The increase in interest rates, and the tightening of lender requirements, is hurting buyer’s purchasing power, which is creating less able to purchase buyers in the marketplace. While I think it is good thing that lenders are finally tightening up their requirements for loans to eliminate buyers that borrow ‘above their means,’ the resale market is hurting because there are fewer qualified buyers able to write contracts on homes. As a result, homes are staying on the market longer, or not selling at all, due to a limited number of approved buyers. We are also seeing homes that have contracts not going to closing because the lending requirements have changed and the loan that the buyer got approved for is no longer available.
The Washington Post touches on this issue in this article.