By Ann Saphir

(Reuters) – There is a cooling down in the hottest areas of the U.S. home market. Redfin According to NASDAQ:, Friday’s report shows that rising mortgage rates and high house prices are reducing homebuyer demand.

Redfin reports that Google (NASDAQ) search for “homes to sell” declined by double-digits in Baltimore. Also, California home tours fell 21% in the week ending March 31st from the previous year. Data from ShowingTime also shows that there was a decrease in California homebuyer inquiries as of March 31, despite nationwide demand for help. Redfin agents reported seeing less offers for each property than last year.

National home prices rose by approximately 35% over the past two years after the COVID-19 pandemic devastated the nation. The Federal Reserve also reduced short-term rates to close to zero in response, as the Zillow Home Value Index reveals.

Last month, the Fed raised its policy rate in an effort to lower decades-high inflation. Long-term borrowing costs have increased quickly as a result of anticipation for more aggressive rate increases.

Last week, the average interest rate on the popular U.S. mortgage loan was 4.9%. That’s a three-year record, according to the Mortgage Bankers Association (MBA).

The U.S. housing markets are still very hot, even though they are located in cooler areas of California. Redfin stated that an average Los Angeles property sells for 5.5% above its asking price. The record selling share was achieved within the first week.

The report stated that there are already signs of a slowdown in prices over the next few months.