There are early signs of a cooldown in some of the hottest corners of the U.S. housing market, Redfin said in a report on Friday, a fresh indication that high house prices and rising mortgage rates are cutting into homebuyer demand.

Google Searches Down

Among those early tells, according to Redfin: Google searches for "homes for sale" dropped by double digits in Baltimore, Boston, San Francisco and Los Angeles in the second week of March from a year earlier; tours of homes for sale in California were down 21% as of March 31 from the first week of 2022, data from ShowingTime shows; Redfin agents in San Francisco, Los Angeles, Washington D.C., Boston and Seattle reported a drop in requests for homebuying help at the start of this year compared with last year, even as requests nationwide surged; and agents in California say they are seeing fewer offers on each home than previously.

Home prices nationwide have risen about 35% in the two years since the COVID-19 pandemic slammed the nation and the Federal Reserve slashed short-term interest rates to near zero, the Zillow Home Value Index shows.

The Fed last month began raising its policy rate to bring down decades-high inflation as the economy reopened, and longer-term borrowing costs have climbed swiftly in anticipation of more aggressive rate hikes ahead.

The average interest rate on a 30-year-fixed mortgage, the most popular U.S. home loan, rose last week to 4.9%, a fresh three year high, data from the Mortgage Bankers Association (MBA) showed this week.

Homes Grabbed Up Within a Week

The U.S. housing market is still hot, however, even in cooling California cities. The average home in Los Angeles, for instance, is sold for 5% over its asking price, with a record share selling within a week of listing, Redfin said.

But the signs are there already, the report said, of a price slowdown in coming months.