Home prices are rising at their slowest pace in more than a year, and mortgage rates could drop soon, setting up a showdown between buyers and sellers

Home prices are much higher than they were before the pandemic. But record home price appreciation might be coming to an end, for now. Home prices rose 0.3% in May, which is the smallest monthly rise since January of last year. Prices rose 7.2% from a year earlier, “but annual growth showed signs of plateauing,” according to a new analysis from Redfin.

The pace of home price growth seems set to slow further, just as people wait on the sidelines for mortgage rates to drop, even if it’s only a little. But if buyers rush into the market at full force, price growth could accelerate, and if sellers do so, prices could cool all the more.

A lot of this has to do with supply. We’re still missing millions of homes across the country, but the number of listings has gone up this year. “New listings have been inching upward, which has taken a little pressure off of sale prices because buyers have more options to choose from,” the analysis states. The number of listings rose 0.3% in May from a month earlier and 8.8% from a year earlier (but are still about 20% lower than pre-pandemic listing levels). And that trend is expected to continue as the lock-in effect, a phenomenon that refers to homeowners who refuse to sell their homes for fear of losing their below-market mortgage rate, eases further. “Eventually, the people who don’t want to move because they have an ultralow mortgage rate have to move,” Redfin said.

Redfin’s chief executive, Glenn Kelman, recently quipped that people were less likely to put off selling this year “just because they’re going crazy living with their ex-wife, or they have a third baby and there’s no space in the house.”

According to a Realtor.com analysis of data from the Federal Housing Finance Agency, as of the fourth quarter of last year, “more than half of outstanding mortgages have a rate of 4% or lower, and more than three-quarters have a rate of 5% or lower.”

Still, it helps that mortgage rates have come down some, although they’re far from the historical lows witnessed throughout the pandemic. But in October last year, daily mortgage rates reached a more than two-decade high, at just above 8%. As of today, the average 30-year fixed mortgage rate is 7.02%. And with one interest rate from the Federal Reserve penciled in amid somewhat tamed inflation, they could fall further; by how much is yet to be known.

If rates drop, sellers and buyers alike could rush back to the market. Whoever does so faster, or in greater numbers, can affect where home prices go from there.

“We learned last week that inflation continued to cool in May, which means mortgage rates could decline in late summer or early fall,” Redfin economics research lead, Chen Zhao, said in the analysis. “A drop in mortgage rates would bring both buyers and sellers back to the market, which could either accelerate price growth or pull it back depending on who comes back with more force. If sellers come back faster, prices would likely cool, but if buyers come back faster, prices would likely ramp up.”

Last year, home prices eased as listings rose, too. And we know there are sellers out there who want to off-load their homes. Still, it’s a mixed bag. Some sellers dread losing their low mortgage rates, and some buyers can’t make the homeownership leap in the present unaffordable housing world, one where starter homes are going extinct. We saw it in real time last year when existing home supply plummeted to its lowest point in almost three decades because nobody was selling or buying.

Lately, things haven’t gotten much better, but existing home sales data for May is set to be released on Friday. Maybe it will tell a different story, or a very similar one.

This story was originally featured on Fortune.com