Yun added that new home listings declined annually since many homeowners are unwilling to give up the ultra-low, 3% mortgage rates they locked in prior to this year.

“The new normal for mortgage rates could be around 7% for a while,” Yun said. “On a $300,000 loan, that translates to a typical monthly mortgage payment of nearly $2,000, compared to $1,265 just one year ago – a difference of more than $700 per month. Only when inflation is tamed will mortgage rates retreat and boost home purchasing power for buyers.”

Last week, the average 30-year fixed-rate mortgage hit 7.08% – the highest level in over two decades.

Read more: Interest rates top 7% – industry reacts

“As inflation endures, consumers are seeing higher costs at every turn, causing further declines in consumer confidence this month,” said Freddie Mac chief economist Sam Khater. “In fact, many potential homebuyers are choosing to wait and see where the housing market will end up, pushing demand and home prices further downward.”