The housing market in the U.S. is facing an unprecedented challenge as rising mortgage rates threaten to forever change the landscape for homebuyers and sellers. Morgan Stanley recently revised its housing market outlook, reversing its previous prediction of falling home prices. The Investment banking giant is now forecasting a potential 5 percent increase. Mortgage rates have already soared above 8 percent, the highest in decades.

Rising mortgage rates are making borrowing more expensive and thus making homebuying more of a challenge. Morgan Stanley warns that if mortgage rates remain at 8 percent or higher for an extended period, existing home prices could decline by as much as 5 percent, Fortune reported.

The housing market has already experienced the negative effects of escalating mortgage rates, with falling sales and a growing reluctance among homeowners to sell their properties. In September, sales dropped to a record low.

Assuming the 8 percent mortgage rate remains, Morgan Stanley predicts that the housing market will see flat prices by the end of the year, The Street reported. The rise in mortgage rates has already led to a major drop in home sales, with sales figures reaching their lowest point since 2010. The median price of homes across the country has remained around $400,000 since May.

Morgan Stanley isn’t the only company issuing a warning. Home sales haven’t hit these lows since 2010 and Zillow warned of this “deep freeze” back in the spring, Fortune reported. Economists, such as Mark Fleming, chief economist at Fortune 500 financial services firm First American, and Jeseo Park, from Bank of America Research, said the current housing market is similar to the “housing recession” of the 1980s.

Meanwhile, Zillow economists had been increasing their home price forecast each month through August, and predicted that home prices would rise 2.1 percent between September 2023 and September 2024.

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