The number of pending home sales fell more than 7% between July and August, according to the National Association of Realtors. That drop was bigger than analysts had expected and the NAR says it was largely due to rising mortgage rates.

While plenty of people want mortgages right now, rising rates restrict what they can afford, said Dominik Mjartan, CEO of Optus Bank in South Carolina.

“A lot of the borrowers that would have normally qualified for a $500,000-$600,000 house are migrating towards $250,000-$300,000 houses, because that’s simply all they can qualify for,” he said.

So, competition for those homes is heating up even more.

Chris Duncan is senior loan officer at La Salle State Bank in Illinois and said a lot of his customers are frustrated.

“Customers who will come in and pre-qualify for a loan,” he siad, “and they’re waiting around, you know, six, eight, 10 months until a house comes onto the market that they can buy.”

Many homebuyers are willing to borrow at today’s rates, he added, because they’re betting rates will eventually fall.

And more borrowers are asking about adjustable rate mortgages. “And a lot of our borrowers are assuming that in 3 or 5 years, those interest rates are going to have come back down,” said Duncan.

All that that will depend on just how long the Federal Reserve keeps interest rates elevated.