Unexpectedly strong home sales at the start of this year just reversed a sharp, several-month decline in home prices. Mortgage rates are behind the swing.

Home prices nationally rose 0.16% in February, when seasonally adjusted, according to Black Knight. That is the strongest one-month gain since May of last year. Home prices are now 2.6% below their peak last June.

Of the 50 largest U.S. markets, 39 saw home prices rise in February. That’s a quick turnaround from November, when prices were falling in 48 of 50 markets.

Behind the quick change are wide swings in mortgage rates. The average rate on the 30-year fixed began rising off of a record low at the start of 2022. By June it had gone from around 4% to just over 6%. Sales slowed down, and prices followed. By fall, the rate shot over 7%, and home prices began cooling more quickly.

In December and January, however, mortgage rates began pulling back, and homebuyers were quick to take advantage. Closed sales of existing homes in February, which represented contracts signed in December and January, shot a remarkable 14.5% higher, according to the National Association of Realtors.

“Conscious of changing mortgage rates, home buyers are taking advantage of any rate declines,” Lawrence Yun, NAR’s chief economist, said in the February sales release.

As with all real estate, however, the price dynamics differ depending on location. Miami continues to see the largest price gains, along with more affordable markets in the Midwest, like Cincinnati, Columbus and Cleveland. Meanwhile, prices are still falling in some of the markets which saw the greatest price inflation over the last several years. Those include Austin, Las Vegas, Salt Lake City, Seattle and San Francisco.

While mortgage rates were the driving factor for the price turnaround nationally, tight supply is adding to the upward pressure, especially with new spring demand from buyers.

“The unfortunate reality is that the scarce supply of inventory that’s the source of so much market gridlock isn’t getting any better,” said Andy Walden, Black Knight’s vice president of enterprise research strategy, in the release.

The number of homes available for sale fell in February for the fifth straight month to the lowest level since May of last year, according to Black Knight. New listings were 27% lower than their pre-Covid pandemic levels.

“While some price increases – most notably in Miami, which saw the largest of the month – can be chalked up to people moving to the area, we’re seeing stronger price gains more generally in those areas with better affordability and larger inventory deficits,” Walden added.

Mortgage rates began rising again in February and then fell back slightly in March due to market fears over the U.S. banking system, amid several bank collapses.

Demand for homes, however, appears not to have been swayed by the crisis, with real estate agents anecdotally still reporting busy open houses. Black Knight is still predicting prices to move lower again throughout the rest of this year, but if supply continues to drop, keeping the competition strong, prices may not have far to fall.