The frenzied bidding wars for co-ops in New York are mostly over.
In Pittsburgh, the rising inventory of homes on the market is dragging down prices, a boon for buyers.
And in the once red-hot market of Salinas, Calif., some open houses now attract more yawns than bids.
These are all anecdotal signs that the exuberant housing market - one of the economy's most important pillars - finally appears to be winding down. Many analysts now expect that with a less vibrant housing market, the economy will be somewhat slower next year. If the housing market continues to lose fizz, it will also take some pressure off the Federal Reserve to raise interest rates next year.
"The boom is slowly passing us by," says Anthony Chan, an economist at JPMorgan Asset Management in Columbus, Ohio. "I think the best gains are behind us."
On Monday, the National Association of Realtors reported that October sales of existing homes dropped after no gain in September. Sales of new homes have held up better as developers have dropped prices - down 1.1 percent from October 2004 - to move homes. Tuesday, the Commerce Department reported the sales of new homes shot up 13 percent, the largest one-month gain in 12 years.
"People are killing themselves to get in before rates go up," says Mr. Chan. "But the developers are taking a page out of the auto industry as they are dropping prices."
In many parts of the nation, the less buoyant housing market is reflected in an increase in the inventory of unsold homes. On Monday, that inventory of single-family residences could keep the market supplied for 4.8 months, up from 4.3 months. Condo and co-op inventory rose to 5.5 months from 4.5 months.
The increasing number of homes for sale is a boon for buyers. Tennis pro Brian Poling, moving from New York to Pittsburgh, looked for just the right house all summer. Deals on two places he'd liked didn't go through. But this fall, he found a third place. It was a much nicer house in a more upscale neighborhood. And thanks to the increase in inventory on the market, he was able to get it for less than either of the homes he considered over the summer.
"I'm elated," he says. "Everything couldn't have worked out better."
On a national basis, it remains to be seen how home prices will be affected. Since the boom began in 2000, prices are up 52 percent nationally. In October, the National Association of Realtors reported that the median home price came in at $218,000, up almost 17 percent from a year ago. Housing prices have not declined nationally since the 1930s.
"I would be surprised if we saw big national housing-price declines," says Jan Hatzius, an economist at Goldman Sachs in New York. "But we could see close to zero increases next year."
In some of the hottest markets, these changes are already taking place. Properties in New York - especially luxury properties - are sitting on the market for a much longer time. And prices, instead of being bid up, are coming down. Some reductions have been $100,000 or more.
Karla Saladino, an owner of SDB Residential in midtown Manhattan, says they've had one $1.8 million property on the market for several weeks. "Last year, an identical unit sold almost immediately," she says.
In Salinas, Calif., houses last year received offers sometimes before a "for sale" sign went up. Now, homes are sitting on the market for as long as three months. Open houses that last year attracted 50 or 60 people now can often draw no one, according to Wesley Franklin of Century 21.
"The market is changing from a sellers' market to a buyers' market," he says.
One major reason for the cooling market is the Federal Reserve's steady increase in short-term interest rates. This has decreased the demand for adjustable-rate mortgages (ARMs), which were the hottest segment of the mortgage market. "The biggest trend is people leaving adjustables and going into 30-year fixed-rate mortgages," says Bob Walters, chief economist at Quicken Loans in Livonia, Mich.
So far this year, the interest rate on 30-year fixed-rate loans is up nearly half a percentage point. "It's still conducive to housing," says Mr. Walters. "It will take higher interest rates to end this game."
However, economists say that the higher interest rates are slowing the amount of "equity extraction" - loans that Americans are taking out on the increased value of their homes. Last month, Fed Chairman Alan Greenspan co-wrote a report that found that equity cash-outs, lines of credit, and capital gains added $700 billion to economic activity in 2004.
"It means that all of the increase in nominal GDP can be traced back to the housing market," writes David Rosenberg, chief economist at Merrill Lynch in an analysis. But, he adds, "mortgage refinancing activity is down 43 percent in the past four months, so something tells us that the home equity cash-out effect on spending is beginning to dry up."
To real estate broker Franklin, all these changes are part of a larger five- or 10-year cycle. "I liken this cycle to a ballgame. We're in the eighth inning of a nine-inning game, and we don't know how long the eighth inning is going to take."