Sarah Travers
As August 2023 approaches, the housing market continues to face significant hurdles, leaving both buyers and sellers grappling with difficulties due to limited inventory and surging mortgage rates.
Despite the usual upswing in spring and summer, the market remains stagnant, and there seems to be no relief in sight. Let’s delve deeper into the three key predictions for the housing market in August.
Persistently High Mortgage Rates
Prospective homebuyers are bracing for tough times as mortgage rates are expected to stubbornly stay high. According to recent data from Freddie Mac, the average 30-year mortgage rate stands discouragingly at 6.78%. There is little indication that these rates will become more affordable, and some experts even suggest they might edge up into the low 7% range.
For buyers seeking competitive mortgage rates, there are measures they can take, such as boosting their credit scores and reducing non-mortgage debt. However, the overall outlook remains disheartening for those hoping for more affordable financing options.
Limited Options with Expensive Homes
The scarcity of available real estate inventory continues to push home prices higher. Despite a 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, marking the second-highest figure since January 1999.
Unfortunately, the decrease in home sales did not lead to lower prices. The real estate market remains fiercely competitive due to limited choices for potential buyers, allowing 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, representing a meager 3.1-month supply of homes. Typically, a four to six-month supply is needed to meet buyer demand.
The current impasse in housing inventory has created a catch-22 situation. 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 dynamics of the housing market.
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 involved.
- 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 significant financial compromises. Prospective buyers will need to be prepared for expensive mortgages and possibly settle 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.
