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Forecasters predict that sales of existing homes and construction of new homes will decline from about 5 percent to 6 percent in 2006. That still would be the second-best year ever. If markets cool more steeply in 2007, other sectors of the economy might start to cut back on investment and hiring.

"It doesn't take a lot of cessation of employment growth to pitch the economy over the edge," Smith said. "It's the stone in the pond rippling out. And if other areas of economy don't pick up that slack, you're likely to get a recession."

The South in particular could see a drop in migration from the Northeast, where people will find it harder to sell their homes or get the prices they expect.

"That means transplants may start coming here with less money, or not come," said Mark Vitner, senior economist for Wachovia Corp. That would hurt the Triangle housing market, which has benefitted significantly from Northern transplants and retirees.

But as speculators in Northern markets back away from commitments or dump holdings, inventories there would rise and compound price declines, Vitner said.

He estimated that sales could tumble an additional 7 percent nationwide in 2007.

"If we have a hard landing, overall growth will be slower. And housing markets are so interconnected that not even the Triangle could escape a hard-landing scenario," he said.

Local prices are stable

The good news for the Triangle is that home prices never exploded in the first place. They plodded along at their historic annual increase of just under 3 percent right through the housing boom. That makes them unlikely to decline, on average. If they do, it might be good news for some.

For renters who have shied away from buying, now may be the time to spot deals as the housing market turns from a sellers' to buyers' market, said Lawrence Yun, senior economist for the National Association of Realtors.

The same may be said of homeowners considering a move to another area. Triangle home values are likely to fare better than average in a downturn, lifting the currency of people looking to move elsewhere. According to Census Bureau figures for March, the Raleigh-Cary area had 71.4 percent homeownership in 2005, compared with 67.4 for all metropolitan areas, 68.9 percent nationally and 70.9 for the state.

The bad news is that most forecasters predict higher mortgage rates and fewer buyers.

"If you borrowed most of the equity in your house, now is the time to save and pay down debt or risk foreclosure," said Smith. Indeed, household mortgage debt has more than doubled since 2001, to about $1.07 trillion last year, according to figures this month from the Federal Reserve. Incomes are up less than 20 percent over the same period.

Not all agree that the nation's housing-based economy is in any significant trouble, nor that rising interest rates will push down home values next year. The Triangle -- one of the most consistent, albeit slow, appreciation markets in the country -- should remain especially stable.

"I would expect as good a year as last because nothing demographically is changing here," said Stacey P. Anfindsen, a managing partner with Birch Appraisal in Cary.

From April 2000 to July 2004, Wake County added 91,654 residents, more than any other county in the state, according to the Census Bureau. That level of growth is expected to continue.

Partly as a result, Triangle home sales were up 14 percent in January over January 2005, compared with a slight decline nationally.

Anfindsen said that the stock of new homes in the Triangle decreased about 3 percent in January. Nationally, housing stock hit an eight-year high.

And in any case, Anfindsen doesn't think there are localized bubbles elsewhere, for the most part. "Houses don't behave like stock. If you see home values decline a little, you don't immediately get on the phone with your broker and say 'sell.' "

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