Jackie Castleberry won't be playing Santa Claus this year.

She usually buys her grandchildren, nieces and nephews lots of gifts around the holidays — bicycles, educational games, clothes — but this year she is just struggling to keep her house in North Las Vegas.

The interest rate on her four-bedroom home loan shot up in October and she is $6,000 behind on her payments. She now owes $168,000 on her home, which once was worth $220,000 but is now worth about $150,000. In the past, when times were tough, she would borrow against her home's equity; that's no longer possible.

"I was always seen as the person that's giving, but it's kind of affected this year," said Castleberry, a former casino buffet supervisor who now makes $11 an hour, 30 hours a week, supervising children before and after school. "This year, I can't see anything right now as far as gifts."

Castleberry is just one of thousands of homeowners nationwide who can no longer finance their spending by tapping into their once inflated, now depreciating home equity. Others can no longer afford their higher monthly payments because of a reset in their adjustable-rate mortgages and have been victims of foreclosure.

The crisis is taking a toll on consumer spending, particularly in areas that have been hit hardest such as Florida, California and Nevada. And it is one of the biggest factors behind what is expected to be the weakest holiday season in five years.

Nevada, California and Florida have posted the highest foreclosure rates in the country for the past several months, according to Irvine, Calif.-based RealtyTrac Inc. In October, Nevada reported one foreclosure filing for every 154 households. California's rate was one for every 258 households; Florida had one for every 273 households — up nearly 165 percent from October 2006's total.

Mark Zandi, senior economist with Moody's Economy.com, said the housing downturn is "weighing increasingly heavily on retailers and will play a significant role during the holidays." In the second half of 2006 and the first quarter of 2007, mortgage equity withdrawals were at a peak of $850 billion on an annualized basis, Zandi said. But in the third quarter of 2007, that number had fallen to $550 billion.

NOT MUCH EQUITY

Nevada's overall sales tax revenue was down 4.7 percent in August from a year earlier — marking the first drop since right after the Sept. 11 attacks.

"The decline in house prices and homeowners' equity is making it difficult for homeowners to pull out equity for their homes, and therefore, they don't have the cash to spend as aggressively," Zandi said.

And that's also hurt people employed in the real-estate and mortgage businesses.

Last year, Leo Rojas could spend liberally on Christmas gifts for his 7-year-old son and 14-year-old daughter and the employees at his Miami-based mortgage company, which was processing 50 home loans a month. He bought a video game system and a slick toy all-terrain vehicle for his kids, and Movado watches, expensive pens and Walt Disney World trips for his workers.

But this year, his company is processing five loans a month. He has closed offices, laid off employees and is selling cell phones to make ends meet. He estimates he'll spend about a quarter of what he spent last year on gifts, with his children getting a phone, clothing and perfume or cologne.

"We're finding ourselves going back to the basics," Rojas said. "We made a decision that we're only going to give to our immediate family, as opposed to last year when we gave to all our family and our friends and our friends' kids."

Many retailers have curtailed inventory levels and others started promotions earlier than before. Discount stores could benefit from a trade-down effect among consumers seeking better pricing over department stores, while home-related retailers such as furniture stores offer deals to stimulate sales. Luxury stores may be OK, considering that more affluent people tend to weather economic downturns more easily, analysts noted.

"The housing market has caused a dent in our appliance sales," said Bobby Johnson, senior vice president of Hollywood, Fla.-based BrandsMart USA. "But people seem to be buying flat-panel TVs, as many as they were before, if not more, because of the price erosion."

NO MUST-HAVE TOYS

Conrad Szymanski, president of Bradenton, Fla.-based Beall's Department Stores, an apparel and homewares retailer, said he's seen an uptick in sales near the end of the year, partly because of an annual influx of seasonal visitors. But Florida still is seeing "some mounting headwinds" because of the housing situation, coupled with high home insurance and property taxes, he said.

"In Florida, we have enjoyed a number of just fantastic years in a row," Szymanski said. "In those years, we aggressively went after market share with additional inventory. This year, we're taking a more cautious approach with regard to inventory."

Mark Vitner, senior economist at Wachovia Economics Group, said this season is a "little odd" because there's no must-have item sending people flocking to stores.

While all things Hannah Montana are hot, and shoppers are seeking hard-to-find Nintendo Wii consoles and video games like Guitar Hero 3, there is very little that is creating a consumer frenzy.

And Miami-based analyst Tony Villamil said the middle retailer would probably feel the most pressure as people seek to trade down from department to discount stores.

"This is a time for aggressively using the marketing mix of pricing, promotion and discounting ... to attract the consumer wallet," Villamil said.

'MONEY'S REALLY TIGHT'

Plenty of locally owned stores are facing a struggle. In California's San Joaquin Valley, Christina Perret said the foundering housing market has caused sales to sag at her three high-end women's fashion clothing shops and forced her to reconsider her stock.

Perret's gotten rid of racks of flashy tops with plunging necklines that were favorites with real-estate agents, substituting a line of conservative sweaters popular with farmers' wives.

"We're going after the wives of dairymen and women in agriculture because their economy is so much more stable," said Perret, 25. "Even moms who come in shopping with their daughters for prom aren't wanting to spend as much now. They want to buy dresses for $200 max and know their daughters can wear it at graduation next year."

Sal Arroyo, who manages a Western wear store in Fresno, Calif., said selling $300 ostrich-skin boots is a challenge, since sometimes as few as 10 shoppers come in each hour.

"Money's really tight and that's hard for us," Arroyo said.

Money's also tight for Deborah Vick, a Las Vegas home loan officer who says she's cut back on spending since the housing slowdown took hold and cut her salary in half. She used to have a BMW and a Land Rover, but had to give up the BMW to a company that took over her $600-a-month lease.

"If you have to give up a luxury item, which you probably shouldn't have purchased in the first place, you know, for me it was a learning experience," she said.

"My daughter's having a fabulous holiday. She always does," Vick said. "Am I going to go buy myself another car this year? No."