The rise in mortgage rates has forced borrowers into less expensive homes—as purchasing power drops.

A homebuyer with a monthly housing budget of $2,500 a month and a 20 percent down payment could afford to purchase a home for as much as $473,750 at the beginning of the year when 30-year mortgage rates were averaging around 4 percent. Now that rates have climbed above 4.75 percent, that same buyer can only afford a home priced up to $444,000—a loss of $29,750 in purchasing power, according to a Redfin analysis.

Home prices in some of the hottest markets have been inching down over last few months. Prices are still higher than they were a year ago, but price growth is slowing in the coastal markets where homes are sitting on the market longer, more homes are available to choose from, and more sellers are dropping their prices.

"Every fall and winter we see prices decline relative to spring and summer, but this year's seasonal declines have been more extreme as buyers, especially in coastal markets, are finally reaching a limit in terms of how much they are willing to pay," said Redfin chief economist Daryl Fairweather. "Sellers haven't quite come to terms with the fact that they no longer have buyers wrapped around their finger. This push and pull is likely to continue until early 2019 when the home-buying season picks back up."

For those weighing whether to buy a home now before mortgage rates tick up further, or wait for seasonal price declines, Redfin published the attached chart showing how purchasing power changes as mortgage rates rise, on several different monthly housing budgets.

Rates are expected to continue rising through into 2019, which will have a direct effect on the number of homes that are affordable to buyers.

For instance, a borrower who’s looking for a three-bedroom, two-bathroom home. If his monthly house payment budget is $3,500, an increase in mortgage rates from 5.0 percent to 5.5 percent would reduce the number of homes for sale that you could afford by more than 15 percent in Orange County, Calif., Honolulu, or San Jose. In Boston, Seattle, Los Angeles, or San Diego, your selection shrinks by 10 to 14 percent.

Table: Number of Affordable 3-bed, 2-bath Homes For Sale at $3,500 Mortgage Payment

[For this table, Redfin used the relatively high monthly mortgage payment of $3,500, which is enough to purchase a home around the median price in many coastal markets. The data show that even with a budget this high, the selection of homes for sale can be dramatically affected by rising rates.]

With a monthly housing budget of $2,500, if rates rise to 5.5 percent, the number of listings on the market that a buyer can afford decreases by 10 to 20 percent in Sacramento, Long Island, Denver, and Portland, Oregon.

If prices actually fall next year (which is not currently expected in most markets), falling prices could offset the cost of rising mortgage rates. However, the bigger a borrower's budget, the bigger home price drops needed to see in order to balance out increasing mortgage rates. For example, if a budget is $2,500 a month, a borrower would need to pay $18,000 less for the home to offset a rate increase to 5.5 percent from 5 percent. If the budget is  $3,500 a month, the home price needs to be $25,250 less to keep the borrower's payment the same.