As if record-high mortgage rates weren't bad enough, in another housing blow, the number of homes for sale fell 2 percent from last year's level for the week ending July 1, the first significant drop in inventory in more than a year, to 60 weeks.

Sellers' reluctance to list their homes is directly related to today's high interest rates, with 1 in 7 homeowners choosing not to sell this year because they feel "locked in" to their current low interest rate loans.

As a result, "the housing market is not getting the large number of homes for sale that would normally be the case," noted Danielle Hale, chief economist at Realtor.com®, in her weekly data analysis." For this reason, our updated 2023 outlook expects inventory to decline this year."

The silver lining for homebuyers is that home prices fell 0.3 percent for the week ending July 1 - the fourth consecutive week of declines - to $445,000 in June.

However, this has little impact on the higher cost of housing for homebuyers, and unless more homes suddenly appear on the market, the limited supply will keep prices high.

"The still limited number of homes available for sale may be one factor holding back existing home sales and keeping prices high," Hale explained.

Adding salt to the wounds of weary homebuyers is another startling statistic: Not only are mortgage rates up and overall inventory down, but the number of new homes on the market reached a major milestone in the week ending July 1, with the number of new homes for sale dropping 21 percent annually. This marks a full year - 52 weeks - with fewer new homes on the market than a year ago.

At the same time, the pace of home sales is slowing. In the week ending July 1, homes stayed on the market 13 days longer than last year. This marks 50 weeks of homes needing to be sold compared to the same week last year.

In June, homes stayed on the market for an average of 43 days. Nonetheless, it's worth noting that this downturn is still faster than it was before the COVID-19 pandemic.

"The June housing data shows that the typical home on the market in June took 10 days less than it did from 2017 to 2019," Hale said.

Homebuyers unwilling to spend big bucks on a less-than-desirable home but dealing with high monthly payments do have some alternatives.

Newly built homes are becoming increasingly popular among intrepid homebuyers and are often priced below the price of existing properties.

"Affordability continues to be stretched," Hale notes, "and fortunately, builders continue to add homes with a greater focus on affordable price points."

Other would-be first-time homebuyers may simply choose to continue renting - now that rents are finally starting to fall.

"As rents begin to fall nationwide and homes take longer to sell, potential first-time homebuyers may feel less urgency," Hale said. That said, "the high cost still makes the question of where to live feel high-risk."