Due to the ongoing persistence of higher mortgage rates, numerous homeowners may find themselves hesitant to sell, despite their strong desire to relocate. Consequently, the housing market is currently grappling with a scarcity of available listings, leaving potential buyers with limited options.

In the week ending on August 26, new listings recorded an 8.8% decrease compared to the previous year, marking a continuous 60-week decline. Moreover, the total housing inventory, encompassing both new and existing listings, is trailing behind last year's figures by 5.9%.

The limited availability of listings is propping up home prices, a situation that may disappoint hopeful buyers. In August, median list prices held steady at $435,000. While there was an annual decline in prices during June and July, for the week ending August 26, prices remained unchanged compared to the same week in the previous year.

"The tension between the demand for affordable homes and the shortage of available properties is keeping prices close to last year's levels," explains Jones. Buyers seeking potential growth in listings and reasonable prices can turn their attention to new construction. "Builders are actively increasing new construction projects to offer more options to buyers," Jones explains. A Shift in the Pace of Real Estate Sales Despite the presence of high mortgage rates, elevated home prices, and limited choices, Jones notes that homebuyers still appear "enthusiastic" about making purchases.

This is evident in the pace of home sales, which has been slowing for the past 58 weeks but is showing signs of a turnaround. "For over a year, the typical time a home spends on the market has been increasing compared to the same period the previous year," Jones points out. "However, this gap has generally been decreasing this year." For the week ending August 26, this gap narrowed to just two days, down from four days the previous week and six days the week before. "As we move beyond the 2022 housing slowdown period, it's likely that this gap will continue to shrink, and by fall, we may even witness homes selling more quickly than they did a year ago," says Jones.

"If this materializes, it could signify that the market is establishing a new norm, where homes spend fewer days on the market than pre-pandemic but more days than during the peak of the real estate frenzy.""We anticipate a 5% decrease in the overall existing home inventory available for sale in 2023 compared to 2022," states Jones.

Nevertheless, she further explains, "Even if there is some improvement in inventory during the fall, the number of new listings remains more than 20% lower than what was typically observed during this time of year before the pandemic. This shortfall could potentially contribute to further price increases in the weeks ahead."

The reality of the situation is home prices are continuing to rise due to the inflation we have seen over the past few years.  The dollar has become weaker than it was pre-pandemic, so it takes more dollars to buy homes and property.

Real estate has historically been a solid hedge against inflation and this current cycle of rising prices has proven that true again.  If you are in the market and can afford the home you want, then you should buy it.  When rates drop again, you will have the ability to pay less per month for the same home you are already in by refinancing it.  

You marry your house, but you only date your mortgage rate...