Just as the housing sector appears to be recovering, gathering problems in the commercial real estate market threaten to become a new drag on the economy.

The collapse in home prices sunk many big banks last year, but this year smaller lenders and community banks are going bust at an alarming rate because of their exposure to souring commercial real estate loans.

At least 115 banks have failed this year, many because of their exposure to deteriorating commercial loans for retail space, office buildings and industrial parks. As of June 30, another 416 institutions the Federal Deposit Insurance Corp. was monitoring as "problem" lenders.