Home prices are softening in most markets across the nation.

Yet home prices are still higher compared with a year ago, and it’s unlikely they will fall too steeply.

The sharp rise in mortgage rates over the past several months has made housing more expensive for anyone needing a loan. While that has some buyers pulling back, and some sellers lowering what they’re asking for, strong demand and tight supplies are supporting prices.

Recent reports are using monthly comparisons because of the sharp turnaround in the once-hot, pandemic-driven housing boom. So the changes can appear dramatic.

Black Knight, a real estate software, data and analytics firm, reported the second straight month of declines in August, with prices down 0.98% from July. It reported an upwardly revised 1.05% monthly decline in July. Put together, these mark the largest monthly declines in more than 13 years and the eighth largest since at least the early 1990s, Black Knight said.

“Either one of them would have been the largest single-month price decline since January 2009 – together they represent two straight months of significant pullbacks after more than two years of record-breaking growth,” Ben Graboske, Black Knight’s president of data and analytics, wrote in the report.

“The only months with materially higher single-month price declines than we’ve seen in July and August were in the winter of 2008, following the Lehman Brothers bankruptcy and subsequent financial crisis,” he added.

Despite all of these factors, it’s important to remember that real estate is also heavily influenced by local economic forces. It’s seasonal, too. Families tend to buy larger, pricier homes in the spring and summer, so they can move during between school years. That skews prices higher. Smaller, less-expensive homes tend to sell in the fall and winter, skewing prices lower. This is why home prices are usually compared year over year, to get the most accurate reading.

The average home price is now about 2%, or $8,800, off its June peak of $438,000. Black Knight reports prices are off their peaks in 97 of the 100 largest U.S. markets, but they’re still roughly 40% higher than they were in 2019, before the pandemic.

But the rate of growth is cooling. This week, CoreLogic reported that home prices were 13.5% higher in August than in the same month a year earlier. That is the lowest annual rate of appreciation since April 2021, according to the report. It partially reflects cooling buyer demand due to higher mortgage rates. CoreLogic expects these annual increases will continue to shrink, but will still show a gain of 3.2% by August of next year.

The National Association of Realtors, in its August home sales report, showed the median price of an existing home was up 7.7% year over year. Compare that to a 15% year over year gain just last May. The median is often skewed by the types of homes selling. After a boom in luxury home sales during the pandemic, sales of higher-priced homes dropped in August. That may account for at least some of the smaller annual gain.

The Realtors did, however, note that while home prices traditionally fall from July to August, this year they fell at three times the normal pace.

Certain markets are softening faster than others. Some of the markets seeing the biggest declines are some of the formerly priciest, such as San Jose, San Francisco and Seattle, according to Black Knight. These markets are being hit hardest by rising mortgage rates because they were so unaffordable to begin with.

Other markets seeing big declines are those that saw the biggest jump in demand during the pandemic, such as Phoenix and Las Vegas. With the ability to work from anywhere, people flocked to these comparably more affordable markets where the climate may have been more friendly. That surge in demand fueled prices.

Big price gains are holding up in Florida markets, which continue to see strong demand because of the shift in many tech workers from Silicon Valley to the Sun Belt during the pandemic.

It’s unlikely home prices will fall dramatically the way they did during the Great Recession caused by the financial crisis because there is much more demand than there is supply.

Before the pandemic, supplies were low due to a decade of underbuilding following the Great Recession. The furious homebuying during the pandemic only exacerbated that shortage. That supply demand imbalance was what pushed home prices more than 40% higher in just two years.

There are fewer sellers, too. They see the market weakening and some don’t want to get less for their home than they feel it deserves.

“Right now, prospective sellers are not only coming to grips with falling demand and declining prices due to sharply higher interest rates, but they also have a growing disincentive to give up their own historically low-rate mortgages in this environment. Some may be waiting out the market to see if demand – and prices – return in the spring,” said Graboske.

There is about three months of supply in the existing home market, which is about half of what is considered a balanced market. There is more supply in the new home market, but new construction comes at a price premium, and buyers today are contending with higher mortgage rates. Affordability is still at one of the worst levels in history, despite prices softening slightly.

What most experts seem to agree upon is that this is not a “normal” housing market or even a normal correction in prices. Inflation, global economic uncertainty, rising mortgage rates and a still tight supply of homes for sale are all weighing on potential buyers. It remains to be seen how far they will pull back and how much that pullback will cool prices.