After rising for an alarming five weeks straight, mortgage rates have at long last cooled a bit.

For the week ending Aug. 31, rates for 30-year fixed-rate loans averaged 7.18%, according to Freddie Mac. That’s a welcome drop from last week’s 22-year high of 7.23%, but rates are still formidable enough to discourage many homebuyers from shopping—and homeowners from selling.

“Today’s buyers are facing still-high home prices, limited for-sale inventory, and decades-high mortgage rates,” Realtor.com® economist research analyst Hannah Jones says in her analysis. At the same time, “sellers are hesitant to sell as it would mean giving up a lower mortgage rate in exchange for a higher one.”

Why home sellers are sitting tight

Until mortgage rates subside significantly, many homeowners might feel “locked in” to their low mortgages, even if they’re eager to move. As a result, the housing market’s experiencing an inventory crunch with very few listings for buyers to even consider.

For the week ending Aug. 26, new listings were down by 8.8% from last year, marking a 60-week decline. And total housing inventory (both new and old listings) lags behind last year’s levels by 5.9%.

Why home prices remain elevated

This lack of listings is buoying home prices at a time when buyers might be hoping for a bit of a break.

In August, list prices hovered at a median of $435,000. Although prices declined annually over June and July, for the week ending Aug. 26, prices stabilized and remained level compared with this same week a year earlier.

“The tension between demand for lower-priced homes and lack of home inventory has kept prices hovering near last-year levels,” explains Jones.

Buyers looking for one area of potential listing growth—and reasonable prices—can turn to new construction.

“Builders are attempting to provide options for buyers by picking up new-construction activity,” Jones explains.

A ‘new normal’ in the pace of real estate sales

Yet despite high mortgage rates, high home prices, and limited options, Jones says that homebuyers still seem “eager” to seal the deal.

For proof, look no further than the pace of home sales, which has been slowing for the past 58 weeks but is showing signs of reversing course.

“For more than a year, the time a typical home has been on the market is up compared to the same time one year ago,” Jones notes. “But the gap has been generally declining this year.”

For the week ending Aug. 26, that gap shrank to just two days, compared with four days last week and six the week before.

“As we lap the 2022 housing slowdown period, this gap is likely to continue to shrink, and by fall we could even see homes selling faster than one year ago,” says Jones. “If this happens, it could indicate that the market is finding a new normal, where homes sit on the market for fewer days than pre-pandemic, but longer than was common during the height of the real estate frenzy.”

Will the fall housing market bring relief for buyers?

Homebuyers hoping against hope for a bounty of listings come fall shouldn’t hold their breath or expect a deluge anytime soon.