Home inventory may improve soon — here's how buyers can prepare

If you've been searching for a new home over the past few months, you may be familiar with the double whammy potential homebuyers are facing right now: rising mortgage rates and a low inventory of homes on the market.

Many homeowners who locked in a low mortgage rate during the pandemic don't want to take on a new loan, as rates are approaching 7% APR today. But new data shows that the tide could soon change. If you're in the market to buy a home today, start comparing mortgage interest rates you can qualify for here.

Could housing inventory improve soon?

According to the most recent data from Realtor.com, the number of homes for sale across markets is lagging. As of July, homes actively for sale have decreased by 6.4% compared to last year.

But a new report from Zillow shows that buyers could get some relief in the near future. Nearly a quarter (23%) of homeowners said they are either considering selling their homes within the next three years or have their home listed for sale currently. That's an increase from 19% at the beginning of this year, and 15% this time last year.

Of course, inventory is only one part of the equation. Mortgage rates are still important, too. It's impossible to predict where exactly mortgage rates could go in the near future, but some experts predict that a longer pause in Fed rate hikes could halt rising mortgage rates, even if they don't immediately drop. Find out what rates you can qualify for here today.  

What buyers can do now to prepare

The experts we've spoken to say that it can still be worth buying in todays market, even with fewer homes for sale and increased mortgage rates, if you find the right home for you. 

Regardless of whether you find the perfect home today or in the future, scoring the right mortgage rate can make a big difference. Here are a few ways you can start preparing now so to get the best possible mortgage.

Check your credit

It's always a good idea to check your credit score and credit report before applying for a loan — especially one as long as a mortgage. Look out for any errors or inconsistencies on your credit report that could be affecting your score. If you find anything out of place, contact the credit bureaus to dispute it.

If your credit score isn't in as good standing as you'd like, start practicing good credit habits now to improve it over time. This includes paying your bills in full and on time, reducing your credit utilization and limiting the number of applications for new loans or lines of credit within a short window.

Compare loan terms

Your mortgage interest rate is important, but it's not the only consideration when choosing a mortgage. The type of loan you choose and the length of your term can make a difference in how much you pay over time.

Before you actually apply for your loan, compare the benefits and drawbacks of choosing a fixed interest rate or an adjustable-rate mortgage. You should also decide whether you want a 15-year term length or a 30-year loan. You may get a lower interest rate with higher monthly payments when you choose a shorter loan term, or a higher interest rate with lower monthly payments on a loan with a longer term.

Shop with different lenders

Once you've decided what type of mortgage works best for your situation, you may want to compare different lenders. You can apply for pre-approval with different lenders to see exactly what loan terms and rates you may qualify for. 

Don't forget to apply for pre-approval using the same information and loan type in order to make a fair comparison across different lenders. Want to see what you can qualify for today? Get started with some of today's top mortgage rates. 

The bottom line

Despite today's ongoing shortage of housing inventory, data is beginning to signal a change — with more homeowners planning to list their homes for sale over the next few years. If you're looking to buy a home, now is the time to start your financial planning. Take time to ensure your credit is in good standing, you know the type of mortgage you're looking for and even what rates you may qualify for. When you do find the right home for your budget and needs, you'll be in a good position to make your purchase.