New home sales plummeting, home prices moderating, what's next?

"Sales of new homes plunged in November by the largest amount in nearly 12 years, providing the most dramatic evidence yet that the red hot housing market over the last five years is starting to cool down. The Commerce Department reported Friday that new single-family homes were sold at a seasonally adjusted annual rate of 1.245 million units last month, a drop of 11.3 percent from October, when sales had surged to an all-time high." (more)

Additionally, the Southern California housing market has slowed in both sales and in price appreciation. While some areas of Southern California are still fairly hot, other areas have cooled considerably. In many areas around Los Angeles home after home that is listed for sale sits longer and longer. Eventually, many are lowering prices and still those homes are not moving.

If mortgage rates remain at their current levels, it seems the real estate market while continue to slow and prices will continue to moderate. Of course, some of this stagnation in the market is just due to the season. Winter always slows real estate sales, but just winter alone - it seems - cannot account for all the slowing.

While mortgage rates have moderated, what would happen if they went up a point?

The signs that we've reached the top of the market appear obvious, but little in real estate is ever obvious.

More on real estate.