The Portland area, which through much of 2016 led the nation in rising home prices, fell out of the top three metros in August for the first time since September 2015.

Prices in the Rose City climbed 7.2 percent compared with a year earlier, according to new numbers from the S&P CoreLogic Case-Shiller home price index. That's the slowest rate of home-price growth the region has seen in more than two years.

Portland was overtaken by Las Vegas, which saw prices rise 8.6 percent year-over-year, and San Diego, where prices rose 7.8 percent.

Seattle, where home prices rose 13.2 percent in the last year, leads the 20 cities included in the index.

While homes continue to appreciate in value at a rapid pace, the slowdown suggests Portland is approaching the limits of affordability.

The market remains competitive, with a slim inventory of homes for sale. But while bidding wars still break out over certain homes, they come with less frequency and frenzy than in the heated market of two years ago.

New construction has brought some relief to the rental housing market, giving first-time homebuyers more flexibility to wait.

"People aren't going to pay anything for anything," said Matthew Gardner, chief economist for Windermere Real Estate. "Just because there's so few homes on the market for sale doesn't mean people are going to pay anything it takes to get that house. They're being more choosy."

The median home price in the Portland area was $385,000 in August. It fell to $380,000 in September.

-- Elliot Njus

enjus@oregonian.com

503-294-5034

@enjus