The housing market will continue to rebalance as prices adjust to the reality of higher mortgage rates. However, the pace of price deceleration and the decline in home sales will be more severe in the downside, higher inflation scenario. The main trend to watch is whether mortgage rates will go any higher and, if so, by how much. Once mortgage rates peak, home sales volume and price declines will stabilize. That all depends on what the Fed chooses to do in the coming months and whether inflation begins to decline.
