While there are plenty of challenges for homebuyers and sellers in today's market (as there are in every market) there are a couple of silver linings as well.

If you're a prospective homebuyer, for example, rising mortgage rates are causing the runaway price increases of recent years to finally subside. While declining prices are leading to fewer sellers choosing to list their home, buyers can at least enjoy a reprieve from the inflated prices and bidding wars that had been plaguing the market.

According to a recent Zillow market report, while the number of buyers and sellers decline as mortgage rates rise, the result is a more balanced market. Home values remained nearly flat in October as new inventory waned and sales continued to fall from the pandemic frenzy.
 
"Home prices in October remained in suspended animation as more buyers, but especially sellers, took a wait-and-see approach to market conditions," said Skylar Olsen, chief economist at Zillow.
 
Rapidly rising mortgage rates continue to have an impact on affordability despite the leveling off in home prices. According to the report, the share of income spent on monthly mortgage payments has risen from 27.7% in February to 37.3% in October, making the monthly mortgage payment on the purchase of a typical house in the U.S., even when putting 20% down, $1,910 in October.
 
Mortgage-rate-driven affordability changes are also highly impactful on seller behavior, keeping more existing homes out of the market. While first-time buyers have experienced continued pressure on rent as well, homeowners who bought or refinanced when rates were near record lows in 2020 and 2021 are sitting on substantial home-value gains and have little incentive to take out a new home loan.
 
To that point, the number of new, for-sale listings dropped by more than 12% month over month, bringing the flow of listings to the market 24% lower than in 2021 and 21% below 2019. There are slightly more (1.8%) for-sale listings on Zillow than a year ago, but still far fewer (-36.1%) than in October 2019.
 
Despite the less-than-favorable statistics, there are silver linings for both buyers and sellers alike in today's market: Sellers can take advantage of less competition on the market, and buyers once again have the appropriate amount of time to make wise decisions about their home purchase without the pressure of losing the listing to a higher bidder. And while interest rates rose fast over the past six months, recent news on the slower-than-expected pace of inflation may bode well in terms of further increasse.
 
Your local real estate professional can help you make sense of the headlines and navigate the nuances of today's housing market to make a decision that safeguards your financial future, whether you're looking to buy, sell or move up.