The number of homes sold in the Lehigh Valley continued to fall last month, the rate of home appreciation slowed to 1 percent from the year before and homes stayed on the market longer.

The January statistics show trends that began last year are continuing in the new year. Home sales fell last year for the first time in at least 10 years, while the average time homes sat on the market lengthened. Home prices continued to rise in the fall, but at much slower rates.

The Lehigh Valley remains attractive to home buyers, particularly those relocating from New Jersey where houses still cost more. However, real estate agents say the market has reverted to "normal," after the "white-hot" sales atmosphere of 2004 and 2005. The shift has caught some sellers by surprise, as their homes linger unsold, but it has been a boon for prospective home buyers.

"Buyers know they have a lot more choices than they did in the past. They feel they have the upper hand, and often they do," said Ellen Shaughnessy, a real estate agent with Prudential Paul Ford in Easton.

The average period of time homes stayed on the market was up 12 days in January to 61 days, according to the Lehigh Valley Association of Realtors. Real estate agents say the market remains brisk when the average time it takes to sell a home is about 60 days or less.

Nonetheless, it's a sharp increase. The slower pace stems in part from the large supply of homes on the market. The number of homes that sat unsold last month rose 26 percent, while new listings increased 20 percent.

The number of new listings in 2006 reached an all-time high of 16,062 homes, up 16 percent from the year before. As the number of homes for sale has swelled, buyers have had their pick of properties, and agents say they can make offers that are below the listing price.

"Homes stayed on the market longer, and sooner or later, you had more inventory than you had buyers," said Jack Gross, owner of Cassidon Realty Corp. in Bethlehem.

It's a stark contrast from 2005, when agents say properties of varying condition and often less than desirable locations frequently received multiple offers.

The average price of an existing home in Lehigh and Northampton counties was $215,000 in January, up 1 percent from the year before. The average price of a new four-bedroom home with 21/2 baths fell 6 percent in January to $387,000, compared with the same period last year.

The number of homes sold fell 16 percent, compared with the same period last year. It was the eighth consecutive month home sales fell in the Valley. Pending sales contracts -- a measure of future home sales -- fell in December to the lowest level in four years. The number rebounded somewhat last month.

"People are holding back," said Loren Keim , who owns Century 21 Keim Realty in Allentown. "We are putting together far fewer offers."

Average prices for existing homes have risen 10 percent or more for each of the past four years. The market has been bolstered by strong demand from home buyers moving to the Valley from more expensive towns in New York and New Jersey, and to a lesser extent the Philadelphia area. The newcomers considered the Valley's home prices a bargain.

Newcomers continue to find the area affordable. But some segments are faring better than others. For example, agents say homes in the lower range -- those with asking prices below $200,000 -- continue to sell quickly. But homes that are priced at $300,000 or more are often sitting on the market longer.

The peak selling season of spring and summer are still ahead. How much homes will appreciate and how quickly they will sell in 2007 remains an open question, after four blockbuster years. The Realtors association does not release a forecast.

Keim, who develops proprietary data on the local housing market, had predicted the number of homes sold would fall between 2.5 percent to 3.5 percent in 2006, which was on the mark. For 2007, he predicts sales will be flat, or drop slightly. He said he also expects a modest increase in home prices.

jeanne.bonner@mcall.com

610-820-6539