The median price of a residential home sold in the U.S. in July was $191,000, up 3% from June and 12% from a year ago, according to data released Thursday by RealtyTrac. But despite the increase, in 65% of the markets measured, the rate of appreciation was less than it was a year ago.

That slowdown trend likely will continue as the 20% to 30% appreciation seen last year is not sustainable, said Daren Blomquist, vice president of RealtyTrac. Blomquist said many markets are returning to historic normal levels for affordability, a sign price appreciation will taper.

"The nationwide home price increase masks slowing home price appreciation in the majority of housing markets across the country," he said. "This slowing appreciation was expected and provides another sign that the real estate recovery thus far is behaving rationally. The housing market is entering a dicey transition phase where it is becoming much more reliant on first-time homebuyers and move-up buyers to sustain the recovery as investor involvement wanes."

The latest numbers mark the highest price level since September 2008. States such as Michigan (24% annual increase), Ohio (20%) and Virginia (20%) saw particularly high year-to-year jumps in median sales prices, as did cities such as Detroit (33%), Dayton, Ohio (31%), Stockton, Calif. (24%), Modesto, Calif. (22%), Cleveland (20%) and Miami (19%).

In local markets - including San Francisco and Phoenix - home price appreciation has slowed far more than others, compared with a year ago, and is already in single digits. Often, this is because investors jumped into these markets early to buy up properties and now are pulling out or easing off on buying because prices are high, says Blomquist.

But some markets are still seeing rapid appreciation. From July 2012 to July 2013 in Cleveland, for example, home price appreciation was just 3%, but from last year to this year, it jumped 20%. In many cases, this is because buyers or investors didn’t take much interest in distressed properties in these markets until relatively recently, says Blomquist.

Buyers scouring the housing market for deals, meanwhile, should take caution. The median price of properties in the foreclosure process or bank-owned properties was $128,000 in July, up 3% from June and up 11% from a year ago. There has been strong demand for these kinds of properties for some time, Blomquist said, and now inventory is drying up, sending prices higher for even the cheapest properties. This trend also is expected to linger, he added.

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