Exactly. Most home buyers take out a mortgage. Most people also look at monthly payments as a proxy for affordability. Monthly payments raise when interest rat

Exactly. Most home buyers take out a mortgage. Most people also look at monthly payments as a proxy for affordability. Monthly payments raise when interest rates rise. Therefore, sellers need to ask for lower prices when rates are high in order to attract buyers. A $150,000 mortgage at 12% interest has monthly payments of $1,543, at 5% interest its $805.