I think that’s half the story. Sales are still high, and that has pulled more homes on the market from people cashing out, figuring that prices or at their peek.
One could also argue that the increase in new home sales is the result of the big building companies dumping in anticipation of price decreases. I am not sure that volume numbers can be interpreted as positive or negative for the market without other evidence.
In the long term, if housing prices continue to rise at a much higher pace than after-tax incomes, then it seems that the marginal buyer will be priced out of the market, which doesn't bode well for further housing price increases.