Although rising mortgage rates bring new burdens for potential buyers, inventory is beginning to rebound, the March Zillow Real Estate Market Report reveals. And overall, the first month of spring indicates the return to a more balanced market.

Considering the record-low mortgage rates set during the pandemic, higher rates were widely expected throughout the year 2022. “But the speed of their rise has been breathtaking,” Zillow Senior Economist Jeff Tucker said in the report. “March was the biggest test yet of whether enough buyers can meet the new asking prices to keep home values growing at a record pace, and the answer was, ‘So far, yes.’”

By the end of March 2022, the 30-year mortgage rate for a U.S. home had risen an astounding 19.5% since December 2021, although home sales were not deterred. In fact, newly pending sales were up 11.6%, month over month — the exact same percentage as March’s national increase in inventory. And that perfect correlation reflects persistently hungry demand. The median time on the market also shrank — two days month over month and, more notably, 24 days from the pre-pandemic March of 2019 — to nine days.

And for the 12th month in a row, home values also rose. The median price for a U.S. home is now $337,560, 20.6% more than one year ago, while the median price for a Chicagoland home is $300,651, 14.3% more than one year ago. Of course, that’s not so surprising. Both nationally and locally, home values have swelled due to an ongoing lack of inventory. But even that dilemma saw a silver lining in March as housing supply increased by its largest share since 2018. Nationally, listings were up 11.6%, and in the Chicago metro area, the jump was even sharper: up 14.9% to a total of 24,830 listings.

Still, inventory remains generally tight with the number of homes on the market, nationally, lower than any month on record before January 2022. And in turn, that leaves room for home values to grow — though perhaps more modestly than previously anticipated. Zillow’s official home value forecast now predicts 14.9% growth through March 2023, down slightly from the year-ahead forecast for February which estimated 16.5% growth. Additionally, Zillow lowered its 2022 home sales forecast to 6.09 million sales. And though the adjustment illustrates a projected 0.5% decline from the sales seen in 2021, it would still mark the second-best year for the market since 2006.

Only time can tell, though, the extent to which buyers are deterred by high mortgage rates. With March’s peak mortgage rate of 4.54%, new homeowners can expect monthly payments that are, in total, 38% higher than last year’s (assuming a 30-year mortgage with a 30% down payment). Then again, for those reconsidering purchasing property of their own, the Zillow report also accounts for rent escalation. With Generation Z renters entering the market, rental vacancies are hovering near an all-time low with prices rising to make up for the pandemic’s brief pause. Here in Chicagoland, the median monthly rent in March was $1,842: 12.1% higher than a year ago and 0.1% higher than in the month prior.

So, with both renting and purchasing presented as increasingly expensive options, Zillow predicts a robust, yet comparatively stable, spring housing market. “There will be a point when the cost of buying a home deters enough buyers to bring price growth back down to Earth,” Tucker concluded. “But for now, there is plenty of fuel in the tank as home shopping season kicks into gear.”