The year before NASA's project Apollo reached the moon, the Department of Housing and Urban Development launched Operation Breakthrough. Its intentions were to mobilize American space-age technology and management for the purpose of revolutionizing the design and production of housing and new communities.

Many were convinced that the nation's housing problems could be solved and the housing industry transformed by advanced technologies never before applied rationally to homebuilding.

HUD solicited and evaluated proposals from every conceivable source -- manufacturers, contractors, developers, architects, engineers, universities. There were hundreds of responses. Proposals were reviewed, selected, funded and tested in one of the most ambitious programs of design and building experimentation ever devised and carried out in the United States. Surely, it was believed, this "shotgun" approach would yield the innovations hoped for, whatever they might be.

But Operation Breakthrough, in the short-lived excitement accompanying it, only reconfirmed what some skeptics suspected. New and exciting designs, construction methods, materials, site-planning strategies, and other technical innovations -- directed at product enhancement or construction-cost reduction alone -- could not alter significantly the basic process by which American housing is financed, built and marketed.

The skeptics' vindication was inevitable. They knew, from personal experience and familiarity with history, that technology was not the key to breakthroughs in housing. They knew that the critical path in housing production meandered through quagmires that technology could not eliminate.

Look at the development process. Most of the housing that you see in cities and suburbs is created by independent acts of private entrepreneurs responding to perceived local markets. They must acquire or assemble land -- either as raw acreage or already improved lots -- to build on. The land has to be zoned for residential use. And, in some cases, zoning itself can preclude design innovation.

Builders and their consultants then must prepare plans for sites or subdivisions, engineer roads and utilities, and design buildings and related landscape. Even here, architectural or technological innovation may have low priority. The driving forces are predominantly economic and legal. Market satisfaction and development-budget objections are paramount. Statutory regulations must be met, along with loan-underwriting standards.

The developer must obtain sufficient funds to pay for land, design, permits and miscellaneous fees, construction, financing costs, marketing, and operating overhead. Typically, most of these funds are borrowed in the form of short-term construction loans disbursed by lenders as construction proceeds. Moreover, the developer must hope that cost projections are accurate and achievable. If not, he can go broke or end up with an overpriced, unmarketable product.

Finally, developers and their customers must have access to permanent, long-term mortgage loan funds with which to pay off short-term construction loans when construction is completed. Most important, prospective housing buyers must be able to afford such permanent mortgages and related down payments.

Developers and lenders know ultimate success in selling or renting housing is linked inextricably to general conditions in financial markets and to consumer income. If economic circumstances are unfavorable, no amount of ingenious planning, breakthrough design, or wishful thinking will produce housing and convey it to waiting purchasers. Even extreme cost-cutting measures -- reducing lot and unit sizes, amenities, or quality -- may prove inadequate, if not unacceptable to the market.

In a rapidly changing or unpredictable economic climate, homebuilders assume extreme financial risks. And unlike some industries threatened periodically by foreign competition, obsolescence or changing tastes, the fragmented housing industry has little control over its destiny, so inexorably tied to local, regional and national economic forces.

Perhaps this explains why homebuilders, while interested in technological and design innovation, are much more interested in programs or policies that produce economic stability, employment, and capital formation. In fact, many would argue that economic instability is itself a primary deterrent to design and technical innovation. Sticking to the tried and true, they reason that going farther out on a limb for the sake of experimentation needlessly exaggerates their risks.

By contrast, recall what can occur when favorable financial and market conditions, public policy and private entrepreneurship are synchronous. In the late 1940s, postwar demand for housing, especially by veterans, was enormous. Unemployment was below 5 percent. Simultaneously, the means for producing housing -- skilled labor, materials, new techniques, available land and accumulated savings -- were in great supply.

Congress had increased FHA and VA home-mortgage-insurance authorizations. Loans were made with 5 percent down and interest at 4 1/2 percent. Automobiles, not tanks, again were being produced on a massive scale, while roads were being planned and built for them to drive on. Suburbia was about to sprawl in earnest as housing starts rose from 326,000 in 1945 to more than a million in 1946.

William J. Levitt clearly saw the opportunity for innovation arising from these circumstances. He would industrialize the process of building houses, not in a factory, but in the field. Started in 1947, his first Levittown rose on Long Island and eventually encompassed more than 17,000 homes on 5,000 inexpensive acres.

Levitt created the residential version of the Model-T, constructing as many as 150 homes a day. They were built with conventional materials, and all were basically the same, conventional looking house. By varying colors, window placement, roof lines and setbacks, Levitt made buyers feel that each house was somewhat unique. Architecturally undistinguished Levittown houses nevertheless proved to be just what the public wanted.

But the building process was anything but conventional. Levitt realized the selling price of the home included many profit and overhead markups that go into different pockets -- suppliers, subcontractors, land sellers and subdividers and brokers. To lower his selling price, he decided to integrate the process vertically and reduce the number of separate participants and markups. Levitt purchased raw materials directly from factories, used mechanized tools, precut lumber and preassembled raw panels and plumbing trees. Specialized crews would sweep across the site from house to house performing only one set of tasks in sequence. It was, in effect, a static mass-production assembly line.

Levitt's innovative thinking had focused on the process, not the product. Yet he knew Levittown was feasible only because there were employed people in need of shelter who could secure the financing to buy it. And such financing was available because there was a pool of capital that could be invested continuously in home mortgages and because the federal government was willing to insure such mortgages.

Today, you can still obtain a mortgage and mortgage insurance to buy a house. But you might not qualify with the income of a returning veteran. For many, the costs of housing and financing have outstripped their incomes. As economic uncertainties persist, homebuilders once again are less concerned about technological innovation, instead wondering if the next generation seeking shelter will be able to afford anything at all.