3 Housing Market Predictions for August 2023

At this point, it's pretty fair to say that 2023 is shaping up to be a tough year to buy a home. Between expensive mortgages and limited inventory, buyers might continue to struggle as they have been for the past several months.

Now sometimes, housing market conditions improve in the spring and summer. But so far, we haven't seen much movement there. And based on existing conditions and recent data, here's what we can likely expect from the housing market in August.

1. Mortgage rates will remain high

As of late July, the average 30-year mortgage rate was 6.78%, according to Freddie Mac. It's unlikely that mortgage loans will get less expensive to sign in August, and we could even see the average rate creep upward into the low 7% range.

Of course, there are some steps that prospective buyers can take to try to snag as competitive a mortgage rate as possible. These include boosting their credit scores and keeping their non-mortgage debt as low as possible. But for the most part, anyone looking to buy a home in August should not expect a bargain from a mortgage rate perspective.

2. Homes will remain expensive to buy

There's not a lot of real estate inventory to choose from these days, so despite higher mortgage rates, sellers are still able to command higher prices for their properties. The National Association of Realtors (NAR) reports that in June, the median existing-home sale price was $410,200. That's the second-highest figure on record since January 1999.

It's also worth noting that home prices remain high even though sales are dropping. In June, existing-home sales fell almost 19% from a year prior, says the NAR. But a decline in buyer demand clearly didn't do a whole lot to bring home prices down.

3. Housing inventory will remain stagnant

At the end of June, there were an estimated 1.08 million unsold housing units on the real estate market, according to the NAR. But that only represents a 3.1-month supply of homes.

It normally takes a minimum of a four-month supply of homes to meet buyer demand in full. And it can commonly take up to a six-month supply.

As long as housing inventory remains stagnant, sellers can get away with charging higher prices. But at this point, there's a bit of a chicken-and-egg situation happening with mortgage rates that's likely to result in ongoing inventory challenges.

Because it's gotten so expensive to sign a mortgage, many sellers are hesitant to do so. As such, they're staying put. And if people aren't willing to sell their homes, inventory won't increase.

Should you aim to buy or sell a home in August?

It's easy to make the case that August won't be a good time to buy or sell a home. For buyers, it's easy to see why -- there's not much inventory to choose from, and both homes and mortgages are expensive.

For sellers, what makes August a bad time to list a home is the struggle to find a new house to buy at a time when the market lacks inventory. And anyone who sells this summer and needs a new mortgage is apt to find that the cost of signing one is high.

That said, August could be a good time to sell a home for those who won't need a mortgage to find a replacement home. That's because sellers can capitalize on low inventory and the higher prices that situation tends to lead to.