Oct. 30—MOSCOW — Climbing interest rates could trigger a modest decline, but not a breathtaking dip, in the region's home prices in the coming year.

That prediction comes from Steven Peterson, a clinical associate professor of economics at the University of Idaho in Moscow. He was a Realtor for 10 years before 1995, when he became an economist who follows trends in the Northwest.

Some buyers could be less eager because it's more expensive to buy homes now than at the start of the year, he said.

Interest rates on a 30-year fixed home mortgage are now running at close to 7%, compared with 3.2% in early January, according to Freddie Mac.

"What most economists see is basically a slowing of the increase, maybe a slight decrease in (home) prices, but nothing overly dramatic," Peterson said.

The trend has implications for sellers too. They may need to be a little more patient instead of having as many as 10 offers the first day their home hits the market, Peterson said.

The shift follows an unprecedented escalation of prices, according to the areas' multiple listing services.

The average price of a home sold in Lewiston, Clarkston and Asotin was $356,894 in the six months ending Sept. 30, compared with $218,128 five years ago. Moscow saw a similar trend, with its average price being $259,012 in 2017 compared with $476,743 this year in the same time frame.

Even though the market is decelerating some, it's different than in 2008 when the housing bubble burst and triggered the Great Recession, he said.

The recent acceleration of home values was fueled by people needing places to live, not real estate investors, Peterson said.

"There was a huge deficit in house building from about 2008 to about 2018," he said. "And frankly, the market still has not caught up to that."

Absent availability, prices for housing of all kinds rose, something that didn't occur in the years just prior to the Great Recession, Peterson said.

"It was in almost every rural community in the state," he said. "I was just (shocked) when I first realized how widespread the price increases were across Idaho, both in urban and rural areas."

A dramatic rise in rents paralleled what happened in the housing market, something that didn't happen in the years just prior to the Great Recession.

The trend was more pronounced in Idaho than most places in the nation, with the state ranking third highest in rent hikes from 2018 to 2021.

"We will have to see how the next several months play out to see to what extent housing prices are really going to fall," Peterson said. "(Economists) think that the fundamentals behind the recent increase in home prices are sound and that this is not a speculative bubble."

Williams may be contacted at ewilliam@lmtribune.com or (208) 848-2261.