The U.S. housing market has peaked and a slowdown appears underway after a five-year rally that toppled all construction and sales records and sent home prices soaring, economists said Thursday.

A string of new economic data from the government and private sector show rising interest rates tugged the reins on housing activity in October and the first part of November.

The Commerce Department said Thursday both home construction and permits for future building tumbled last month while an industry group said mortgage applications slid last week as rising interest rates dampened home buyers' demand.

Those reports follow a host of data over the past month indicating an increase in the supply of homes for sale, waning demand and some falling prices.

Add to that growing anecdotal evidence that homes are staying on the market longer and buyers are bidding below sellers' asking prices, and it cements an impression that the long-anticipated cooling has begun.

"All of that suggests this is now a buyers' market," said Nariman Behravesh, chief economist at Global Insight. "It is a big change from a year ago."

Mortgage rates are the main force behind this.

Until recently, long-term lending rates held onto historic lows, largely ignoring the U.S. Federal Reserve's 12 increases in short-term borrowing costs.

But starting in September, the average 30-year fixed-rate mortgage, the industry benchmark, started a steady climb. Mortgage finance giant Freddie Mac (FRE) Thursday said the 30-year mortgage averaged 6.37 percent in the latest week -- the highest since September 2003.

"The level of housing activity remains quite solid but we just might be seeing the end of the boom," said Joel Naroff, president and chief economist at Naroff Economic Advisors Inc.

Economists and housing market analysts have been warning of a moderation for months, saying the huge price gains in many markets were simply unsustainable.

Fed Chairman Alan Greenspan, too, has warned of "frothy" local markets and homebuyers' expanding use of risky "exotic" mortgages to afford houses in pricey areas.

Low mortgage rates have fueled double-digit price growth in many metropolitan areas, especially along the U.S. coasts.

In California, for example, prices jumped 25 percent over the past year and nearly 110 percent over five years, according to government data. Florida, Nevada and Hawaii all posted price gains of more than 90 percent over five years.

On average, overall U.S. home prices have risen more than 13 percent over the past year and 53 percent over five years.

But as mortgage prices rise, buying will slow and air will come out of some local bubbles, economists say.

Nationally, prices should flatten out over the next one to two years, according to some analysts' predictions. But they could head lower in some of the hottest areas of California, Florida and the Northeast.

"It's not like it's going to be a lousy market for housing next year," said Frank Nothaft, chief economist at Freddie Mac. "It will just be normal as opposed to these abnormal levels we've seen these last couple years."

Softening in the housing market will have a spillover effect on the broad economy and is likely to play a major role in an expected slide in consumer spending in the months ahead.

Real personal consumption expenditures -- about 70 percent of gross domestic product -- are forecast to grow just 2.8 percent next year, slower than this year's 3.5 percent and the smallest increase since 2002, according to the Blue Chip survey of more than 50 top forecasters.