Prices in the U.S. housing market dropped 7% for a third month in a row. This came as markets display volatile behavior due to interest rates being at all-time highs and fewer mortgages in circulation.

For the year’s first quarter, a two-bedroom family home’s median price in the United States began at $423,000, which is significantly higher than the 2021 first quarter median price of $369,800. As of September, the price of a two-bedroom family home is $396,667, which is lower than the start of the year.

However, when comparing home prices in recent history, it is worth looking at 2021’s third quarter and 2020’s first quarter, when prices were $327,000 and $329,000 respectively. The price fluctuated tremendously over three years, with the lowest being $322,600. The United States risks significant consequences because of current housing prices.

Homeowners tend to take out mortgages when they purchase a home, which immensely impacts the housing market and the economy. In this year’s third quarter, mortgage applications decreased by 14.2%. Meanwhile, applications to refinance homes decreased 17.8%, while applications for purchasing homes decreased 12.6%.

The market may continue seeing declines  in housing prices and possibly the number of homes purchased due to higher mortgage interest and homeowners not refinancing their homes. Rating agencies continue to lower the value of housing, even with higher interest rates.

Moody’s Analytics expects home prices to fall between 5% and 10%, regardless if a recession happens.

“Many of these highly overvalued markets may now be primed for price depreciation,” the financial services company said in an August analysis report. “This depreciation will likely not, however, be a crash like we saw during the Great Recession.”

Consumer behavior will likely stay the same even if prices continue to drop, meaning consumers will take fewer mortgages out and buy fewer homes.

As interest rates reach all-time highs, investors need to take notice because the housing market may be in jeopardy if prices continue declining. Therefore, prospective homebuyers may become stagnant and not make offers, leaving investors with few options to generate profit outside of selling homes.

Homeowners lost a large amount of wealth due to declining prices and rising rates in the third quarter.

Most major markets celebrated rallies through July, with only a third of them falling more than 1% and a tenth of them down more than 4%, as reported by CNBC.

Homeowners may want to be wary of the fourth quarter due to current market behavior mimicking the third quarter. Market activity tends to slow down come winter, with activity dropping 15% by the third quarter, according to analysis from Bankrate.

The predictions are pessimistic for the final quarter, as the decline in housing prices is projected to continue.

Potential homeowners may look into the mortgage history of homes they are interested in purchasing, options for credit, applications for refinancing and real estate analysts who may guide them.