Swedish housing prices were little changed last month, with analysts split on whether a slide in home values will resume as interest rates rise further.

Apartment prices fell by 1% in August from the prior month, while the average price of detached houses remained unchanged, according to data on Thursday from Svensk Maklarstatistik.

The moves follow a decline that started last year when inflation and borrowing costs surged. Current prices are about 10% to 11% below a peak in March and April of 2022, having dipped as low as 12% to 13%, according to data from the organization owned by the Association of Swedish Real Estate Agents.

The market has stabilized this year, shrugging off rising mortgage rates and stubborn inflation, in a move that has puzzled economists and prompted revisions to earlier calls for a 20% total decline. Some, such as Danske Bank A/S and Svenska Handelsbanken AB, now say that prices have hit a trough, while others expect more moderate declines going forward.

Still, households are not out of the woods. The Riksbank will have to respond to continued price increases and a weak krona by further tightening, adding pressure on mortgage lenders. The bank is widely expected to take its benchmark rate to 4% from 3.75% at a meeting later this month, and could raise the rate further in November.

The drop in home prices, combined with rising construction costs, has also led to a sharp downturn in the number of new dwellings that are being built. Estimates for this year indicate that the number of housing starts will be less than half of the 2022 level, which is set to weigh on economic output and exacerbate shortages in many parts of the country.

Data from state-owned lender SBAB has indicated a similar trend of stabilization for the values of detached houses, with some gains recorded in August for a third month in a row. Still, SBAB expects home prices to resume the drop, reaching a total of 20% from last year’s peak.

--With assistance from Joel Rinneby.

(Adds SBAB data in final paragraph)