The Bay Area's frenzied housing market, marked by soaring prices, short supply and a scramble for homes, is showing signs of cooling.

Some buyers, fearful of a new bubble or worried about higher interest rates, are putting their plans on hold, while new listings of homes for sale have been increasing since March, which should put the brakes on spiraling prices.

"It's a welcome break in the trend, even if it ultimately means prices start to cool off a bit too," said ZipRealty CEO and President Lanny Baker.

Real estate agents in Silicon Valley, where homes have commanded offers hundreds of thousands of dollars over asking price, say bidding is less frenzied than a few months ago, although it's still one of the hottest markets in the country with a median of 10 days to sell a home.

"Some buyers are seeing that the market is so crazy they are stopping and catching their breath," said Mark Wong of Alain Pinel Realtors in Saratoga.

"I'd call it a little calming of the bubble," said Kerry McCarty of ZipRealty in Santa Clara.

Masa Shiohira and his wife, Jaime Abdilla, are among the Bay Area buyers who have hit the pause button. Concerned about a possible housing bubble, they have stopped looking and plan to rent for a while.

They're selling their home in Montclair and a condominium in Foster City and putting the money aside for a year or two. They bought at the top of the market in 2006-07, and while they aren't short selling, they are losing a little money on the sales.


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"We're seeing something very similar to the situation we got burned in six years ago," Shiohira said. "I'd rather see what's happening first, and take my time."

For now they'll rent a house in Hayward halfway between her job as a teacher in Belmont and his as a lawyer in Alameda.

"We don't know if we're making a good move or not," Shiohira said, "but we want to operate in more measured way as opposed to getting caught up in a rush of people, competing for competing's sake."

Higher interest rates could also trim the ranks of eager buyers.

Brian and Denise Ballou are moving from New Mexico to Morgan Hill to be close to their children and grandchildren. They locked in a 3.125 percent rate for a loan on a $795,000 home two weeks ago.

"At 4.5 percent, which I guess is what the rate is right now, it would probably be a deal-breaker," Brian Ballou said.

Average rates for a 30-year fixed mortgage remained above 4 percent for the second week in a row, according to a report by mortgage giant Freddie Mac on Wednesday. The average rate was 3.35 percent in May.

Also helping to cool off the frenzy is an increase in the number of desirable homes for sale in the middle to upper price range. As sellers face more competition from other sellers, prices should stabilize.

New listings are up 8 percent in San Mateo County from a year ago, up 5 percent in Santa Clara County, 6 percent in Contra Costa County and 3 percent in Alameda County, according to ZipRealty.

While the steep climb in median sales prices for single-family homes in the East Bay, Peninsula and South Bay has made some buyers nervous, it doesn't necessarily mean there's a bubble, said Robin Dickson, president of the Contra Costa Association of Realtors.

"Clients say they are just not going to buy at the top of market, but really, how do you know this is the top of market?" Dickson said.

Investors are said to be a driving force behind the rise in sales prices, and they were still out in force in May, accounting for a quarter of all sales. But Glenn Polf of Diversified Ventures in San Ramon says it's harder to make deals work when prices rise too high.

At some price ranges, there's no sign of slowing demand.

The market for luxury homes is "red hot," according to Rick Turley, president of Coldwell Banker Residential Brokerage in the Bay Area.

Sales of East Bay homes for more than $1 million were up 58 percent in May from a year earlier, according to Coldwell Banker, citing Multiple Listing Service figures. Silicon Valley homes selling for more than $1.5 million were up 28 percent compared with a year ago, Turley said.

Contact Pete Carey at 408-920-5419 Follow him at Twitter.com/petecarey.