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03:43 PM CDT on Wednesday, August 9, 2006

Alan Sayre / Associated Press

Nearly a year after Hurricane Katrina wiped out much of New Orleans, the city is showing early signs of a rebirth, but a lack of health care and other services and a dearth of affordable housing could stymie a recovery, according to a study released Wednesday.

A rebuild New Orleans flag adorns the front of a home in the Gentilly area in New Orleans on Friday, July 21, 2006. Residents of the area are still waiting for Louisiana's 'Road Home' funds to reach them. About 123,000 homeowners are expected to have enough damage to qualify for the program.

The Brookings Institution, a Washington, D.C.-based think tank, said positive signs include a possible turnaround in the housing market and increased visitor and business travel.

But the majority of the indicators are troubling, pointing to much-needed progress in basic city services, infrastructure and affordable housing for workers in order to boost market confidence and move the region's economy affirmatively forward," Brookings said.

According to the study, rent prices in the New Orleans region have increased by 39 percent since Katrina hit on Aug. 29 and home sales in the less-damaged suburban parishes have spiked at levels not seen since before the storm.

The study also pointed to potentially disturbing economic data: On one hand, the New Orleans work force, which has about 190,000 fewer workers than a year ago, has grown by about 14,700 over the past six months. But, at the same time, the unemployment rate also has risen above pre-Katrina levels, Brookings said.

"This may mean that a good portion of the new workers in the labor force are returning residents entering the job market and not having much luck," the report said.

Education and health services have been the biggest loser with a combined loss of 32,600 jobs -- or 41 percent of the pre-Katrina count.

Brookings said progress in opening up more affordable housing would be a key to the city's recovery. Over the past six months, demolition of now-useless housing has picked up and, in Orleans Parish, 38,594 homeowners have received building permits for repairs and renovations.

At the same time, though, Brookings said the number of houses put up for sale in Orleans Parish -- 4,433 -- far exceeded the number that had been sold in the parish since Katrina -- 273. The average sale price for a New Orleans home has slid from $292,735 six months after Katrina to $247,436 in June, the report said.

Renters are paying through the nose: a two-bedroom apartment now rents for an average of $940 a month, a 39 percent increase over the last year, the report said.

Brookings also warned that a recovery could be hampered by a lack of public transportation, child-care services and hospitals. For instance, less than half of all bus and streetcar routes are running, just over a fifth of the pre-Katrina child care centers are available, only half of the pre-storm hospitals are open and devastated areas of the city still remain without power service.

"This picture doesn't include data tracking the latest concerns about elevated crime levels and the spotty water-sewer infrastructure," the report said. "If the quality of services remains uneven and unreliable for much longer, families, even with housing assistance in hand, may vote with their feet."

(Copyright 2006 by The Associated Press. All Rights Reserved.)