Will mortgage interest rate fluctuations impact market activity in the local housing market?

Yes and no.

For context, first...

Over the past year, rates have fluctuated between 5.75% and 7.75%.  That's a pretty broad swing over just a single year.

The current average rate of 7.09% is lower than the 7.5% rate we saw six months ago.

Rates have been mostly rising over the past four months from 6.6% to 7.1%.

So, will rates impact market activity?

Yes... if/as rates get back below 7% or closer to 6.5%, more buyers are likely to more seriously consider more offers on more properties.  Likewise, if/as rates rise further and if they approach 7.5%, fewer buyers are likely to consider offers.

But, no... rate swings between 6% and 7% (for the most part) seem unlikely to drastically change the number of buyers who will choose to buy a home this year.

So, if you will be selling a home, you likely don't need to try to time your listing with when mortgage interest rates are lowest.

And if you will be buying a home, it will be convenient if the home you like the most hits the market when mortgage interest rates are the lowest... but you'll probably still pursue it if rates are a bit higher when that perfect house hits the market.