The American housing market, once hotter than the 4th of July, is facing a new reality as mortgage rates continue to climb. For many prospective homeowners, the dream of owning a slice of the U.S. is becoming financially out of reach. Thanks to soaring interest rates, monthly payments on new homes have gone through the roof, leaving countless families on the sidelines. What used to be a rite of passage—the first-time home purchase—is turning into a financial hurdle too high for many to clear.

Why the sudden shift? The Federal Reserve has been steadily raising interest rates to combat inflation, and mortgage rates have followed suit. For context, a 3% rate on a 30-year mortgage just a couple of years ago seems like a distant memory. Today, rates have breached the 7% mark, adding hundreds (if not thousands) to the average monthly payment. This has cooled the once-sizzling market, sending potential buyers and even some sellers into a holding pattern.

For those trying to sell their homes, the outlook isn’t rosy either. Fewer buyers mean longer listings and lower offers, as people simply can’t afford to overbid in a market where the cost of borrowing has skyrocketed. In regions like California and Texas, where prices are already steep, many would-be homeowners are simply opting out. They’re waiting, hoping for the market to settle or interest rates to decline.

The situation is impacting more than just buyers and sellers. Local economies that rely on a booming housing market—think construction, real estate services, and home goods retailers—are feeling the pinch. And for those who were banking on home equity as their financial safety net? They’re in for a rude awakening, as property values level off or even begin to dip.

The big question is: will rates ever come back down? Many are betting on the Federal Reserve reversing course, especially as the economy slows. But experts caution that a quick pivot isn’t likely. After all, inflation is a beast that’s hard to tame, and rates may need to stay high for a while to ensure it doesn’t roar back.

For now, American families dreaming of homeownership are left with limited choices: buy at higher rates or wait and watch. Either way, the days of easy, low-rate mortgages are behind us, and the housing market has entered a new phase. The American Dream may not be gone, but it’s certainly on hold.