As we approach August 2023, the housing market is poised to continue its struggle, with limited inventory and soaring mortgage rates making it a challenging time for both buyers and sellers. Despite the traditional improvement in the spring and summer, the market remains stagnant, with no relief in sight. Let’s take a closer look at the three key predictions for the housing market in August.
Mortgage Rates Remain High
Prospective homebuyers are in for a tough time as mortgage rates are expected to remain stubbornly high. Recent data from Freddie Mac reveals that the average 30-year mortgage rate stands at a discouraging 6.78%. There’s little indication that these rates will become more affordable, with some experts suggesting that they may even edge up into the low 7% range.
Buyers looking to secure competitive mortgage rates can take steps to boost their credit scores and minimize non-mortgage debt. However, the overall picture is one of disappointment for those hoping for more affordable financing options.
Expensive Homes with Limited Options
The scarcity of available real estate inventory continues to drive up home prices. Despite the decline in buyer demand, the National Association of Realtors (NAR) reported that in June, the median existing-home sale price reached a staggering $410,200. This figure is the second-highest since January 1999.
Unfortunately, the decrease in home sales did not result in lower prices. The real estate market remains highly competitive due to the limited choices for potential buyers, enabling sellers to command premium prices for their properties.
Stagnant Housing Inventory
The real estate market is grappling with a significant lack of housing inventory. As of June, only an estimated 1.08 million unsold housing units were available, which represents a meager 3.1-month supply of homes. Typically, a four to six-month supply is required to meet buyer demand.
The current impasse in housing inventory has created a catch-22 situation. The soaring mortgage rates have deterred many sellers from listing their homes, exacerbating the scarcity. Without willing sellers, the inventory shortage is likely to persist, further challenging the housing market dynamics.
Buy or Sell in August?
As we look ahead to August 2023, the decision to buy or sell a home becomes more complex for both parties.
- Buyers’ Dilemma: For potential homebuyers, August may not be the most opportune time to make a move. The limited inventory and high home prices mean that choices are limited, and purchasing a home may require making significant financial compromises. Prospective buyers will need to brace themselves for expensive mortgages and possibly settling for less-than-ideal housing options.
- Sellers’ Prospects: On the other hand, those considering selling their homes could find a silver lining in the current market conditions. For sellers who don’t require a new mortgage for a replacement home, August could be an advantageous time to list their properties. The scarcity of inventory allows sellers to capitalize on higher prices and maximize their returns. However, sellers who intend to purchase a new home in the same market will face the same challenges as buyers.
Navigating August 2023’s Housing Challenges
As the housing market outlook remains bleak for August 2023, both buyers and sellers will need to weigh their options carefully. With mortgage rates expected to stay high, and housing inventory remaining stagnant, prospective homebuyers may need to be patient and pragmatic in their search for a new home. Meanwhile, sellers who can leverage the current market dynamics might find August to be a prime opportunity to achieve top dollar for their properties. In these trying times, navigating the housing market requires a strategic approach and a keen understanding of the prevailing conditions.
