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Is a chill in the air now being felt in the luxury housing market too? Luxury home prices saw their smallest increases in nearly two years. And those in the luxury market are now blaming a culprit familiar to other sectors of the market for slowing sales and prices: higher mortgage rates. This week, luxury homebuilder Toll Brothers reported a 13 percent drop from last year in the number of signed contracts for homes in the fiscal fourth quarter, along with a 9 percent cancellation rate. The average sales price of a Toll Brothers home in the fourth quarter was $906,000, compared to the national average home price of $294,000. “In November, we saw the market soften further, which we attribute to the cumulative impact of rising interest rates and the effect on buyer sentiment of well-publicized reports of a housing slowdown,” Douglas Yearley Jr., Toll Brothers’ CEO, said in a statement. The luxury market has felt immune to the housing slowdown since buyers in that category tend to be less sensitive to changes in mortgage rates. But now the sector is starting to acknowledge that the slowdown is occurring across the housing market, Peter Boockvar, chief investment officer with Bleakley Advisory Group, told CNBC. Luxury home prices increased 3.2 percent annually in the third quarter of this year, reaching an average of $1.7 million, according to the real estate brokerage Redfin. That marks the lowest increase since the end of 2016. (Redfin defines the luxury sector as the top 5 percent of values in a local market.) Redfin’s Chief Economist Darly Fairweather says a decline in high-growth stocks—called the FANG tech stocks—is curtailing sales. “This impacts the belief that the overall economy will grow,” Fairweather told CNBC. In markets where homes are the most expensive, sales are weakening significantly, notably in California, according to Yearley. “California has seen the biggest decline,” he says. “Significant price appreciation over the past few years, fewer foreign buyers in certain communities, and the impact of rising interest rates all contributed to this slowdown.”