According to the data, mortgage rates on 30-year fixed-rate loans have risen from just under 3% to over 7% in the past year. This means mortgage payments have increased by hundreds of dollars per month.

Few buyers, especially first-time homebuyers, can afford such increases. Many no longer qualify for mortgages due to higher interest rates, while others are forced to cut their budgets.

Homes are lingering on the market longer, sellers are slashing prices and sales are stalling. As a result, home prices are under pressure to fall. And they are starting to say yes.

Many potential buyers are keeping an eye on home prices - how low will they go?

Home prices are expected to fall about 10 percent nationwide from peak to trough, bottoming out next summer. In the pandemic hotspots that have experienced the biggest gains - such as Phoenix, Boise, Nevada, and Austin, Texas - home prices will fall even more.

Prices in those places could fall as much as 20 percent. Buyer demand in Florida remains strong and will likely hold up a little better, he said.

It's expected that home prices nationwide could drop 15 percent next year. She sees about 40 percent of builders cutting prices. However, it's important to put any price declines into perspective.

Nationwide, home list prices rose 40.6 percent in just over two years, from the start of the pandemic lockout in March 2020 to the peak of the market in June of this year, according to the data.

So a 10%, 15%, or even 20% decline over a two-year period is not as significant as it may seem at first.

Not everyone expects prices to drop significantly.

Lisa Sturtevant, chief economist at Bright MLS, which covers the Mid-Atlantic region, expects home prices to fall back from their summer peak.

But for much of the country, price growth will slow. That means prices won't rise at such a large rate as they did during the pandemic.

Most renters are struggling to afford the higher price tag, especially as inflation, gasoline and other costs soar.

Rents are so high in many places that many young adults can't afford to move out of their parents' house. And now many companies are handing out pink slips, making it even harder for renters to afford these high prices.

Zandi expects rents to stabilize, perhaps even falling back slightly in the areas of the country that have seen the biggest increases.

This is due to the U.S. Federal Reserve, which has been hitting the housing market by raising interest rates to fight inflation.

When the Fed raises its interest rates, mortgage rates usually follow suit. And, the Fed is expected to continue raising its rates.

However, mortgage rates fell last week after the government showed that inflation is still strong but is slowing. This means that the Fed will continue to raise its rates, but perhaps not as much as previously expected.

This unexpected optimism reportedly explains why mortgage rates on 30-year fixed-rate loans fell from 7.22 percent to 6.62 percent on Thursday.

While mortgage rates are expected to remain high for the rest of the year, many are watching closely to see what they will do next.