A report from the Star Tribune in Minnesota. "The Twin Cities housing market, after one of the most frenetic summers on record, is beginning to cool. Home sales are down from a year ago, more sellers are cutting their asking price and mortgage rates are climbing."

"Aaron Terrazas, a senior economist at Zillow, said that although the economy is strong, rising rates can cause a psychological chill. 'People have been receiving news of a looming slowdown,' Terrazas said. 'They’re starting to take that into account, and they’re being more conservative in their bidding than a year ago.'"

"'Buyers are weary,' said William Huffman, a sales agent with Re/Max Results in Minneapolis. 'They’re sick of hearing that it’s a sellers’ market.'"

"Given the rapidly changing nature of the market, Huffman and other agents are warning sellers that buyers are on the defensive. He’s now including a clause in some listing agreements that asks sellers to approve an automatic price reduction if the house doesn’t sell in 10 to 14 days."

"He used that strategy with Kayla and Matt Dutton, who listed their house in Otsego right before Labor Day. They had numerous friends and family members who sold their houses earlier in the spring who had multiple offers, so they were optimistic when Huffman initially listed the house at $300,000. But when it didn’t sell within a week, they started to get nervous."

"Then a $10,000 price reduction triggered multiple bids. 'We decided to swallow our pride and discount it a small amount to attract more buyers,' Kayla Dutton said. 'It’s still a great sellers’ market, but not as hot as it was a short while ago.'"

"Data from MAAR show that so far this year about a quarter of all homes that sold through a Realtor in the 13-county metro had a price reduction, a steep increase from this summer."

"The bulk of the discounts are on the most expensive houses in the Twin Cities, according to Zillow. Among the top one-third most-expensive listings, one in five sellers offered a discount — nearly twice as many as the bottom one-third of all listings."

"Those price reductions tended to be most common in third-ring suburbs that were developed in the 1980s and 1990s and are flush with big houses that need updating. In Chanhassen and Maple Grove, for example, price cuts were being offered on nearly one in four listings."

"More houses are also starting to come on the market. During the last week of September there was a 15 percent increase in new listings compared with last year, according to MAAR."

"Nancy Yang, a broker associate in Woodbury, says many buyers already believe homes are overpriced, so she’s advising sellers to make price adjustments ahead of what she expects to be a shift in the market."

"'It’s been primarily a sellers’ market the last two years,' she said. 'Our buyers were getting frustrated and tired of losing their dream homes over the frenzy of multiple offers. They decided to rent instead and wait for prices to stabilize.'"

From KARE 11. "One percent in one year. The jump in mortgage rates to just over 5 percent might not seem like much, especially for those who recall paying 18 percent in the early 1980s."

"But the leap is a big one for first time homeowners, especially those already struggling to buy. Jessica Covell and her husband finally found a house in Coon Rapids last winter after losing two others to higher bids. Desperate to move from North Carolina, they paid $20,000 above the asking price, spending $80,000 more than they did just five years ago for a house nearby of a similar size."

"'It was very frustrating,' said Covell. 'That was our complete max. But even though our mortgage was more than what we wanted it to be, we love our house and we love the area we live in, so it was completely worth it.'"

"But new data from the Minnesota Association of Realtors suggests for many buyers that may not be an option. While Twin Cities inventory is still low, the last six months have seen a rise in new listings, which may shift local housing from a seller’s market to one that's more balanced."

"'Everything is an ecosystem,' said Long Doan, CEO of Realty Group."

"The report shows nearly 20 percent of Twin Cities homes listed above $300,000 have been reduced. Yet entry level homes costing less than that are still in high demand, and with rates now rising that could price new buyers out. The rate jump of just 1 percent could drive up the price of an entry level house $30,000 to $40,000."

"'They now have to worry about what they can offer,' said Doan. 'They can't be as aggressive.'"