“This stagnation reflects the economic impact of the Omicron variant of COVID-19, which we believe will subside in the coming months,” he said. “As economic recovery continues going into the spring and summer, mortgage rates are expected to resume their upward trajectory.”

Over recent months, inflation has accelerated to a 40-year high of 7%. This has pushed the Federal Reserve to phase out its bond purchases and raise interest rates. The significant rate increases have been a bit of a shock to the housing market. Still, Fannie Mae chief economist Doug Duncan stressed that people should be more concerned about inflation in the long term as that will eat into Americans’ household budgets and weaken purchasing power more than mortgage rates can.

“Rising interest rates in and of themselves are not a big problem if household incomes are rising as well. But if they rise rapidly, and by a significant amount, household incomes don’t adjust that fast, and the housing market takes a hit,” Duncan told MPA in a recent interview.

Read more: The “new normal” – Doug Duncan’s mortgage industry outlook

“In the meantime, recent data suggests that homebuyer demand continues to be elevated as supply remains low, driving higher home prices,” Khater said.