Buyers looking for relief in a sizzling home market might finally be seeing some in the form of falling home prices.

That's according to Redfin, which says 13% of home listings on its site had dropped their price during the four weeks ending April 10. That's up from 10% a month earlier and 9% from the same period a year ago.

The big listing service says this is occurring during a season when price drops are typically fewer, and that it's the fastest the share of price drops has grown this time of year since at least 2015.

A Redfin sign in front of a home for sale.

Image source: Getty Images.

The reason for the pullback is simple: rising interest rates. The Mortgage Bankers Association says mortgage applications dropped 5% for the week ending April 15 from the week before as the 30-year fixed rate hit an average of 5.2%, up 2 percentage points from a year ago and the highest since 2010.

There's simply only so much that borrowers can afford -- Black Knight says affordability as measured by mortgage versus monthly income has hit a 15-year low -- and the combination of rates suddenly moving sharply up and prices staying high would seem to dictate a change. That could now be happening on the pricing side.

"There really is a limit to homebuyer demand, even though the market over the past few years has made it seem endless," said Redfin Chief Economist Daryl Fairweather in a press release.

Supply surge? Interest rates help keep sellers on the sidelines

Of course, there are always two sides to this economic pushmi-pullyu. Redfin also reports that about half of all U.S. homeowners have mortgages with rates below 4%, making holding on to their current home more attractive than taking advantage of the surge in their homes' value.

That would seem to dampen any surge in inventory. Prices also remain at record highs, demand is strong, and many markets are still seeing homes sell very quickly as supplies remain limited.

Fairweather says in that same press release: "The sharp increase in mortgage rates is pushing more homebuyers out of the market, but it also appears to be discouraging some homeowners from selling. With demand and supply both slipping, the market isn't likely to flip from a seller's market to a buyer's market anytime soon." 

Indeed, each prospective buyer has to do their own calculations, and for many, this is still a good time to buy.

Head for the hills! Or at least inland

Redfin also reports that it's seeing a drop in buyers requesting services from agents in the pricier coastal markets. That, too, could be a harbinger of things to come, and a signal for real estate investors to react in two ways: Watch for deals in those places and/or take advantage of the much-lower prices available in places like Midwest markets.

Those are the places where people who can live and work anywhere can get the most for their money, and where the calculation of interest rates versus home prices still applies. But with a much lower total, that means more buyers moving in. It's all about timing, right?