Here’s one more sign of cooling in Seattle’s hot housing market

Seattle’s housing market may feel red hot, but try telling that to home buyers in Phoenix, San Diego, Tampa and Dallas.

After months as the third-hottest housing market in the country, the Seattle area slipped to fifth place in a ranking of single-family home price growth released Tuesday. The ranking is one more indicator that a fall cooldown has arrived in the Puget Sound region, with prices leveling off, buyers facing fewer bidding wars, and sellers offering occasional price drops. 

Still, home prices here are up about 24% over last year, according to the S&P CoreLogic Case-Shiller Home Price Index. That’s a sharper uptick than in New York, Los Angeles, Portland and San Francisco, among other cities.

The index, which uses a three-month rolling average of home prices, reflects parts of King, Snohomish and Pierce counties. The measure lags by two months, so this week’s data reflects home sales through August.

For the 27th consecutive month, Phoenix topped the list, this time with a 33% year-over-year increase.

Nationally, home prices are up nearly 20% compared to last year. That’s roughly level with the increase in July, suggesting “that the growth in housing prices, while still very strong, may be beginning to decelerate,” said S&P Managing Director Craig Lazzara in a statement.

CoreLogic Deputy Chief Economist Selma Hepp called the figures a sign that “buyer fatigue is setting in, particularly among higher-priced homes.”

Housing markets all over the country heated up soon after the pandemic hit last year, driven by a combination of low interest rates attracting more buyers, potential sellers holding onto their homes thus limiting the number of houses for sale, and investors and millennials trying to get into the market. 

The spike in prices is making homeownership more difficult — and not just because of bidding wars. 

With rising prices, mortgage payments for new homebuyers are climbing, too. For buyers putting down a 5% down payment in the Seattle area, the median monthly mortgage payment last month was up 12% compared to a year earlier, according to Redfin.

As remote work has taken hold, local buyers have faced some of the stiffest competition outside major cities such as Seattle.

In King County, for example, median home prices in August were up 26% on the Eastside, 16% in Southwest King County and 18% in Southeast King County compared to 2020, according to separate data released earlier this month by the Northwest Multiple Listing Service.

In Seattle, the $850,000 median home price was up 4% over the same time in 2020. In Bellevue east of Interstate 405, the $1.3 million median home price last month was up 29% compared to a year earlier.

Areas of Snohomish and Pierce counties have become more competitive for home shoppers, said Zillow senior economist Jeff Tucker.

“Demand has surged in these cities thanks to the declining relevance of commute times, as more employees expect to only visit their offices occasionally, if ever, and are now feeling confident enough to buy a home based on that expectation,” Tucker said in a statement.