Average home prices here have continued to rise, and the number of days homes stay on the market before they sell has decreased.

Indeed, 2006 could wind up as another record year, in terms of the number of homes sold. But a closer look at the market data and conversations with local real estate agents and homeowners suggest a softening of the local market.

To sell their houses, homeowners and national builders alike are having to reduce prices, improve properties and offer incentives. The number of people in the Triangle who lowered the price of their homes in September so that they would sell surged 17.4 percent, compared with a year ago.

In September, 3,845 homes in the Triangle Multiple Listing Service had reduced prices, or 35 percent of all homes listed.

The number of resales on the market at reduced prices has increased significantly every month since June, when they were up 3.6 percent from a year before. Resales were up 8.8 percent in July, and 16.6 percent in August. Resales make up 57 percent of the Triangle's $9.3 billion housing market.

"If it's priced right, it will sell quickly," said Marti Hampton, owner of ReMax One Realty in Raleigh. "But I am definitely telling them [sellers] more than last year, and early this year, if there is anything holding them back, they may need to lower prices.

"A year ago we weren't telling them that."

The cooling resale market coincides with a similar trend in new homes. Sales of new homes for the quarter rose 2.6 percent to 4,298 in the six-county Triangle area, compared with an 11.6 percent increase during the same period last year.

Both markets are being affected by what's happening across the country. Nationally, new-home sales are down 14.2 percent compared with a year ago, and new-home prices fell in September by the largest amount in 35 years.

Potential buyers who have moved to the area from cities glutted with homes say they can't buy here until they can sell their old houses. To spur sales, national home builders are offering special financing and appliance upgrades and dropping prices. Those deals hurt existing-home sales.

Dan Lucas knows full well how new homes can hurt a homeowner's chances.

Within five miles of his Cary home are 33 new homes priced from $150,000 to $250,000. Most offer some kind of incentive.

When Lucas, an N.C. State University employee, put his 3,600-square-foot home on the market in April, he asked $305,000. With surrounding homes selling briskly and a renovated basement, he expected a quick profit.

Now, four price reductions later, the house is down to $285,000. Although Lucas doesn't expect to lose money on the house, which he bought for $147,000 in 1987, he is wondering how many more times he'll have to drop the price before the house sells. "I haven't even had a bad offer yet," Lucas said.

To better compete with the new homes, he has spent $15,000 on improvements, such as a new kitchen floor and paint.

Even older, more-established Triangle neighborhoods feel the heat from new projects. M. Ruth Little searched her 27607 zip code when she was selling her home in West Raleigh's University Park this summer. The search turned up several dozen new homes priced at more than $500,000.

Little first offered her 2,750-square-foot home for $549,000 but ended up dropping the price twice before finally selling for $485,000. The architectural historian was eager to sell because she had bought a smaller house. But she also realized that the market had cooled.

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