“Interest rates can’t stay this low forever. When they do start to go up, do you think home values will increase? I think it will shake people off the fence and there will be a mini-surge in home sales.”
That brings to mind the old economist’s joke: Why are there no one-armed economists?
Answer: Because they couldn’t say, “on the other hand.”
…Okay, economists aren’t so funny!
To answer your question…
On the one hand, higher rates will decrease buying power, thus decreasing demand.
But on the other hand, higher rates will motivate some homebuyers to go out and buy, thus increasing demand.
Which force will prevail? It’s anyone’s guess…