Despite some dire-sounding reports of people falling out of contracts around the country, suggesting a major slowdown in housing sales, NAR says that home prices in numerous metropolitan areas are still showing double-digit appreciation.
In December, the association's fourth-quarter metro area single-family home price report, covering 145 metropolitan statistical areas, shows a record 72 areas with double-digit annual increases in median existing single-family home prices and only six areas posting price declines. The previous record for areas showing double-digit price appreciation was 69 metros in the third quarter of 2004.
The national median existing single-family home price was $213,000 in the fourth quarter, up 13.6 percent from a year earlier when the median price was $187,500. That's a little over one percent less than the annual rate of home-price appreciation in the third quarter, 4.7 percent.
In the fourth quarter, the national median existing condo price was $228,200, which is 12.3 percent higher than a year ago. In all, 27 areas showed double-digit annual gains in the median condo price; there were seven areas with declines.
David Lereah, NAR's chief economist, said the modest dip in appreciation is an early sign of a market adjustment. "Although home sales have eased, the tremendous momentum in price appreciation was sustained in the fourth quarter because tight inventories still favored sellers," he said. "The good news is that the supply of homes on the market has been trending up and we are entering a period of a more normal balance in supply and demand."
Yet, signs a cooling market are there, but not across the country.
The NAR also said that sales of existing homes should slide about 4.7 percent to 6.74 million unites, down from a record 7.07 million in 2005. Construction of new homes will also tumble to 9.3 percent from the 2.06 million homes started in 2005.
New home luxury giant Toll Brothers has already slashed its sales forecast, and KB Homes told the press that fallout rates were up in December.
Cendant's NRT brand is also noticing changes in the New England, Florida and California markets where the company-owned brokerages have a large presence. Cancel rates of open contracts spiked in some speculation-driven markets by as much as 30 percent in December, with volume in real estate transaction sides dropping about 19 percent in the fourth quarter. Yet transaction sides in other NRT market segments were up enough to give the company about a 4 percent improvement in closing rates.
"New construction is less than 10 percent of the market, but it's a good indicator of how people feel about their jobs, mortgage obligations," says Richard Smith, chief executive of Cendant Real Estate Services."You started seeing some indication of a slowdown about midway through the fourth quarter. The builders were still positive, saying 2006 will be the best year, yet, but that changed. Now they are taking their forecasts down. Our forecast doesn't include a dramatic slowdown, but anytime you see a change in the markets you have to pay attention to what's going on."
Smith points out, "Nothing indicates its a long-term trend, but you have to consider the crushing influence the media has on buyers and sellers. Local papers talk about a housing bubble, but nothing has significantly changed over the past few years. We believe there is enough hype that buyer sand sellers are becoming cautious, but sooner or later, they have to go on with their lives and ask themselves, "Do I pay attention to media or what I see in front of me?" That said, adjustments to any market could take weeks or months, if they've been conditioned to be negative, they may realize the media doesn't know what it's talking about."
"We've been through this every year for the last five years -- we forecasted that each year would be the second best year and we broke records every year, but this could be the year it's actually true." 
