Breakneck. That’s the best way to describe the pace of the 2021 housing market. The bidding wars got so intense this year that home price growth set an all-time record.

But the tide is turning.

The rush of buyers into the housing market during the pandemic absolutely crushed housing inventory—the number of homes on the market—with that figure falling for 12 consecutive months. By April, housing inventory was down a staggering 53% from a year earlier. However, the trajectory has flipped: For two straight months the number of homes for sale has gone up. Homes listing on realtor.com rose 3% in May, then again by 9% in June. That’s not all: We learned last week that new home sales are falling—their pace in June was the slowest since the onset of the pandemic. Every indication is that the market is shifting a bit in buyers’ favor.

Why the sudden cooling? Home shoppers are finally showing some reluctance to pay top dollar.

“The…

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