Sales of previously owned homes fell 7.2% month to month in February to a seasonally adjusted annualized rate of 6.02 million units, according to the National Association of Realtors.

That significantly missed analysts’ expectations of 6.13 million units. Sales were 2.4% lower compared with the same month a year ago. Rising mortgage rates likely played a role in the underwhelming numbers.

The sales count is based on closings, which means the homes likely went under sale contract in December and January. This is important to note, as mortgage rates were relatively low in December, with the average rate on the popular 30-year fixed loan hovering around 3.25%, according to Mortgage News Daily. But that rate then began to rise steadily in January, reaching 3.68% by the end of the month. The rate is now considerably higher at 4.5%.

“It will be very interesting to observe what’s going to happen in the coming months as mortgage rates make a much more meaningful jump,” said Lawrence Yun, chief economist for the Realtors.

While some of the sales figures were likely affected by rising rates, the bigger issue in housing today is very low supply. More homes came on the market in February compared with January, but there were just 870,000 homes for sale at the end of the month, a 15.5% drop year over year. At the current sales pace, that represents a 1.7-month supply, which is close to an all-time low.

Tight supply and strong demand continued to push prices higher. The median price for an existing home sold in February was $357,300, an increase of 15% from a year ago.

That price is skewed somewhat by the mix of homes that are currently for sale and the price range where sales are most prevalent. Supply is leanest on the lower end of the market. Sales of homes priced between $100,000 and $250,000 fell 26% year over year. Sales of homes priced between $750,000 and $1 million increased 24%. Sales of homes priced above $1 million jumped 21%.

Competition for the limited supply of homes for sale is increasingly fierce again. Homes are going under contract in just 18 days. Nationwide, 68.6% of home offers written by Redfin agents faced bidding wars, according to a new, seasonally adjusted report from the real estate brokerage. That was the highest level since Redfin began counting in April 2020.

“Bidding wars intensified this year after rates started spiking, which lit a fire under buyers. Competition will likely plateau or even decline if rates keep increasing as expected,” said Daryl Fairweather, chief economist at Redfin. “Monthly mortgage payments for new buyers are already at a record high. As they continue to creep up, some buyers will move to the sidelines.”

Regular homebuyers are facing steep competition from investors. The investor share of sales in February was 19%.

First-time buyers, who are generally looking for homes on the lower end of the market, made up 29%, a slight gain from January, but well below the historical average of around 40%. At current mortgage rates and with higher home prices, buyers are paying 28% more today on a monthly payment than they would have for the same home a year ago.

“Our expectation is that home sales will remain relatively high throughout 2022, as homebuyers get creative about how to spend their housing budget amid rising prices of competing expenses like energy, food, and childcare, driven up by inflation,” said Danielle Hale, chief economist at Realtor.com. “So far, buyer activity has been resilient to the extra costs of homeownership, but demand will be tested by an extraordinary year.”