Worries about higher interest rates have sent Wall Street into a tailspin during recent days.
The housing market may face some turbulence, too. Home mortgage rates rose this week for the fifth week in a row. The cost of financing a home is now at one of the highest points in years.
Along with pulling down the securities market, higher interest rates are likely to slow the rate of home price appreciation in markets across the U.S., said Daren Blomquist, economist with Attom Data Solutions.
"Especially in light of what we’ve seen in the stock market in the last few days, I think there is going to be a lot more pressure on interest rates to go higher," said Blomquist, who was in North Texas this week for a mortgage industry conference. "What people have predicted in the last few years is actually going to happen.
"The pressure is there for interest rates to rise."
The prospect of higher inflation and growing federal borrowing to pay for the big tax cuts and other spending is fueling worries about rising interest rates. That could mean homebuyers get a double whammy — both higher home prices and finance costs.
"The housing market has become somewhat dependent on low interest rates," Blomquist said. "It’s going to be an adjustment for the industry to deal with even marginally higher interest rates.
"In markets that have gone hog wild in terms of home prices, they are going to be in for a rude awaking as interest rates rise."
Dallas-Fort Worth is one of those "hog wild" home price markets.
Median North Texas housing costs have shot up by more than 40 percent in the last four years to an all-time high. Attom Data Solutions estimates that home prices in the D-FW area rose by more than 9 percent last year — one of the highest in the country.
Blomquist thinks that as long as job growth in North Texas continues to boom with thousands of people moving to the area, demand for houses will remain strong.
But it could be harder for sellers to hike their prices if buyers are having to spend more for mortgage interest every month.
"A little bit of headwind of rising interest rates could be good for the market," he said. "When you have substantial price appreciation happening you start to get in danger of over speculation."