The widely anticipated increase in the Federal Reserve’s key interest rate is poised to exert a cooling effect on the previously booming U.S. housing market. Economists predict that the rate hike will translate into higher mortgage rates, making homeownership less affordable for prospective buyers.

This shift in affordability is expected to dampen demand, leading to a slowdown in both sales volume and the rate of price appreciation. While a dramatic collapse is not foreseen, analysts anticipate a period of more moderate growth and increased price stability in the housing sector.

Some experts suggest that the rate hike could also lead to a slight increase in housing inventory as fewer buyers compete for available properties. This could further contribute to a more balanced market, benefiting buyers who have been priced out of the market in recent years.

However, the full impact of the rate hike will depend on a variety of factors, including the overall strength of the economy and consumer confidence. Further rate increases by the Federal Reserve could amplify the cooling effect on the housing market.