Deaths, divorces, moves, bankruptcies, etc. still happen, so there's still a market. The average peasant didn't suddenly begin to make 2x more per month, so for the same fixed monthly payment, the house price needs to go way down. Cash buyers may be less sensitive to rates, but even they have significantly slowed purchases since the low rate frenzy.
Prices for homes last year were crazy high, because of the low interest rate. You should have a chance to get a house in the next year or two when prices come down a bit, and then refinance in 5 years.
At some point ARMs might actually make sense for people again as well. Once rates go up further and inflation actually starts to come down they should be a relatively safe bet.
Land cannot be created. The interest rate hike is on purpose. Price buyers out of homes from people who've deceased or moved into assisted living. Landlords purchase with cash, interest drops... then homes have a limited availability and increase in price. Repeat