August 12, 2005, Wall Street Journal — Signs of a possible peak are appearing, perhaps in part a reaction to widely publicized warnings from Federal Reserve Chairman Alan Greenspan about “froth” in the housing market and a torrent of media reports about the “housing bubble.” “We’re beginning to see that the housing market is cooling a little bit,” says Mark Vitner, senior economist at Wachovia Bank in Charlotte, N.C…If the sales rate slows, the inventory would start to look more plentiful. “We’re hearing from some really big Realtors that there is a little slowing [in the housing market] this month,” says David Lereah, the chief economist for the Realtors’ association.

If mortgage interest rates keep rising, as they have recently, home sales will slow, says Mr. Lereah. “Many times I have said housing has peaked, and I was wrong,” he says. “Still, I think we’ve peaked and we will come down a little bit.”

Meanwhile, builders have been putting up new homes at a breathtaking pace. New homes that either were completed or under construction totaled 354,000 in June, up from 320,000 a year before, according to the Census Bureau. So far, many home builders say they can’t keep up with demand and aren’t worried about inventory levels. While they note that orders for new homes are soft in a few markets, such as Denver, South Carolina and the Washington area, there’s continued strength in San Francisco, Las Vegas, Phoenix and South Florida. But, warns Ivy Zelman, a housing analyst at Credit Suisse First Boston in New York, “If the music stops and the sales rate declines, then you’re going to have a lot more supply” of new homes on the market.

Rise in Supply of Homes [Wall Street Journal]