U.S. home prices continued to appreciate in July, but the growth pace dropped for the fifth consecutive month to a low that hasn’t been seen in almost two years, according to a Redfin report Friday.

Across the country, the median sales price reached $307,400 at the end of last month, increasing 5.3% annually. The growth rate was the slowest since September 2016, according to Redfin, a Seattle-based national brokerage.

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The cooldown was evident in some of the hottest markets, including Seattle; Portland, Oregon, and San Jose, California.

In Seattle, home prices grew 8% year-over-year, the lowest growth rate in 27 months. Portland registered a 4% annual price growth, the slowest in 41 months.

San Jose, with a 19.3% year-over-year price appreciation, had the highest growth of all the metro areas Redfin tracks. However, the double-digit growth rate was still the lowest in nine months.

These changes could signal that these markets are returning to a healthier, more balanced condition, Taylor Marr, a senior economist at Redfin, said in the report.

“The Bay Area, Seattle and Portland have been so competitive for so long that buyers and sellers have adjusted to those conditions,” he said. “After several years of shrinking inventory and unsustainable price growth, I’m encouraged by these changes.”

The slower price growth was accompanied with a surge in housing supply, resulting in more negotiation powers for buyers.

For the second month in a row, all three cities saw double-digit inventory growth, with San Jose increasing 28%, Seattle increasing 27%, and Portland 21.8%.

Nationwide, inventory was down 5.4% to 747,200 in July.  

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Other major findings include:

  • The number of residential sales across the country increased 4.1% year-over-year to 277,100
  • It took a median 35 days for a home to sell, three days faster than in July 2017
  • Grand Rapids, Michigan, was the fastest-moving market, with half of all homes pending sale in just eight days. Boston, Denver and Seattle were the next fastest markets with nine median days on market
  • The most competitive market was San Francisco, where 76.3% of homes sold above list price, followed by San Jose (71.7%)
  • 13 out of 73 metros saw sales surge by double digits from last year. Baltimore led the nation with a 55.1% jump