NEW YORK (CNN/Money) -
The pace of home sales are slowing and sellers are finding a harder time getting their asking price for homes, according to a published report.
The Wall Street Journal, reporting on the results of a survey of real estate brokers as well as comments from brokers and real estate economists, reported Tuesday that there are numerous signs of a slowdown in what has been a white-hot home market.
The newspaper reported that a survey of top brokerage firms by real-estate consulting firm Real Trends found of home-purchase contracts signed last month dropped 8 percent from a year earlier at 48 of those firms.
Those declines are widespread, according to the report, with home-purchase contracts down 14 percent along the West Coast, off 7 percent in the Northeast and 8 percent in the Mid-Atlantic states. Meanwhile, contracts were off only 1.5 percent in the Southeast, and contracts edged up 1 percent in the Southwest.
The slowing of housing contracts is caused by rising mortgage rates and energy prices, according to the report, as well as numerous articles speculating that there is a "bubble" in housing prices due to recent gains that may be about to burst. The paper quotes real estate brokers as saying that buyers are not as willing to get into a bidding war for a house they want as they were a few months ago.
The Journal reports all those factors have caused the supply of homes on the markets to swell in many markets and could cause prices to fall in some markets in the next year, according to brokers quoted by the paper.
"There's a newfound sense of urgency among sellers to get out while the getting is good," David D'Ausilio, operating partner of Keller Williams CT Realty in Monroe, Conn., told the paper. He said that the supply of homes there is up 14 percent from a year ago and he forecasts that prices will fall 5 to 10 percent in his area during the next 12 months.
Greg Rand, managing partner of Prudential Rand Realty in White Plains, N.Y., told the paper he expects prices there to fall about 3 percent next year. And Robert Griswold, owner of Griswold Real Estate Management in San Diego, tells the paper that fliers offering condo buyers a car were being handed out at a recent Rolling Stones concert.
"The market has definitely turned," he said. "When you see that kind of advertising and promotion, they are clearly getting desperate."
The paper said that economists from housing trade groups are less concerned about a decline in housing prices nationwide, but they too tell the paper that the housing market seems to have topped out.
"The air is coming out of the balloons," David Lereah, chief economist at the National Association of Realtors, told the paper. Still he told the paper he predicts that median home prices will rise about 5 percent nationwide in 2006 after leaping 12 percent over the last 12 months. In September, the national median price, the point at which half the homes sold for more and half sold for less, stood at $212,000, according to the group's figures.
Doug Duncan, chief economist of the Mortgage Bankers Association, told the paper that strong sales so far this year should lift sales of new and existing homes to a record high of 8.3 million homes in 2005, up 4 percent from 2004, which would mark the fourth straight record sales year. But he told the paper sales are expected to decline 3.5 percent next year.
"We believe the market has peaked," he told the paper.
Appreciation in housing prices has been a major force lifting consumer spending and the spurring economic activity, as home owners borrowed against equity in their homes to make purchases. It has also helped to spur new home construction.
A slowdown in home-price appreciation would therefore probably be another factor slowing economic growth, and the Journal reports it could encourage the Federal Reserve to stop raising interest rates. However, absent a significant decline in prices, the Fed would be unlikely to cut rates to cushion housing, according to the report.
Ben Bernanke, the nominee to be the new Fed chairman, said last month that "a moderate cooling in the housing market, should one occur, would not be inconsistent with the economy continuing to grow at or near" its long-term trend next year. He may face additional questions about his view on the housing market during his confirmation hearing Tuesday.