The past seven months of 2022 have been interesting ones as far as the real estate market is concerned. Mortgage rates have risen sharply since the start of the year, but so far, that doesn’t seem to have impacted buyer demand all that much.
But things could change as August rolls along. Here are a few things that are likely to shake out over the course of the month.
1. Inventory will rise
In June, housing inventory rose 9.6% from May and 2.4% on an annual basis, according to the National Association of Realtors. And as of the end of the month, there was a three-month supply of available homes on the market.
Although that three-month supply is well below normal, the fact that inventory has ticked upward is encouraging. And chances are, inventory will continue to rise in August as sellers move past pandemic-related hesitancy.
Sellers may also decide to list their homes to get ahead of a potential decline in buyer demand. With recession fears on the horizon, sellers won’t want to miss the opportunity to cash in while home values are sky-high.
2. Mortgages will get even more expensive
Mortgage rates have been climbing since the start of 2022. Meanwhile, the Federal Reserve just implemented a 0.75% interest rate hike for the second month in a row. That could lead to an even more substantial uptick in mortgage rates during the month of August. And at a time when home prices are already high, that’s not a great thing for buyers.
Cash buyers have, for the past few months, had a solid advantage over mortgage borrowers. But with borrowing rates rising, we could see an uptick in cash offers in the next four weeks.
3. Home prices will largely hold steady
Real estate inventory is creeping upward, and that’s a good thing. But we’re not yet at the point where there’s enough inventory to meet buyer demand — not even close. As such, it’s doubtful that we’ll see a major drop in home prices in August, as the market will need time to adjust to inventory-related fluctuations.
This isn’t to say that there won’t be exceptions, and in some markets, buyer demand is already cooling (and home prices are following suit). But for the most part, buyers and real estate investors should not expect August to be the month when listing prices suddenly take a turn for the far more affordable.
So, should you buy a home in August?
It depends. The upside of buying in August is potentially locking in a reasonable mortgage before rates climb even more. And with inventory picking up, buying may not be such a struggle. But don’t expect bargain home prices in August by any means.
Should you sell a home in August?
Maybe. Inventory is still limited now, which means there’s less competition. And it’s a good idea to list a home before rising mortgage rates push more buyers out of the market.
All told, it will be interesting to see what August has in store for the real estate market. But whether you’re a buyer or seller, be sure to pay attention to how things shake out so you can make the right financial decision for you.
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