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. Last Updated: 07/27/2016

U.S. Housing Market Losing Fizz

NEW YORK -- A real estate slowdown that began in a handful of U.S. cities this summer has spread to almost every hot housing market in the country, including New York.

More sellers are putting homes on the market, houses are selling less quickly and prices are no longer rising as rapidly as they were in the spring, according to brokers and local data.

In Manhattan, the average sales price fell almost 13 percent in the third quarter from the second quarter, according to a report by Miller Samuel, an appraisal firm, and Prudential Douglas Elliman, a real estate firm. The amount of time it took to sell a home was also up 30.4 percent over the same period.

In another sign that the housing market might have reached a peak, executives at big home builders have sold almost $1 billion worth of company stock this year.

Outside Washington, in Fairfax County, Virginia, the number of homes on the market in August rose nearly 50 percent from August 2004. In the Boston suburb of Brookline, where many three-bedroom houses cost $1 million or more, the inventory of homes for sale has increased in just the last few weeks, said Chobee Hoy, a broker there.

For-sale listings have also swelled throughout California, according to the California Association of Realtors. In the San Francisco Bay area, they have increased 16 percent in the last year, Coldwell Banker Residential Brokerage said. "We are seeing a market in transition," said Leslie Appleton-Young, the association's chief economist.

Brokers said that some houses seemed to be on the market longer because sellers priced them too high, assuming that their value was still rising sharply. In other cases, people who otherwise would have waited a year or two to sell their homes -- like empty nesters ready to move into smaller quarters -- had listed them now out of fear that prices would soon fall.

The question remains whether this represents a momentary cooling off of some overheated housing markets, or if it presages a more pronounced downturn that would end a decade-long boom.

Some economists and commentators have for years predicted the bursting of a real estate bubble, and previous slowdowns have turned out to be relatively brief pauses before prices started accelerating again.

But with mortgage rates now rising and house prices in some areas out of reach for many families, brokers and analysts said they thought that this slowdown could be the real thing.

For now, the change remains a far cry from the bursting bubble that some have predicted.

In Massachusetts, for example, the median house price remained flat from July to August, and the median condominium price fell only slightly, according to the realtors' association there. At the start of the year, prices had been rising at an annual rate of more than 15 percent.

If anything, some brokers said, the recent slowdown meant a return to a healthier, more sustainable market. The cooling off has forced both sellers and real estate agents to begin changing their attitudes about residential property.

In Manhattan, the average sales price of co-op and condominium apartments fell 12.7 percent, to $1.15 million, in the three months that ended on Sept. 30 compared with the second quarter, according to the Prudential Douglas Elliman report. The median sales price, which means half of homes sold for more and half for less, fell 3.2 percent, to $750,000. Still, the average sales price was 10 percent higher this summer than it was a year earlier, the study said.

Nationally, housing prices rose at the fastest rates since 1979 in the 12 months through August, the National Association of Realtors said last week.

But the changes that real estate agents have seen in recent weeks -- increased inventories and longer sales times -- have often preceded market slowdowns in the past.

Indications of a slowdown have appeared before. Jonathan Miller, president of Miller Samuel, said the last time that average and median sales prices dropped below those the previous quarter at the same time that inventories and sales duration rose in Manhattan was in the fourth quarter of 2002. But by the end of 2003, the market had come back.

An important difference now, though, is that mortgage rates are creeping up, whereas previous comebacks have been fueled by ever-lower rates.

On five-year adjustable-rate mortgages -- a popular loan with a fixed interest rate for the first five years -- the initial rate has risen to 5.59 percent on average, from 5.14 percent in June, according to BankRate.com.

Also, some mortgage lenders have started to tighten credit standards, making it harder for buyers to get loans.

"Low interest rates and easy credit standards are just about over," said Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.