A total of 6,206 new and resale houses and condos were sold in the nine-county Bay Area region last month. That was up 3.4 percent from 6,004 for January, and down 16.8 percent from 7,463 for February last year, according to DataQuick Information Systems. Sales normally decline from January to February, but last year February was the strongest since 1988.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

"We'll know more about what's going on once next month's numbers come in. March sales have a more typical purchase pattern than February or January's. Right now we don't see anything ominous in the numbers, just a real estate cycle that is past the frenzy phase," said Marshall Prentice, DataQuick president.

The median price paid for a Bay Area home was $616,000 last month. That was up 1.5 percent from January's $607,000, and up 12.2 percent from $549,000 for February a year ago. The annual price increase was the lowest since prices rose 9.7 percent to $443,000 in January 2004. It's probable that appreciation will dip into the single digits again this spring.

The typical monthly mortgage payment that Bay Area buyers committed themselves to paying was $2,889 in February. That was up from $2,798 in January, and up from $2,460 for February a year ago. Adjusted for inflation, mortgage payments are 16 percent higher than they were at the peak of the prior cycle 16 years ago.

Indicators of market distress are still largely absent. The use of adjustable-rate mortgages has decreased significantly the last three months. Foreclosure rates are coming up from last year's low point, but are still below normal levels. Down payment sizes are stable, and there have been no significant shifts in market mix, DataQuick reported.

On the national scene, the lower level of home sales expected this year will create a more level playing field for buyers and sellers on the heels of a five-year sellers' market, reported the National Association of Realtors.

David Lereah, the association's chief economist, said the number of homes on the market has been improving nicely. "The cooling from overheated sales conditions in recent months is helping to bring inventory levels up to the point where buyers have more choices than they've seen in the last five years," Lereah said. "Annual price appreciation is still running at double-digit rates, but the cause of those sharp increases is going away. As the market readjusts, price appreciation should return to more normal rates of growth this year."

The national median existing-home price for all housing types is projected to rise 5.8 percent in 2006 to $220,300. The median new-home price should increase 5.4 percent this year to $250,200. Existing-home sales are expected to fall 5.7 percent to 6.67 million in 2006 from the record 7.08 million last year.

National Association of Realtors President Thomas M. Stevens said some homebuyers and sellers have unrealistic expectations. "Some sellers in markets that have had rapid appreciation are listing the price of their home too high, but those homes are just languishing on the market," said Stevens. "At the same time, some buyers who have believed hype about a housing bubble are hoping prices will drop, but that's not happening, either.

"Consumers need professional assistance to understand and negotiate the current market realities. Sellers should listen to their agent's advice to competitively price and show the home, and buyers may want to choose a buyer's agent to represent their interests and help them negotiate favorable terms. Today's market has changed a lot from the conditions we've seen during the last five years."

The 30-year fixed-rate mortgage should increase gradually to 6.9 percent in the fourth quarter.

Inflation as measured by the Consumer Price Index is projected at 3.3 percent this year. Inflation-adjusted disposable personal income is expected to grow 3.7 percent in 2006.

Growth in the U.S. gross domestic product is forecast at 3.5 percent in 2006, while the unemployment rate is seen to average 4.8 percent this year.

Following the warmest January on record that helped spur a 16 percent jump in new-home construction, the housing market showed signs of cooling in February, with total housing starts down 7.9 percent for the month to a seasonally adjusted annual rate of 2.12 million.

"The underlying market fundamentals remain solid," said David Pressly, president of the National Association of Home Builders. "Job and income growth are moving ahead at healthy levels. Today's starts numbers are another indicator that points toward an orderly cooling-down process for the housing market in 2006."

The evolving slowdown is actually a healthy development and should not lead to any major contraction in the housing markets.

"Last year's record level of housing starts and double-digit price appreciation were unsustainable, and encouraged many investors and speculators to enter the market. With demand slowing, we expect to see price appreciation also falling back into the single-digit range, and that will discourage short-term speculators from jumping into the market. We anticipate another solid year for housing in 2006, with new home construction and new home sales down about 7 percent from last year's all-time highs."

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