Rising rates – what impact will they have on home construction?

For those looking to divest of properties, it’s most assuredly still a sellers’ market, Kushi observed. “Sellers continue to have the upper hand as we enter the busiest time of the year for the housing market. Not enough supply relative to demand will keep house price growth positive, but not at the record-breaking pace we saw in 2021.”

The inverse is not so good for buyers, she added. “Some buyers are being priced out of a housing market experiencing double-digit house price growth and rising mortgage rates. If we hold income constant at its February 2021 level, the 95 basis-point year-over-year increase in mortgage rates since February 2021 resulted in approximately a $53,000 decline in house-buying power.”             

The National Association of Realtors economist predicts mortgage rates to be about 4.5% to 5% for the remainder of the year – leading to a 7% reduction in home sales this year compared to 2021. “Home prices themselves are still on solid ground,” Yun added. “They may rise around 5% by year’s end and we should see much softer gains in the second half of the year.”

Read next: What does the pullback in pending home sales mean for the housing market?

The trade association has also released its Hottest Housing Market report showing that, of the largest 40 metros, the most improved markets over the past year were: Orlando-Kissimmee-Sanford, Fla.; Miami-Fort Lauderdale, Fla.; Nashville-Davidson, Tenn.; Indianapolis, Ind.; and San Diego-Carlsbad, Calif.