Rents and home prices still soaring, but at a slower pace

The red-hot U.S. housing market that has enriched property-owners in recent years while draining renters and first-time home buyers is showing signs of slowing down, according to new data.

Both rents and home prices are still climbing, but at a more subdued pace, as inflation and rising mortgage rates weaken demand. In June, the average home price jumped 17.3%, compared with the 19.3% increase recorded in May, according to the data analytics firm Black Knight. That two full percentage points is "the greatest single-month slowdown on record since at least the 1970s," said Black Knight president Ben Graboske.

Rents prices followed a similar trajectory in the second quarter, with the average monthly payment for an apartment rising 9.4% in the three-month period ended June 30, year over year, according to the real estate data firm CoStar, cited by the Wall Street Journal. That compares with the more than 11% increases recorded in the preceding two quarters.

The cooling housing market reflects a weakness in the broader economy as would-be home buyers find themselves unable or unwilling to rising inflation, which stands at a 40-year high.

Mortgage rates have been steadily climbing since the Federal Reserve started raising its benchmark interest rates in March, part of its plan to put a lid on soaring costs by making borrowing more expensive. That has significantly increased the monthly payment a home buyer would pay for a given property, making everything less affordable. At the same time, a battered stock market has chipped away at many home buyers' resources, making it hard...