Contracts to purchase homes in September fell 8 percent from a year earlier in the state, according to a California Association of Realtors index.

“The frenzy has died down,” Hepp said. “The question in the summer of this year was, ‘is this sustainable, or is this a bubble again?’ Now the data is showing that we’re returning to more of a traditional market.”

Rate Comfort

As would-be buyers get used to slightly higher rates, they may be returning to the market, said Donald Tomnitz, chief executive officer of D.R. Horton Inc., the largest U.S. homebuilder by revenue. While the Federal Reserve has pledged to a continuation of the bond buying responsible for keeping borrowing costs low, an improving economy is fueling speculation that the central bank would end the program soon.

Buyers are “beginning to become more comfortable with where rates are today,” Tomnitz said on his company’s earnings conference call this week, during which he said October sales were improved from prior months. “If you’re waiting for a better rate and a better house price, you’re going to wait and you’re going to find higher rates and higher house prices.”

Fewer properties are going under contract in Nevada and Arizona. In the Las Vegas area, the number of single-family home listings without accepted offers on them at the end of October, jumped 73 percent from a year earlier, according to the Greater Las Vegas Association of Realtors.

Institutional Buyers

Phoenix-area listings, not including those already under contract, were up 32 percent in October from a year earlier and the number of signed contracts to buy homes last month plunged by about a third, according to Arizona State’s Orr.

Demand slowed after institutional investors began withdrawing from the southern Nevada market a few months ago, said Dave Tina, president of the Greater Las Vegas Association of Realtors.

“We did a catch up from being as low as we were,” Tina said. “It created a positive mental outlook on the city and that’s what we needed. Now we’re going to see normal raises in prices, not the craziness of 32 percent.”