Given the cyclical nature of such downturns, Dietz offered a glimmer of hope: “The other thing to keep in mind is we’re always looking through in the medium-term and long-term that housing often is the first sector that will weaken as interest rates go up, but it’s also the first sector that will rebound. Ultimately, when the rate of inflation comes down, the Fed can end its tightening cycle, interest rates may fall back a bit, and that will drive demand for housing up – and housing will lead any kind of economic recovery.”

Read next: Housing market continues to soften

Many would-be homebuyers have all but given up on the dream of homeownership given current conditions that have eroded affordability. But this too shall pass, Dietz suggested while urging those unable to buy homes now to keep saving for a down payment once the market improves.

“The adjustment process that occurs in markets will result in some people pausing their homebuying activities,” Dietz said. “As I’ve said, at some point the Fed will begin to ease some of the interest rate tightening it’s doing right now in order to slow the economy to bring inflation down. Now when does that happen? I think we would be looking at late 2023, early 2024 as the time period where you might see some easing occur because the Fed has accomplished its soft landing or brought on a recession in 2023.

“When that happens, interest rates will come down, the buyer pool actively looking to buy a home will go up. And we know in terms of demographic potential that those buyers are there. If you think of the millennials, for example – leading age of 42, a lot of them in their mid- to early 30s, and that’s prime homebuying period. The cyclical weakness brought about by increased interest rates will continue through this year, likely into 2023. By the time we get to the second half of next year, we could see the markets back on the road to recovery.”