Is this the news homebuyers have finally been looking for? In June, annual home price growth saw “the slowest one-month slowdown since at least the early 1970s,” according to mortgage data and analytics firm Black Knight. What’s more, this was coupled with the highest one-month sales inventory flow in 12 years, the firm said in a statement released on Aug. 1 about its latest Mortgage Monitor report.

The report shows that June was the third straight month of cooling, with annual home price appreciation falling from 19.3% in May to 17.3% in June; This is the year That’s a significant drop from 2006. (for a report released in late July.) In fact, all 50 major metro markets saw growth slow in June, while one in four major U.S. markets grew by 3 percentage points or more.

But why do we see this cooling off? Holden Lewis, a home and mortgage expert at NerdWallet, said mortgage rates are much higher than they were at the beginning of the year, forcing buyers to buy lower-priced homes to make monthly payments. “When people buy less expensive property, they drag down the rate of house price growth. The main lesson of this winter is the importance of setting a reasonable asking price,” says Lewis.

Moreover, Zillow economist Nicole Bachaud says the housing market is in a major transition. “Buyers have hit the ceiling on affordability and demand is pulling back, causing homes to consolidate on the market as sales slow. Home sellers are being forced to adjust their expectations, and many are opting to stay out of the market and wait for favorable interest rates,” says Bachad.

To cheer home buyers and cheer home sellers, Bankrate’s chief financial analyst Greg McBride says this is not the housing market it was a few months ago. “Sellers don’t get the moonshot prices they expect, it takes a long time to sell and there’s no bidding war. While buyers now have more bargaining power, mortgage rates remain above 5% and house prices are still high,” says McBride.

While headline-grabbing activity is to be expected during this transition, Bachaud said it’s important to remember how much prices have risen over the past decade, not just during the pandemic. “We’re talking about small dips from record highs. It’s highly unlikely to fall to pre-pandemic levels as overall housing supply remains constrained and demand remains on the sidelines,” says Bachaud. Ultimately, she says, this much-needed market rebalancing could help some first-time buyers catch up. , homeowners also retain much of the equity they have built up over the years.

Nationally, the housing market hit the reset button in June, with 30-year mortgage rates briefly rising to 6 percent. “Some buyers have pulled out of the market to reassess their price range. If rates stabilize between 5% and 6%, we will see an unseasonal increase in home buying in the fall as buyers who were put off by the summer return to the market,” says Wood.