Home prices are mostly too high to appeal to buyers, who are facing skyrocketing mortgage rates. But sellers are loathe to lower asking prices. Sales are cratering — some folks are just walking away from deals.

Why it matters: People expecting a big housing crash might not see it happen so fast. Home sellers don't have to sell right away, especially because the vast majority have mortgages with low rates that they couldn't get now (aka "Golden handcuffs.")

• The housing market isn't a "clearing market," like the stock market, where you put something up for sale and take whatever price you can get, notes Steven Abrahams, Amherst Pierpont Securities' head of investment strategy.

What's happening: With home sales plunging, the big price gains we've seen over the past two years are "decelerating" at record levels, according to data out last week from Case-Shiller.

• Anyone who wanted to sell their house in 2022 rushed to do it earlier this year when the signs were clear that mortgage rates would be rising, said Daryl Fairweather, chief economist at Redfin. "That's contributing to how dead it is right now."
• There are 14% fewer new listings coming onto the market now compared to this time last year, according to Redfin data. The real estate company's "demand index" — a measure of the number of buyers touring houses and making offers — is down 13%.
• Yet prices are still up...a lot. Home prices rose 45% from December 2019 to June 2022, housing grand poobah Robert Shiller told the New York Times, a lot of that rise spurred by pandemic-era FOMO and social dislocation. (Read it.)

The animating question is what happens to those big gains. Abrahams believes home prices will basically stay flat for the next couple of years. That's quite distinct from the last big housing collapse in the wake of the financial crisis.

• Back then, homeowners weren't locked into low rates: In fact, many of them couldn't afford to keep their homes. They'd taken out adjustable rate mortgages— with little money down — that pushed up monthly payments.
• "Prices have fallen, but are you going to see home prices tumble the way that we saw from 2006 - 2011. I don't think so," said Abrahams.

Yes, but: Not all markets are going to just lay flat. Some pandemic boomtowns in places like the Sunbelt and Boise, Idaho, are already seeing price drops.

• And this won't be a soft landing for the industry, experts said. Home builders and anyone in the mortgage business is feeling pain.

The bottom Line: Home prices are "sticky on the downside," said Jonathan Miller, CEO of appraisal firm Miller Samuel in New York.

• "Meaning that when markets fall, sellers are reluctant to take a lower price because they stick to the value they think it's worth."

What to watch: The job market. Unemployment can unstick a lot of things for reluctant home sellers.

Editor's note: This story has been corrected to say that Steven Abrahams is head of investment strategy, not head of investment, at Amherst Pierpont Securities.