Wool prices eased back at this week's North Island sale, ending a sustained lift in the prices over recent months.
New Zealand Wool Services International reports that more than 90% of the 6500 bales sold.
But prices for all types of wool were up to 5% cheaper than last week's South Island sale.
Wool Services general manager John Dawson says the drop in New Zealand carpet wool prices was necessary because they were starting to get out of kilter with demand.
He says New Zealand wools were becoming uncompetitive against product from the UK and Europe.
"The question will be ... how long this downward movement will be. My gut feeling is that it won't be a large movement downwards," he said.
"The positive story is that there's a lot of people out there waiting to buy."
Mr Dawson said says cross-bred wool prices are still below the peak of three years ago, but are well above where they were a year ago.