Subprime mortgages have pushed the price of gas off the front pages and spooked the financial markets. Any housing news is now bad news, proof that the sky is falling.

When the Census Bureau reported a statistically insignificant decline of 3.9% in new home sales for February, the stock market dropped, ignoring significant increases in both new home construction and existing home sales. Moreover, the monthly housing numbers are notoriously volatile during the winter, because the housing market is sensitive to the weather in much of the country, and has been since the days of New Amsterdam.

But the markets and the press have reversed the old song: they now accentuate the negative, eliminating the positive.

This panic started two months ago, when the two largest subprime lenders, HSBC and New Century Financial, announced that they were suffering large losses from unexpectedly high defaults by homeowners. New Century and some smaller lenders stopped making loans. Since then, people who had never heard the term “subprime mortgage” have been forecasting disaster.

The concern about subprime loans comes on top of last year’s predictions of a “housing bubble.” They reinforce each other: subprime borrowers are going to lose their homes, and the rest of us are going to see the value of our homes plummet as the bubble pops. Fortunately, however, both of these worries are overblown.

Subprime mortgages are loans to borrowers who have some history of credit problems and who therefore can’t qualify for the lowest interest rates available to “prime” borrowers.

In the last four years, subprime lenders have been willing to take more and more risk: offering loans for the full value of the home, and more, so the homebuyer often needs no money down; making loans without verifying the borrower’s income or ability to pay, and loans with low introductory rates that adjust sharply upward in two or three years, putting borrowers in a financial bind. These are high-risk loans, and they’re coming home to roost.

But subprime loans are a small share of the mortgage market. The latest figures from the Mortgage Bankers Association indicate that they account for about 14% of all home mortgages.

In addition, only a small fraction of these borrowers are having troubles. MBA reports a subprime delinquency rate of 13% — borrowers who have missed their latest payment. Far less than half of them are likely to default on their mortgages. Those families will experience real hardship and real anguish; losing their homes will be a tragedy. They represent less than 1% of all borrowers, however. For the housing and mortgage markets as a whole, and the overall economy, it will not be a disaster.

We can be pretty sure of this because we have been here before, quite recently. Twice in the last decade, between 1998 and 1999 and again between 2001 and 2002, delinquencies on subprime mortgages were higher than they are today. Both times, some lenders went out of business and some borrowers defaulted, while the overall housing market remained strong.

That’s likely to happen this time as well. Borrowers with good credit and with mortgages based on their ability to make the payments aren’t likely to experience problems simply because borrowers with bad credit and risky loans do experience problems. About 2.3% of subprime borrowers lost their homes in 2001, compared to 0.4% of prime borrowers.

Many analysts foresee worse problems this time around because home prices were rising in 2001, and now, supposedly, the housing bubble has popped. It’s certainly true that if prices are falling, more homeowners are likely to default on their mortgages. But, despite the common opinion, house prices are not falling. They are not rising at the double-digit annual rates of recent years, to be sure, but they are still rising nationally and in most markets.

New York is a good example for all of this. In the first five years of the decade, house prices almost doubled, rising at over 15% a year. In 2006, the rate of increase slowed to 6%, still above the national average. Prices are rising in most of the tristate area. Slight declines in Newark and Bridgeport late last year are the only exceptions.

Where prices have declined, it has usually been because of the local economy. Detroit is the only large city where prices are down in the last year, along with nearby communities in Michigan, Ohio, and Indiana, where the local economy is based on automobiles and auto parts. Their fundamental problems are not housing ones.

The overall economy is taking all this in stride. Employment in homebuilding is down about 25,000 workers from its peak last September, while over the same period total employment is up by 1 million, and the unemployment rate has remained around 4.5%, which is unusually low.

Despite the headlines, the subprime mortgage market is not about to lead America into a recession; nor is the housing bubble. The sky is still up there, and it’s still in one piece.

Mr. Weicher is director of the Center for Housing and Financial Markets at the Hudson Institute. Between 2001 and 2005 he was the assistant secretary for Housing and Federal Housing Commissioner at the U.S. Department of Housing and Urban Development.