3 Housing Market Predictions for October

It'll be interesting to see what the upcoming month has in store.

If you ask the average buyer whether 2022 has been an easy year to purchase a home, you'll probably get a resounding "no." For much of the year, housing inventory has been extremely limited, forcing buyers into bidding wars that have ultimately driven prices upward. 

But things seem to be shifting in buyers' favor. And so if you're in the market for a home, you may find that things start looking up in October in some regard. Here are a few predictions for the coming month.

1. Inventory should continue to increase modestly

Housing inventory has been ticking upward over the past few months. So there's reason to think that trend will continue into October.

Also, many sellers are aware that economists have been sounding warnings about a potential recession. That's a situation sellers will no doubt want to get ahead of -- namely, by getting their homes ready and listing them sooner rather than later. 

Of course, the more housing inventory there is for buyers to choose from, the more bargaining power they get. And an uptick in inventory could really make bidding wars a rare occurrence instead of a regular thing.

2. Mortgage rates could climb -- but probably not by much

We've seen mortgage rates rise sharply this year following record-low rates during the latter part of 2020 and 2021. With the Fed making plans to continue implementing interest rate hikes, there's reason to believe mortgage rates could continue to climb in October. That's the bad news.

The good news, though, is that we're probably not talking about a drastic jump. The average 30-year loan recently rose above 6%, and so it's fair to say it could hover between that and the 6.5% mark in October. But we're unlikely to see that loan product hit 7%. 

3. Home prices could dip

While the idea of even higher mortgage rates may be discouraging, on the flipside, we could see home prices start to come down -- especially if inventory picks up nicely. Now this doesn't mean we'll be looking at pre-pandemic prices anytime soon. But it is fair to say that buyers could get a modest break as sellers start to realize supply is catching up to demand.

Should you try to buy a home in October?

If you're in a solid place financially, have strong credit (which makes it more likely you'll qualify for a mortgage) and have ample funds saved for a down payment, then you may decide that October is the right time to purchase a home. But realize that if you go that route, you might still pay a higher price than usual for your home and get stuck with a higher borrowing rate.

That said, even fixed-rate mortgages give you some wiggle room because there's always the option to refinance to a lower interest rate down the line. If you're financially ready to buy a home and are tired of being a renter, then you shouldn't let higher borrowing rates stop you from moving forward.