The culprits: rising mortgage rates, a new tax law that reduces the incentives for homeownership and a growing weariness among first-timebuyers being priced out of the market—all of which are expected to damp demand for homes this year.

The next few months are a critical test of the housing market, as buyers look to get into contract before summer vacations and the new school year. About 40% of the year's sales take place from March through June, according to the National Association of Realtors.

With sales volumes expected to be lackluster this year, the relentless price increases of the past few years could lose some steam. That could present opportunities for hardy buyers willing to brave rising interest rates, but make it slightly more difficult for sellers in some pricey markets.