California's housing market is likely to cool off in 2006, with fewer sales than this year and slower appreciation than in the past few years, according to a forecast by the California Association of Realtors.

The forecast, released Wednesday, predicts that the median sales price statewide will increase 10 percent in 2006, to $575,500. The number of predicted sales statewide for 2006 is 630,610, down 2 percent from this year's estimated record high.

Although the forecast does not include predictions for individual metro areas, Leslie Appleton-Young, the association's chief economist, predicted that Bay Area home prices would appreciate between 6 percent and 12 percent, most likely on the low side of the statewide median.

Appleton-Young cited two main reasons the market will likely cool off a bit. First, interest rates are expected to rise in the next year. Second, sky-high prices are pushing some buyers out of the market.

''We feel that affordability is going to start to create a little bit more push-back, ''she said.

The association's forecasts have underestimated both price appreciation and the number of home sales for the past several years. For 2004, for example, the forecast predicted 13 percent price appreciation; prices actually rose 21 percent. For 2003, 2004 and 2005, the association predicted home sales would fall slightly statewide. Instead, they rose each year.

Although the number of sales in Santa Clara County has been lower in recent months than last year, statewide sales are still rising.

Appleton-Young said continued low mortgage rates have led to stronger-than-expected home sales. So have innovative but riskier loans, such as those that allow buyers to pay only interest or even not pay all the interest they owe each month.

The proliferation of these mortgages has let newcomers into the market even while home prices appreciated at double-digit rates.

''That has really enabled people to catch a speeding train, if you will, ''Appleton-Young said.

But both Appleton-Young and David Lereah, chief economist for the National Association of Realtors, said it's not clear what will happen to these buyers when interest rates rise.

''That is the biggest risk in the real estate market today, ''Lereah said last week in an address to real estate professionals in Palo Alto.

Local real estate professionals said they could see some signs that the market is starting to slow.

A house that gets multiple offers today will likely get three or four offers, rather than a dozen, as it might have several months ago. And prices are ``not getting bid up to astronomical levels, ''said Nina Yamaguchi, managing broker for Coldwell Banker in Cupertino. ``I think the market is still strong, but it's somewhat a market in transition.''

In addition, affordability ``has been steadily dropping over the last couple of years,'' said Carol Burnett, vice president of Alain Pinel Realtors and manager of the Saratoga office. She said she hasn't seen a major shift in the market yet, but the lack of affordability could be a factor if prices stop climbing as fast as they have in recent years.

Still, Appleton-Young cited California's housing deficit as a reason real estate will continue to be in high demand. The state usually gains almost 250,000 households a year, according to the forecast, but will build only about 200,000 new housing units this year.

''We have a pretty significant deficit of housing supply,'' Appleton-Young said. ''It really is Economics 101.''