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After years of unprecedented price hikes, heated bidding wars, and a sizable supply deficit, a major housing shift is underway, according to As mortgage rates and home prices continue to climb, a growing number of prospective buyers will be priced out of homeownership, but that dip in demand could lead to a slight boost in supply.

A pricey, ultra-competitive market will sideline a large share of buyers throughout the remainder of 2022, and a slowdown in home sales activity will create a cooling effect which experts hope will tame inflation and create more balance for buyers in the long term.

Mortgage rates are now anticipated to hit 5.5% by the end of the year—a rate expected to continue sidelining buyers already grappling with record-high home prices. Initially, the economists predicted they would hit only 3.6% for 30-year fixed-rate loans. However, rates hit a high of 5.3% last month before settling in at around 5.1%, according to Freddie Mac data.

The lower projection was made before persistent inflation became a thorn in the side of the U.S. Federal Reserve. The Fed is now hellbent on taming those runaway prices by hiking interest rates—causing historically low mortgage rates to soar.

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