Read more: Mortgage rates – historically low era comes to an end

“Given that last month’s sales numbers represent closings, the decline in sales came at a time earlier this year when rates were lower. The more likely reasons for the drop in sales were the ongoing lack of housing inventory and the resulting increase in home values that priced some buyers out of the market,” Fratantoni said. “From a lending perspective, while the number of sales declined somewhat, with 15% home-price growth, the dollar volume of sales and purchase originations have increased over the past year.”

NAR chief economist Lawrence Yun noted that rising rates and escalating prices have prevented many prospective homebuyers from making a purchase.

“Housing affordability continues to be a major challenge, as buyers are getting a double whammy: rising mortgage rates and sustained price increases,” Yun said. “Some who had previously qualified at a 3% mortgage rate are no longer able to buy at the 4% rate. Monthly payments have risen by 28% from one year ago – which interestingly is not a part of the consumer price index – and the market remains swift with multiple offers still being recorded on most properties.”

According to Freddie Mac’s latest survey, the 30-year mortgage rate jumped to its highest level in three years, averaging 4.16% last week. The median existing-home price has also skyrocketed 15% annually to $357,300 in February, marking the 120th straight month of year-over-year gains.