Higher Mortgage Rates Lead To Increased Housing Inventory

Housing inventory
The silver lining to higher mortgage rates is an increased housing inventory.

For the past few years, the housing market has been a seller’s paradise. Low housing inventory and high demand fueled bidding wars and pushed prices ever higher. But a recent shift is happening – one driven by rising mortgage rates.

Remember the rock-bottom mortgage rates of 2020 and 2021? Those are a distant memory now. As the Federal Reserve works to combat inflation, interest rates have climbed steadily. This translates to significantly higher monthly mortgage payments for potential buyers.

The result? A dampening effect on housing demand. Homes that were flying off the market just a few months ago are now lingering a bit longer. We discuss the impact of these higher rates on the housing inventory below.

Higher rates and housing inventory

Affordability Squeeze: When mortgage rates rise, the monthly payment for a home increases. This can push some potential buyers out of the market, especially those on tighter budgets. With fewer qualified buyers, the demand for homes starts to cool.

Sellers Reassessing: As the buying frenzy subsides, some sellers who might have held off listing their homes in the past hot market may now be more motivated. They may be concerned about missing the peak of the market or worried their listing will languish if they wait.

More Time on the Market: Homes that might have sold quickly in a low-rate environment may now sit on the market for longer. This allows for a more balanced market where sellers have to be more realistic with their pricing.

Impact on New Construction: While the short-term effect on new construction is uncertain, some experts predict a slowdown. Builders may be hesitant to start new projects if they see a softening in demand. This could further contribute to a rise in available existing homes.

What does this mean for buyers & sellers?

For buyers, this shift presents a welcome opportunity. With more choices and potentially lower prices, they’ll have more negotiating power. However, with rising rates, careful budgeting and pre-approval for a mortgage remain crucial.

Sellers may need to adjust their expectations. While they might not be able to command top dollar as easily, a more balanced market can still offer a fair price.


Higher mortgage rates are changing the housing inventory and market landscape as a whole. While some sellers may see longer listing times and potential price adjustments, this shift also presents a long-awaited opportunity for buyers. As the market stabilizes, we can expect a more balanced environment for both sides of the transaction.

As always, all housing markets are local. Whether you are buying or selling a home in this market, it is best to hire a local and knowledgeable real estate agent to guide you through the process.

Are you thinking about buying or selling in the South Florida area? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, be sure to download the free Florida Home Search app for your smartphone or tablet.

By natasha moore

REALTOR® with Live South Florida Realty, Inc.