The last time housing was this unaffordable, it took a Great Recession to bring affordability back to the market.
The current housing market is showing signs of weakness, with a sharp decline in inventory but only moderating signs of price appreciation. This indicates that the market's pent-up supply is not driving the record increases of the last two years, but rather high interest rates are suppressing demand.
What remains to be seen is the effect that additional rate hikes will have. The market for the past year has been overly optimistic in its projections and currently hopes for a rate pause or decline going forward (much the same as what they hoped for in May, when before they saw a 25 bp increase). However, with inflation remaining stubbornly high, and consumer spending only moderating, there is still more than a good chance of a 25 basis point rise in 2023.