Two years after the number of unsold homes began to rise and a year after prices began to slide, the local real estate market is showing the first signs of what could become a rebound, according to agents and others in the industry.

Homeowners who sold their houses this spring were able to do so in an average of just under two months, according to data from the Southwest Riverside County Association of Realtors, which represents most local agents. The time-on-market figure, a key statistic, rose from 17 days in the March-to-June period of 2004 to 53 days in the same four months of 2006, but has stabilized, edging up to just 57 days in the last four months. Longer lags can indicate that the economy isn't bringing in enough new residents to replace the ones leaving or that sellers are asking too much and may have to drop their prices.

"In a normal market, which is not what we had three years ago, about 60 days on the market is very average," said Marsha Swanson, a 30-year agent who runs the Wildomar office of Coldwell Banker Residential Brokerage.

Other local agents have said two months is slightly higher than average, but still within normal range. Swanson said sellers have taken several months to get used to the fact that most houses aren't appreciating at the 20 percent to 30 percent annual rates of 2003 and 2004. Until late last year, many were asking for $20,000 or $30,000 more than most buyers were willing to pay in the slowing market.

As a result, buyers held off, leaving houses to sit on the market for longer. Local sellers who cut their price by $20,000 have often been able to sell their houses in just a couple of weeks, agents and sellers said.

That's one reason prices have fallen from 2 to 20 percent in most Southwest County neighborhoods. The price of a typical existing home in Temecula has fallen about 8 percent in the last year to $435,000, according to June figures from DataQuick Information Systems, a research firm. Prices have fallen 3 percent to $385,000 in Menifee and 16 percent to about $425,000 in Murrieta.

No agents or economists interviewed in recent weeks said they expected a broad rebound in Riverside County home prices within the next year. Even the California Association of Realtors, known for its perpetually cheery take on the state's real estate market, forecast that prices will fall 2 percent this year in the state, and other economists have estimated that declines of 5, 10 or even 18 percent are needed to bring prices back into line with residents' incomes after record appreciation in recent years.

But optimists have pointed to Southern California's generally strong economy as evidence that recent sluggish conditions can't last. Some have said that the problems are concentrated among buyers who used risky, 100 percent financing to get into houses that were simply too large, too luxurious and too expensive for them. Foreclosure-related filings in Riverside County have nearly quadrupled in the last year, to 12,759 in the April-June period, according to Irvine-based RealtyTrac.

Andy McIntosh, a vice president of Temecula-based SDL Real Estate, said most of the lower sales this year represent a relative handful of houses that are in foreclosure after owners fell behind on mortgage payments. And those seem concentrated in just a few neighborhoods, said McIntosh, whose firm manages rental houses. Homeowners who stay current on payments and take care of regular home maintenance have kept prices from falling significantly, McIntosh said.

The health of local real estate could depend greatly on how many more houses are driven onto the market by rising interest rates, mortgage payments that rise after initial low periods and, ultimately, by foreclosures and banks' efforts to sell the houses they seize.

A RealtyTrac executive said he expects to see the final wave of them between now and next summer. That's because the mortgage industry began to seriously tighten its lending standards last summer after watching the first wave of foreclosures in late 2005, said Rick Sharga, vice president for marketing for the company.

While that has sped foreclosure on some borrowers who hoped a refinancing would help them escape the higher payments, it has also limited the number of problem loans that brought on foreclosures in the first place, Sharga said.

"The industry has begun to take notice," he said.

- Contact staff writer Chris Bagley at (951) 676-4315, Ext. 2615, or cbagley@californian.com.