The U.S. housing market is showing signs of cooling after a year-long rally as higher prices and interest rates, a slowdown in investor purchases, and shortages of homes for sale weigh on one the sector. While few economists and industry watchers believe the housing recovery will stall, there is growing evidence that the exuberance that prompted bidding wars and led to double-digit price gains is easing.
Redfin, an online real-estate brokerage, said its agents had multiple bids on 61 percent of its homes in August, down from 76 percent in March. "It's clear there will be some moderation in demand," said Lawrence Yun, chief economist for the National Association of Realtors. He noted that the use of electronic "lockboxes" used by listing agents, an indicator of foot traffic at homes on the market, showed a "measurable decline" during August. Some closely watched measures of housing activity, including sales of previously owned homes, may not yet capture the full extent of any slowdown, in part because they measure sales that went under contract earlier in the summer when activity was still robust.