded drops of 3.1 percent.

We'll also worry - some - about employment in the construction industry. Statewide, the number of new building permits issued in the fourth quarter dropped 17 percent, suggesting a big downturn for contractors who provide high-wage jobs. However, conventional wisdom holds that a lot of the skilled tradespeople who used to build houses have moved over to work on commercial projects. I'm hearing, anecdotally, that there's a shortage of plumbers and electricians. And east of the Cascades, reliable scuttlebutt suggests that a fair percentage of the construction laborers who've been building houses were people lured away from seasonal farm work. With agriculture facing an ongoing labor shortage, those people should be able to find jobs.

And at the same time, we'll marvel at places like Chelan County, which according to federal figures has been the nation's hottest home market three quarters running. Sales volume there was up nearly 17 percent and sale prices were up more than 18 percent in the most-recent quarter. In fact, there are a couple still-booming counties east of the Cascades: Walla Walla had double-digit increases in both sales volume and price; and the Tri-Cities (that's Benton and Franklin) had double-digit price increases with flat volumes.

But for most of the state, the question is whether or not we're facing a housing collapse, like California. Most of the people I speak with say no. Ironically, to some at least, the Growth Management Act is one thing that may protect our markets. The regulatory hurdles builders complain about bitterly made it too hard for builders here to throw up on spec the kinds of subdivisions that now sit empty in places like Stockton.

However, a correction seems obvious, and in fact, it may already be here. The fact that things could be a lot worse will be scant consolation for those who got caught on the wrong side of the housing peak.