According to Freddie Mac, mortgage rates for 30-year fixed-rate loans jumped to 6.81% in the week ending 27 July. That's up from last week's average rate of 6.78 per cent. In the week ending 22 July, the welcome 42 consecutive days of declining median home prices levelled off.

The annual decline in median listing prices has disappeared, with prices this week matching year-ago levels, analysed Danielle Hale, chief economist at Realtor.com®.

Mortgage rates have been hovering between 6% and 7% for the past few months at very unfriendly levels. It seems that as soon as rates fall, they go right back up.

In March 2022, when the Federal Reserve began raising interest rates to curb inflation, mortgage rates began to head all the way north. While mortgage rates are not directly linked to the Fed's rates, the two numbers have been rising in tandem lately.

The Fed raised rates again on Wednesday. As a result, the latest rate hike suggests that mortgage rates are likely to remain high until the Fed ends its streak of rate hikes, likely by the end of this year.

Lawrence Yun, chief economist for the National Association of Realtors, said, "There are no surprises in the Fed's latest rate hike. The impact on mortgage rates appears to be modest."

But it remains to be seen where mortgage rates will go in the coming months.

While high mortgage rates have been tempered by falling home prices, that silver lining has dissipated.

After six consecutive weeks of declining home prices, the year-over-year gap in the median home listing price narrowed to 0% for the week ending 22 July. the median asking price for an average home was stuck at $445,000 for the month of June.

What could be the culprit for high home prices? As Hale puts it, sellers with "pricing power" are sitting in the proverbial "bird seat."

Hale added: "With mortgage rates remaining high and buyers cost-sensitive, the limited number of sellers in the market may be feeling the upper hand and pricing accordingly."

As demand continues to outstrip limited supply, the long hoped for price relief has not materialised, frustrating would-be homebuyers.

However, some areas of the U.S., particularly in the Northeast and Midwest, do offer some relief to homebuyers in terms of affordability.

Where have all the homes gone?

New listings entering the market in the week ending 27 July were down 18% compared to a year ago, marking the 55th consecutive week of declines. Active inventory (a mix of old and new listings) was down 8 percent compared to the same week last year.

The gap has been large and fairly stable over the past year," Hale noted. But as the period of sharp slowdown in new listings in 2022 passes, we may see the decline abate."

That's not to say that homebuyers should get their hopes up too high and expect a plethora of new homes to choose from. But the continued decline in new home listings may eventually slow and eventually stabilise, giving homebuyers some predictable footing.

With fewer existing homeowners choosing to sell than has been typical in recent years, inventory is expected to remain low, with an overall decline of 5 per cent compared to 2022, Hale said.

But Hale also notes that "new construction offers a lifeline to homebuyers in the form of options."

Fewer and fewer high-priced homes, combined with high mortgage rates, mean that homes continue to lag in sales.

Homes stayed on the market for nine more days in the week ending 22 July, marking 53 consecutive weeks of extended home sales compared to a year ago.

"High costs continue to be a stumbling block for some buyers, dragging down overall demand," Hale said.

Still, the pace of home sales is accelerating. Just a fortnight ago, homes stayed on the market for an average of 13 days year-over-year. And last week, that number shrank to 10 days.

Hale says, "As we head into the 2022 housing slowdown, that gap will likely continue to narrow, and by autumn, we could even see homes selling faster than they did a year ago." If so, that would mean the market is moving into an intermediate state where homes are staying on the market for fewer days than before the pandemic, but a little longer than was common at the height of the housing frenzy."