With low interest rates keeping the housing market perking, one of the few bright spots for newspapers lately has been real-estate advertising. At Tribune Co.'s Los Angeles Times, for example, revenue from real-estate ads in print and online editions soared 45 percent in the second quarter over year-ago levels.

At Belo Corp., owner of the Dallas Morning News and other papers, similar ad revenue in the second quarter increased 34 percent. And at Lee Enterprises Inc., which owns more than 50 daily papers, fiscal third-quarter real-estate ad revenue was up more than 16 percent from the year-ago period.

But newspapers could be heading for a collision with modern home economics. The strong real-estate market is masking what has been a years-long decline in classified-ad revenue at newspapers. There are signs that the long bull market in housing may be reaching a peak. And, traditional newspapers are fast losing ground to the Internet for real-estate advertising. Last year, 74 percent of all U.S. home buyers used the Internet in their search, according to the National Association of Realtors, up from 65 percent in 2003. Only 2 percent used the Internet 10 years ago.

"I don't want to be down on newspapers, but what they need ... is a wake-up call," says Peter Conti Jr., an analyst for media research and consulting firm Borrell Associates, which counts both newspapers and Web sites as clients.

Real-estate ads accounted for about one-fourth of the $16.6 billion in classified-ad revenue collected by newspapers last year, according to the Newspaper Association of America. That represents a growing share of a shrinking market in general. Total classified-ad revenue was $19.6 billion in 2000, with real-estate ads making up 16 percent.

But online real-estate sites are steadily gaining a bigger slice of the business. Online sites captured an estimated 11 percent of the $12 billion real-estate ad market last year, according to the Realtors' association, with big players like Yahoo Inc. and Google Inc. making major moves into the segment. This year's online real-estate ad sales will total about $1.8 billion, or about 15.7 percent of the total, Borrell estimates. Most of these online ads are placed by real-estate brokers, not individual sellers, the Realtors' group says.

Daily and weekly newspapers still maintain the biggest slice of real-estate ad market -- 42 percent in 2004. Direct mail, television and other print media make up the rest. But Borrell expects that the Internet's share of the market will surpass that of newspapers by 2009.

The bulk of all home listings already can be viewed at Realtor.com and many other popular Web sites, including those run by chains such as Cendant Corp.'s Coldwell Banker and Century 21. The Justice Department has pressured the Realtors' association into reconsidering a proposed rule that would make it easier for real-estate brokers to restrict online use of home listings. Justice is considering a less-restrictive version offered by Realtors, according to people in the industry.

Online real-estate ads offer several advantages over print -- particularly on price. The Chicago Tribune, for instance, charges $75 for a print ad with three lines of type that appears in the paper for seven days. On Yahoo, an ad costs $49.95 -- and it runs for 21 days and is searchable nationwide. On Craigslist, a popular Web site 25 percent-owned by eBay Inc., the same ad is free to listers and users, and often includes color photos. And now, Craigslist links to Google's mapping function. This allows prospective home buyers to see maps and satellite photos of individual neighborhoods -- all free.

Many observers worry that Craigslist is forcing newspapers to cut their prices. Last month, McClatchy Co. Chairman and Chief Executive Gary Pruitt acknowledged what he called "the Craigslist effect" in a conference call. Like other newspaper companies, he said, McClatchy has begun allowing individual advertisers to list certain low-cost goods, such as garage sale items, free of charge on newspaper Internet sites.

Newspapers are also fighting back by establishing their own online ad sites. McClatchy's Minneapolis paper, the Star Tribune, for instance, has its own online real-estate site, which charges $99 for a 30-day listing. It, too, offers color photos. Though still relatively small at $4.9 million through July, real-estate advertising online, is the fastest-growing category of interactive revenue at McClatchy. Through the first seven months of this year, revenue from print real-estate ads is up a strong 13 percent; but revenue from online real-estate ads soared 68 percent.

Many real-estate agents say they like online ads not just because they are cheaper, but also because they can reach more people, says Harley E. Rouda Jr., CEO and managing partner for Real Living Inc., a real-estate firm based in Columbus, Ohio. His company used to take out weekly full-page ads costing $10,000 to $15,000 apiece in the Columbus Dispatch but stopped advertising in the paper in 1998, he says. Now it focuses on Internet and community newspaper ads, he says. The savings was instrumental in helping his business expand from its base in Ohio to its current 10-state area, Mr. Rouda says.

Home buyers seem to like Internet ads as well. According to the Realtors' association's 2004 Profile of Home Buyers and Sellers, 69 percent of home buyers found the Internet "very useful." Only 32 percent said the same about newspaper ads -- even yard signs came in higher at 52 percent.

A slowing real-estate market may actually be good for newspapers in the short run, says Christian Hendricks, vice president of interactive media at McClatchy. That's because real-estate agents and sellers may feel compelled to take out more ads or bigger ones to reach the smaller pool of prospects. But in the long run, a slowdown will hurt because some sellers will simply take their houses off the market.

Home sales are expected to hit new highs this year and then tail off. Existing-home sales in 2005 are projected to rise 3.0 percent, to 7.0 million, according to a forecast by NAR. Sales of new homes should climb 4.8 percent, to 1.3 million, also a record. Next year, NAR expects existing-home sales will slip to 6.7 million and new-home sales to 1.2 million.

The challenge for newspaper companies is to provide online ads that don't simply duplicate basic print ads. "Just taking the listings out of the newspapers isn't enough to have a business," says Dan Shorter, Internet general manager at Cox Newspapers Inc.'s Palm Beach Post. Online ads must offer color photos, maps, information on school districts and video tours of a home's interior, he says. Some papers, like the Palm Beach Post, have these features, but many others don't.

Newspapers also need to learn more about prospective buyers in order to find their target audience. For instance, Mr. Shorter says, his paper's research showed that most Palm Beach home buyers were from the next county -- Broward. Many also frequented shopping malls. So a year ago the Post installed kiosks at shopping malls in Broward County that are linked to the Post's real-estate ads. So far, he says, 12 kiosks in Broward County have produced tens of thousands of searches since last year.

Will such efforts cannibalize a newspaper's print ads? Yes, says Cox President Jay Smith, but "if we don't do it ourselves, somebody else will."