Home prices are still sky-high, but the frenzied housing market is slowly coming down to Earth

After years of frenzy, the housing world is cooling off.

“Home listings are piling up as buyers step back from peak home shopping season faster than normal,” Zillow’s chief economist, Skylar Olsen, wrote in a monthly report published yesterday. “As competition cools, sellers are stepping up price cuts to try and entice buyers struggling with affordability.”

She continued: “A housing market that for years has been defined by fast sales and few options is starting to look more like it did before the pandemic in terms of competition among buyers and their negotiating power, if not costs.”

So while housing is nowhere near pre-pandemic affordability, it is less intense, and in some cases that can mean less costly. The total number of homes on the market is close to 23% more than last year, but of course, it’s 33% below pre-pandemic levels. So in June, there were roughly 1,155,000 homes listed for sale. Still, “that’s the smallest deficit” in almost four years, Olsen said. Homes are staying on the market longer, too, by about a few more days than last summer, according to Zillow.

And because competition isn’t so fierce, in that there are fewer bidding wars and homes selling way above asking, sellers are slashing prices. Almost a fourth of listings saw a price cut last month; that’s the highest rate in roughly six years for the season. “While sellers still have a slight edge nationally, Zillow’s market heat index shows a balanced market may be just over the horizon,” Olsen wrote. “Competition is easing fastest in the South—all major Southern markets are either neutral or buyer-friendly, with the exception of Dallas and Raleigh.”

Still, buying a home isn’t cheap, and is a far cry from what it was four years ago. Median-income households can only afford mortgage payments on a typical home in nine of 50 metropolitan areas, and it’s gotten to the point where a 20% down payment is barely enough. Last month, the typical home value was 3.2% higher than a year before; the typical mortgage payment is 6% higher than last year, and it has increased 112.5% since the pandemic. However, home price inflation has slowed on a monthly and annual basis.

There are even four major metropolitan areas where home values have dropped from a year ago—New Orleans, Austin, San Antonio, and Birmingham, per Zillow—but that means they’re up in the other 46 metros.

And mortgage rates have fallen, giving some buyers more purchasing power (the average 30-year fixed daily mortgage rate is 6.83%). For its part, Capital Economics expects “mortgage rates to continue falling, but not by enough to fully offset the effects of mortgage rate ‘lock-in,’” the research firm’s economist, Thomas Ryan, wrote in an analysis published yesterday. Essentially, he doesn’t see a wave of sellers crashing into the market, at least not in the near future.

“Nevertheless, home listings have crept up this year and we expect that trend to continue given the degree of pent-up selling demand,” he wrote. “Rising supply will slowly erode seller power, with house price growth slowing,” further into next year and the year after. All the while, he sees mortgage rates falling to 6% roughly two years from now. But existing home sales are still depressed, and Capital Economics sees them remaining muted throughout the next two years.

It seems the housing world is “slowly moving towards balance,” as Capital Economics put it. It’s better, all things considered, but it isn’t a reversal of the fastest deterioration in affordability housing has ever seen.

This story was originally featured on Fortune.com