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Will October be kinder to home buyers than previous months? What about sellers? Read on to find out.
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A lot of people have been struggling to buy a home in today’s market. And it’s easy to see why.
For one thing, mortgage lenders haven’t budged on the elevated borrowing rates they started to impose in 2022. Combine that with expensive home prices and limited inventory, and it’s hard not to get discouraged as a buyer.
But will October be any different? Unfortunately, probably not. Here are a few things you can expect from the housing market in October.
1. Mortgage rates will likely remain elevated
As of late September, the average 30-year mortgage rate was 7.19%, according to Freddie Mac. That isn’t likely to budge very much in October.
Sure, we could see the 30-year loan drop closer to 7%, or even fall into the upper 6% range. But buyers should not anticipate a notable drop in mortgage rates. To put it another way, if you can’t afford to sign a mortgage at today’s rates, then you probably can’t afford to sign one in October, unfortunately.
2. Home prices could rise even more
Over the past three months, home prices have risen on an annual basis, according to the National Association of Realtors (NAR). So there’s a good chance home prices will climb once again in October.
That’s a good thing for sellers. But for buyers, it’s pretty darn terrible considering how expensive homes are already.
In August, the median existing home sale price was $407,100. Even if that number rises only slightly in October, it might still price a lot of buyers out of the market.
3. Housing inventory probably won’t pick up
As of late August, there was only a 3.3-month supply of available homes, reports the NAR. That’s well below the 4- to 6-month supply that’s generally needed to fully meet buyer demand.
Unfortunately, housing inventory is stuck in a bit of a holding pattern due to where mortgage rates are sitting today. Homeowners don’t want to sell their properties because doing so will often mean having to sign a new mortgage at a much higher cost. And if homeowners aren’t motivated to sell, inventory can’t pick up.
Should you bother trying to buy a home in October?
There’s no other way to say it — October will not be an easy time to buy a home. But that doesn’t mean that it can’t be done.
Yes, inventory is limited. But chances are, you’re only looking to buy one home. If you find it, you’re set. So keep doing what you’ve been doing — continue to keep an eye on listings and get ready to pounce when your real estate agent tells you about a home that’s hit the market.
At the same time, keep crunching the numbers to make sure you don’t end up with a home you can’t comfortably afford. As a general rule, it’s best to keep your predictable monthly housing expenses to 30% of your take-home pay or less. And that’s not just your mortgage payment — it should include property taxes and homeowners insurance as well.
If home prices keep rising and mortgage rates follow suit, you may have to adjust your price range to make sure you’re not going overboard. It’s better to do that at the start of the month, before you spend time looking at homes that may be out of reach.
Meanwhile, if you’re interested in selling your home, you’re in a good spot if you’re planning to downsize and use the proceeds of your sale to purchase a new home outright. But if you’ll need another mortgage, it’ll mean paying up due to where borrowing rates are at. That’s something you may not want to do. So unless you’re desperate to sell for a specific reason, like relocating for a job, you may want to hold off.
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