“While the drop provides minor relief to buyers, the housing market will continue to normalize if home-price growth materially slows due to the combination of low housing affordability and an expected economic slowdown,” said Sam Khater, Freddie Mac’s chief economist.

Even as price gains start to decelerate slightly, the market is the least affordable it’s been since the mid-1980s, according to mortgage data provider Black Knight Inc.

At the current 30-year average, a borrower with a $300,000 mortgage would pay roughly $1,665 a month, about $383 more than at the end of last year, when rates hovered around 3.11%.

Investors have been trying to analyze how a potential economic slowdown could play out as the Federal Reserve seeks to hike its benchmark rate to tamp down inflation. While rising rates and recession fears have started to cool the real estate market, the shift could bode well for prospective buyers if trends continue, according to Joel Berner, senior economic research analyst for Realtor.com.

“Mortgage rate stabilization could allow them to lock in a lower monthly payment and take advantage of current increases in the number of homes for sale,” Berner said.

©2022 Bloomberg L.P.