Goldman Sachs Group Inc. predicts home prices in the US will grow only modestly next year with mortgage rates likely to stay elevated.

Prices will rise 1.3% in December 2024 from a year earlier, compared with a 3.4% gain expected in 2023, Goldman economists including Jan Hatzius said in a note Sunday.

Buyers have been confronting much higher borrowing costs with one measure of the interest rate on a 30-year fixed mortgage hovering near 8%. Homeowners have also become more reluctant to list properties, limiting inventory for sale. Goldman’s strategists expect mortgage rates to stay higher for some time and dip just under 7% by the end of next year.

“While the sharpest declines in housing activity and prices are now long behind us, the recent jump in mortgage rates and prospect that they could remain elevated for the foreseeable future present headwinds to the economy’s most interest-rate sensitive sector,” Goldman economists said in the note.

Owners not wanting to list homes will continue to weigh on transactions. Goldman expects sales of previously owned homes to fall to 3.8 million in 2024, the lowest since the early 1990s. Supply will be further constricted by a nearly 4% decline in housing starts in 2024, according to the bank’s forecast.