Demand in the housing market tailed off last month as hopes of a Bank of England rate cut faded, according to an industry report released just hours before a major housebuilder issued a profit warning.
A monthly study by the Royal Institution of Chartered Surveyors' (RICS) pointed to a drop in prices during May.
At that time, mortgage rates were edging upwards after it became clear there would be no imminent action from the Bank to cut borrowing costs, despite some progress in its battle against inflation.
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Fixed rates had taken a tumble at the start of the year in anticipation of a rate cut from the 5.25% level imposed by the Bank to tackle the pace of price growth.
But the news out of Threadneedle St since has been akin to 'we're (still) not there yet' - with markets now seeing August or September as the most likely months for the first reduction.
The delays to rate cut expectations - a familiar theme for markets during 2024 - hit sentiment among buyers, RICS said, as many fret over affordability.
According to the latest data from the information service moneyfacts.co.uk, the average two-year fixed residential mortgage rate currently stands at 5.97%.
It was last above 6% in December last year.
RICS suggested buyers were sitting on their hands in anticipation of borrowing costs coming down.
That trend was cited by housebuilder Crest Nicholson for a drop in half-year profits, warning its annual earnings would fall at least by a third.
Its shares lost up to 12% in the wake of the update, that also confirmed its interim dividend had been cut to just 1p per share from 5.5p.
In addition to the lending landscape, the company also said that the election was creating "short-term uncertainty".
Tarrant Parsons, RICS senior economist, said: "The recent recovery across the UK housing market appears to have slipped into reverse of late, with buyer demand losing momentum slightly on the back of the upward moves seen in mortgage rates over the past couple of months.
"Nevertheless, expectations point to this delaying, rather than derailing, a modest improvement going forward."
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