The increase in home prices slowed in February across some of the hottest cities like San Francisco, Los Angeles, and Seattle. Home prices in most major US cities are growing at a steady pace — the last time prices have advanced this slow was 2015.

Tuesday’s Case-Shiller Index’s 20-City composite posted a 3.6% year-over-year gain in January, down from the 4.1% reported in December. Nationally, gains have fallen to 4.3%, down from 4.6% in December.

Housing prices are continuing to cool for a myriad of reasons, including a shift toward more affordable areas and the motivation to rent in areas that are producing new jobs in high paying industries.

The U.S. has had several long cycles in which the housing market stalled in the last two to three years. Higher interest rates and slow wage growth have been two factors that have brought down the demand to buy, especially since home prices inflated from -0.37% in 2010 to 1.32% in 2011.

Wages compared to housing costs from 2011 to 2018

“In the second half of 2018, we saw the housing market slow down and primarily that was a result of higher mortgage rates and home prices going up a little bit too quickly when you look at them against the amount wages were rising,” Charlie Dougherty, an economist with Wells Fargo Securities Economics Group, said in an interview.

In a few coastal areas like San Francisco, Seattle, and even New York City, the supply is beginning to catch up with demand slightly reducing the competitiveness of buyers. Also, not surprisingly people are shifting to more affordable areas and that’s also helping to curb the demand in areas where prices have heated up extremely fast.

Areas like Denver, Dallas and Charlotte were three of the five areas that saw an increase in percent change from December 2018 to January 2019, signaling an increase of demand in these areas. These areas that are attracting growing industries and creating the potential for wage gains.

Denver lost its bid to become home to Amazon’s second headquarters, but it’s in the midst of a tech expansion. Businesses like Ordermark, Udemy, and Slack Technologies have expanded to Denver in early 2019 — Slack receiving an offer for nearly $11 million over eight years in job growth tax incentives. The tech in Dallas and Charlotte are growing as well.

In the coastal areas and major cities renting is more common than homeownership. Manhattan is a prime example where that’s the case. Case-Shiller does not include rent in its report and people who move to areas like Manhattan or the Bay Area of California because of their strong job growth and innovations in industries like tech and energy often rent.

This seems to be demographically driven as young professionals leaving college are more likely to move around rather than people who are established in their careers.

“Most college students are more inclined to rent because they are temporarily in a specific area for school. On the other hand, most individuals and couples who are well into their careers would prefer to purchase a home so that they can grow their families,” said Amoura Barnes a real estate agent with United Realty Group.

An increase in renting has contributed to the decline in home ownership and the lack of sales is driving mortgage rates down, which is a pretty good incentive to buy coupled with the recent increase in wages — which have been mostly static over the last 10 years.

Prices cooling in New York City has been less dramatic, however, and unlikely to deviate much from the current trend. The increase in housing inventory on the coasts had made buying a home there slightly bearable as the prices increase are slowing.

“Lower mortgage rates mean buyers who may have been pushed to the brink of affordability are more able to buy a home and may want to do so before rates rise again,” said Speakman “They could also encourage homeowners who decided not to sell their homes, who would then need to buy a new home at with a higher interest rate, to sell, freeing up more inventory for today’s buyers.”

While house prices remain high, mortgage rates are getting lower and wages are rising.

“Below market interest rates and increased income can make purchasing more affordable for middle-class families, said Barnes”

All in all the housing market seems to be evening out with the hottest markets cooling. The market is evening out and it’s a good sign that another collapse isn’t on the horizon.