The housing market could be especially cold this winter. Is this good news for buyers?

This story is part of Recession Assistance BureauCNET’s coverage of how to make smart money moves in an uncertain economy.

The hot U.S. housing market of the past two years has cooled and could get even colder, experts say.

High mortgage rates – rising from 3% to 6% in less than a year – likely to continue harder for buyers to afford a home, continuing to crush the number of home sales. At the same time, a lack of supply caused by a decade of builders not keeping up with demand could worsen as construction slows down even more as a result of softer demand.

This simultaneous weakening of both demand and supply means home prices may not fall far from their all-time highs – the median existing home sold for $403,800 in July, up 10.8 % more than last year, according to the National Association of Realtors.

“It will be a challenging time for homebuyers. However, there are some opportunities,” said Daniel Hale, chief economist for Realtor.com.

If you are looking to buy a homehere’s what experts expect, how supply and inflation issues relate to the forecast, and some tips to help you navigate the home buying process in this turbulent market.

Where the housing market is headed according to experts

High mortgage rates will exacerbate the usual seasonal slowdown.

“I think demand will continue to weaken over the winter. This usually happens every year, but I think this is going to be a particularly cold winter for the housing market because of these higher mortgage rates.” – Daryl Fairweather, Chief Economist, Redfin

High rates and prices will slow down the market even more.

“We definitely expect home sales to continue to be below what we’ve seen over the past few years.” Demand for homes has really pulled back as buyers struggle with reduced affordability due to higher home prices and higher mortgage rates.” – Daniel Hale, Chief Economist, Realtor.com

Both supply and demand are struggling.

“Honestly, it’s not certain how this will all play out. You have less supply, there should be upward pressure on prices, but demand is also suppressed due to rising interest rates. How it all balances out remains to be seen.” – Rob Cook, CMO, Discover Home Loans

Supply issues will dictate prices in the long run.

“Median prices could fall as homebuilders and sellers sell those smaller starter homes.” – Jeffrey Roach, Chief Economist, LPL Financial

Housing supply will not catch up

Prices are starting to fall on a monthly basis, but are still significantly higher than they were a year ago – and well above where they were before the pandemic. One thing keeping prices high despite the drop in demand is that there still aren’t enough homes for sale.

“In the longer term, we still have the same problems. They are not resolved. There still aren’t enough homes for everyone who wants to buy a home,” said Daryl Fairweather, chief economist at Redfin. “Inventory is already starting to pile up, but it’s kind of an illusion.”

Supply still can’t keep up with current demand, in part because not enough housing has been built in the decade since the Great Recession, said Jeffrey Roach, chief economist at LPL Financial, a national broker-dealer. Builders in particular have not built enough homes suitable for first-time buyers.

“The big story will be how homebuilders respond to the slowdown and whether … homebuilders as a business realize that we need to start spending more effort and time building starter homes instead of care homes , who want more square footage,” Roach said.

Inflation will dictate mortgage rates

Inflation has been the main culprit behind the big changes in mortgage rates this year. This also leads to The Federal Reserve’s efforts to reduce inflation. If overall prices remain high, the Fed will have to keep raising interest rates, raising costs for banks and lenders and raising mortgage rates.

“Anybody’s forecast is only as good as the next inflation report,” said Rob Cook, vice president of marketing, digital and analytics for Discover Home Loans. “If the next inflation report comes out and it shows that inflation is rising again, the Fed will take more aggressive action and you would expect rates to rise.”

Fed rates change don’t directly cause mortgage rates to change, and the mortgage market has already factored in many of the Fed’s expected rate hikes for the rest of the year, experts say. This means that mortgage rates may start to fall earlier than other interest rates if economic conditions change.

“There’s a very murky picture and that ambiguity means we’re probably in for some volatility.” The level of mortgage rates really depends more on the mood of the market than what’s actually happening in the market because what’s happening in the market is so unclear,” Fairweather said. “I think they’re going to stay around the same level , but they will probably go up and down a lot even week to week.”

How buyers can handle this tough market

Home prices may be easing a bit, but they’re still much higher than they were in 2019. Mortgage rates are also higher than they’ve been in more than a decade. Both of these reasons make buying a home especially difficult. Here’s what experts say you can do to make it a little easier.

Proof of your monthly payment

It’s obvious from any review of home listings that prices have risen, but mortgage rates are making those prices even harder to afford. Monthly payments are up 30% to 40% for comparable homes compared to last year.

Don’t shop based on price alone. Use it mortgage calculator to determine the monthly payment and get one that you can manage in the long term. “Really do the math, look at your finances and figure out how much housing you can really afford,” says Cook.

With mortgage rates changing daily and often rising dramatically, make sure you have the option to increase your payment during the home buying process. “It’s worth considering in advance what a change in mortgage rates would mean for monthly costs,” Hale says.

Get multiple offers on the same day

Always get quotes from multiple mortgage lenders. Interest and other costs can vary widely from one lender to another. with mortgage rates change quickly due to large-scale economic problems, Hale advises you to compare offers from different lenders on the same day.

“You have to compare lenders on the same day because there’s so much fluctuation in mortgage rates right now that if you’re not comparing on the same day, you’re really comparing apples to oranges,” Hale said.

Start negotiating again

With fewer people shopping for homes now, sellers are finally starting to make some concessions after years of buyers having to raise their offers and forgo inspections or appraisals. If you’re trying to buy, you can use this change to your advantage. Buyers are now better able to offer less than the seller is asking, or offer to have the seller fix things up or pay for mortgage points – which lowers those high mortgage rates.

“It’s something we haven’t seen in the last couple of years of COVID, but we’re likely to see this year,” Hale said.

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