In the latest indication of how weakness in the high end of the US housing market is beginning to seep into the lower rungs, growth in US home prices slowed in December as sales slumped, marking the smallest annual increase since 2012 - the end of the last housing crash, according to Bloomberg.

The median US home price rose 1.2% to $289,800 in December, the slowest monthly pace since March 2012, when the housing market was just beginning to climb out of the hole left by the collapse. Meanwhile, sales dropped by 11%, the biggest drop for any one month since 2016, according to a report released by real estate company Redfin said. This follows a drop in the hottest markets, like San Jose, California, where prices dropped 7.3%.

As BBG explains, the housing market is softening after years of rapidly rising prices as the shortage in homes is beginning to wane. With interest rates on the rise, mortgages are becoming more expensive, which is cutting in to demand.

The property market, which was surging for years as buyers fought for a limited supply of homes, is softening as inventories start to increase and buyers take more time. The jump in mortgage rates last year added to housing’s underlying affordability problem, putting an end to the era of rampant bidding wars.

Though, as one realtor put it, the cooling is expected after so many consecutive years of torrid growth (particularly since home-price appreciation has so dramatically outpaced wage growth).

"It was like hitting the brakes when you’re going over the speed limit," Redfin Chief Economist Daryl Fairweather said of the slowdown. "You can’t have prices growing faster than wages year after year."

But one question left open is whether the recent retreat in interest rates will swiftly translate into a rebound in purchases. If that happens, then buyers will know that interest rates are the biggest factor here. If not, that could be a signal that the worsening student debt crisis is finally taking its toll.