Bloomberg reports on the housing bubble in the US. "Sales of new homes fell 10.5 percent in February, the biggest drop since 1995, and sales of existing homes slipped in five of the last six months, leaving a record 3 million unsold houses on the market. Sales will fall further this year and price gains will slow, predicts the NAR."

"Signs of the cooling market aren't hard to find on Bradford Street in Boston's South End, where Victorian townhouses are listed for as much as $4.5 million. 'Last year, houses were snapped up as soon as they were put on the market, so you never even saw a sign,' says Kenneth Kinna, who owns a 10-room townhouse in the neighborhood. Now there are three 'For Sale' signs on his block."

"The trend is most pronounced in affluent neighborhoods in the Northeast . Maryam Safai's 5,000-square-foot, five-bedroom colonial in Mahwah, New Jersey, has been on the market for a year, even after three reductions in asking price. 'I'm not going to give in to the market,' says Safai, 44, a dentist. 'I'm not selling below our current asking price' of $1.69 million."

"Buyers of houses in the $1 million to $4 million range are 'particularly sensitive to interest rates because the monthly payments on houses in that range are substantial,' says Anthony Hsieh, CEO of LendingTree.com. While damping price growth the most at the high end of the market and in the Northeast, rising rates have also reduced demand for riskier forms of financing and begun a shift of power from sellers back to buyers, economists and brokers say."

"In Montgomery County, which includes the affluent Washington suburbs of Bethesda and Potomac, unsold homes were on the market an average 58 days in February, compared with 37 days a year earlier, according to Metropolitan Regional Information Systems Inc. The 3,030 homes for sale in the county in February were almost triple the 1,190 listed a year earlier."

"Partly as a result of the Fed's 15 consecutive increases in interest rates, adjustable-rate and interest-only loans, closely tied to short-term rates, are on the decline. Such loans were popular with buyers trying to stretch their dollars and with speculators seeking to minimize the cost of buying property for short-term profit."

"'That's probably a good thing,' says former Fed Governor Edward Gramlich, who left the Fed in August. 'When you raise rates, and we knew what we were doing, one of the consequences is fewer people getting involved in riskier short-term mortgage products,' says Gramlich."

"Buyers are looking for more than peace of mind. They're looking for a deal. 'It's switched to a buyer's market,' says Karen McCormack, (broker) in Boston's Jamaica Plain neighborhood. 'Homes are still selling, but the buyers have much more say in prices this year.' On a Boston street, lined with a dozen 'For Sale' signs, McCormack is trying to sell a three-bedroom house listed at $535,000. She's holding 'commuter hours' open houses on Monday nights to lure would-be buyers on their way home from work."

"'When the market was hot, we never would have had to do this,' she says."