October 2023 Real Estate Market Overview

The housing market, on the whole, remains constrained by the same factors that have kept it from growing for the past few months. Mortgage interest rates remain high, having stabilized at just over 7% in September, and overall housing inventory remains low, with current owners reluctant to sell or refinance. However, the situation may be set to change soon, with more construction on the way to address the shortage of available housing.

Mortgage Interest Rates Stay High

Mortgage interest rates have been at above 7% through most of September, and with the Federal Reserve not set to change its policies anytime soon, it is likely that interest rates will remain there for some time. This compounds the issue of the high cost of housing, which has discouraged people from buying new homes. Refinancing has also suffered, as many people who might otherwise want to refinance would need to take a mortgage with higher interest than they already have.

Housing Inventory Stays Low

At the same time, the amount of available inventory for sale has remained low, which has kept prices up despite the relatively high interest rates. Demand also remains high relative to the number of available properties, despite the high costs involved. As a result, any homes that do go on sale rarely stay on the market for long, and often see highly competitive bidding that increases prices even further.

Current Owners Reluctant to Sell

Current owners are not eager to part with their properties either, in part due to the above mentioned factors. After all, most homeowners who sell their home will also need to purchase a new home themselves, and in many cases, that means accepting a new mortgage that is far higher than the one they currently have. As a result, even if they may want to sell, economic conditions are such that they may need to accept a significant financial burden to do so.

Construction May Offer Some Relief

Fortunately, there are some signs that new construction may offer some relief to this highly constrained market. With the high demand comes people looking to construct new supply to satisfy that demand, although it has been slow going for many companies to begin these new projects. If interest rates start to go down, it is likely that these projects will increase in frequency and intensity, which could also help to bring mortgage prices down to a more affordable level.