Interest rates get blamed for everything in housing, usually in the wrong direction. Rates do not set prices. They set what a monthly payment buys, and prices respond to that with a lag and a lot of friction.
The two effects pull against each other
Higher rates cut buying power, which should push prices down. But they also lock existing owners into low fixed mortgages they will not give up, which cuts supply. Less supply supports prices. The two forces partially cancel, which is why prices often stay stubborn while activity falls off a cliff.
What actually moves
Volume moves first, then time on market, then negotiating leverage, and only then price. Anyone waiting for rates to drop before buying should note that lower rates return buying power to every competing buyer at the same moment, which historically pushes prices up rather than down.
Practical positioning
Buyers can widen their search radius, use seller concessions to fund a rate buydown, or buy the house and refinance later. Sellers should price against current activity rather than against what the market supported when rates were half of today’s.
Read the full breakdown on HouseCashers.com