After two years of historic year-over-year home value jumps in the greater Nashville market, a cooling trend has taken hold.

Sellers are dropping prices, buyers are getting more concessions and competition for properties has eased.

The trend began in the fall, and continues to deliver progressively lower gains to home prices each quarter.

Home owners are still enjoying rising values — but at a more modest rate than during the market's hottest period, when prices vaulted 32 percent from spring 2016 to spring 2018.

"Nashville is slowing down faster than the nation," said Skylar Olsen, senior economist at Zillow. "But I don't think (prices) will begin falling in Nashville for some time yet."

Meanwhile, rents are feeling the slowdown too. They rose, year-over-year, just 1.5 percent to a median $1,512 per month in January, according to Zillow.

Housing market slides

Since April 2017, the 10-county Nashville metropolitan area slid from the third to the 14th fastest growing real estate market among the nation's largest cities, according to Zillow.

Cities from coast to coast are experiencing similar housing market deceleration — with the most extreme downturns in Seattle, San Francisco and other areas that saw the most dramatic gains in recent years.

"The places where the slowdown is more apparent are places that were moving at such an incredible, unsustainable pace," Olsen said. "When prices go too far, too fast, demand starts falling back and appreciation slows down."

The Nashville area's real estate industry hit an all-time peak in the third quarter of 2017, according to The Colliers Index, which was developed by the global real estate services and investment management company.

That quarter was a time of record investment in new offices and a record number of construction permits issued.

"I'm not concerned about a lull because economies are cyclical, of course, and there will be lulls," said Janet Miller, CEO of Colliers International Nashville. "Lulls in Nashville are not as painful as in other places. We're not seeing a slowing of people moving to Nashville."

Downturn seen as healthy correction

Property data analyst CoreLogic predicts the nationwide cooling will continue with smaller gains at this time next year.

Interest rates are expected to continue to tick upward throughout the year, putting more pressure on buyers.

But, all in all, the news isn't bad.

The downturn is a healthy market correction after years of housing price increases outpaces wage gains, analysts said.

In late 2018, Nashvillians needed to earn a $74,018 salary to afford a home, according to real-estate industry analyst Attom Data Solutions. But the average worker made $59,020.

"Housing markets are supposed to move closer to income," Olsen said. "I hope we'll only be seeing those (record-high home price growth) numbers in the rear-view mirror. It is certainly exciting for home owners watching their values appreciate. But it was really hard for home buyers."

At the peak of Nashville area's housing boom in April 2017, 31 percent of buyers paid more than the listing price for homes because competition was so high.

In January 2019, 13 percent of buyers paid more than the home's listing price, according to Zillow.

"13 percent is still pretty high," Olsen said. "That just tells you we're not back to a normal housing market. It takes a little bit of time for our expectations to catch up."

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Sandy Mazza can be reached via email at smazza@tennessean.com, by calling 615-726-5962, or on Twitter @SandyMazza