Is it a buyer's or seller's market?

The real estate market has changed significantly over the years. According to the St. Louis Fed, the median sales price of a U.S. home was $412,300 in the second quarter of 2024 — over $124,300 higher than it was a decade ago.

Frequent shifts in real estate market conditions and housing prices make choosing the best time to buy or sell a home a challenge. Whether you’re buying a home or selling, you want to get the best value for your money. Find out whether it’s a buyer’s or a seller’s market and how that affects you.

What defines a buyer's market?

What determines a buyer’s market vs. a seller’s market comes down to the law of supply and demand. If there’s more supply than demand, prices fall. If demand is high, prices rise.

In a buyer’s market, supply exceeds demand. This means there are more homes available than there are people to purchase them.

Because of this, homeowners often have to compete with one another to attract buyers. This can give buyers more negotiating power as sellers are generally more willing to drop their asking price. Buyers may also get more concessions from sellers who are eager to make the sale.

What defines a seller's market?

A seller’s market favors the homeowner. In such a market, demand exceeds supply and there are more prospective homebuyers than there are homes on the market. Homes also tend to sell more quickly.

Since inventory is limited, buyers have to compete with one another to make the deal. Many homebuyers may make an offer above the asking price. In some seller’s markets, buyers may engage in bidding wars that drive up the property’s sales price.

How to determine if it’s a buyer's or seller's market

The market conditions for buyers and sellers are different. Before making an offer on a home — or listing your property for sale — it helps to understand the current real estate market trends and conditions. Here’s what to look for:

• Housing inventory: This is the number of homes available for sale. It can vary at local and national levels. If there aren’t many homes for sale, it could be a seller’s market if local demand is high.
• Time on market: Homes tend to move more quickly in a seller’s market. Find out how long homes stay on the local real estate market before they’re sold.
• Pricing trends: Compare local home prices with the national average. If they’re lower, it could be a buyer’s market. If prices have recently risen substantially in your area, it could be a seller’s market.
• Other real estate market conditions: Other key features of the local market could also indicate which market you’re in. Enlist a local real estate agent to perform a comprehensive housing market analysis for you. This can give you a better idea of local demand for sales and other key details about housing conditions.

As a general rule, you’re in a neutral market if there’s at least six months’ worth of housing supply available. You can determine which market you’re in by taking the number of available homes and dividing it by the number of homes sold in the past 30 days. If the end result is at least seven, it’s a buyer’s market. If it’s no more than five, it’s a seller’s market.

What are the current market conditions?

Real estate market conditions vary by location, but these are some of the latest statistics:

• Existing home sales are slightly down: Realtor.com reported existing home sales dipped by 2.5% in August after a slow summer. Year-over-year sales were stable in the Northeast, but dipped in the South, West and Midwest.
• The median listing time remains steady: Homes have a median listing time of 53 days, per the St. Louis Fed. Five years ago, that number was 57.
• Supply is fairly stable: New home sales are steadily rising. The seasonally-adjusted supply of new homes for sale is 467,000. This is an estimated 7.8-month supply at the current sales rate, according to the U.S. Census Bureau.
• Pending home sales are slightly up: As of August, pending home sales are up 0.6% across the country, the National Association of REALTORS® (NAR) reported. Year-over-year pending home sales have declined.

The average home price is up: The average sales price for new homes is $492,700, the Census Bureau reported. The median sales price is $420,600.

Tips for buyers in a seller's market

If you’re thinking about purchasing a home, it’s good to be prepared. Here are some homebuying tips in a seller’s market:

• Know your financial situation: Start by reviewing your income, debts and expenses so you can set a realistic homebuying budget. Also, calculate how much the purchase will cost. Be sure to factor in the interest rate, property taxes and homeowners insurance, which will influence your monthly payment.
• Save funds: If possible, set aside three to six months’ worth of expenses for emergencies. You’ll also need to save for for closing costs, which are typically 2% to 5% of the sale price. Try to save at least 20% for a down payment to avoid private mortgage insurance.
• Make a strong offer: Competition can be fierce in a seller’s market, so be prepared to make a persuasive offer. If you have the means, consider making the purchase in cash. Otherwise, you might want to put forth some earnest money to make your offer more competitive.
• Compare multiple lenders: Contact at least three lenders and speak with a loan officer to get answers to your questions. Find out how their interest rates, terms and fees compare.
• Work with a real estate agent: A local agent can bring a wealth of knowledge to the homebuying process and help you find the best deal. They also have access to the local multiple listing service (MLS) and can help you find a larger pool of homes.
• Don’t go too far above asking price: While a competitive offer is important, you don’t want to hurt your long-term financial situation by making too high of a bid.
• Wait and prepare: If you’re not in a rush, wait until the housing market turns more in your favor and start shopping for homes then. This could give you more negotiating power when the time comes to make an offer. It will also give you more time to secure your finances and a higher down payment.

Tips for sellers in a buyer's market

Even if you’re trying to sell your house in a buyer’s market, you still want to get the best offer possible. Here are some selling tips:

• Work with a REALTOR®: A real estate agent can help you sell your home, potentially at a higher price than you would have gotten on your own. In 2023, the average agent-assisted home sold for $405,000 compared to just $310,000 for for-sale-by-owner (FSBO) homes. An agent can also run an analysis to help you figure out how to price your home.
• Do some minor upgrades or repairs: If you’re selling an older home or one in need of some repairs, try to make small improvements before listing your property. A new coat of paint or updating the kitchen could get you a better offer.
• Get a home inspection: Rather than wait for a homebuyer to find out there’s something wrong with your home, have a professional inspection done. This will prepare you for issues that might come up during the real estate transaction and give you the opportunity to make any repairs ahead of time.
• Stage and list your home well: Stage your home to attract more prospective buyers. This could mean decluttering your space or removing personal objects so buyers can imagine the space as their own. If you don’t want to stage your entire home, prioritize the kitchen, living room, and bedroom. For the listing, take well-lit photos and highlight key features of your home. You can do this yourself or hire a professional.

Is it a buyer's or seller's market FAQ

How often does the market shift between buyers and sellers?

Real estate market conditions can fluctuate frequently based on supply, demand and other factors. Demand is generally higher in the spring, so conditions might lean toward a seller’s market. It’s usually lower in the winter, which is better for buyers.

What factors influence the housing market?

A number of factors influence market conditions for buyers and sellers, including the current inventory, demand and location. Economic factors like inflation and housing interest rates also impact the housing market. When inflation is steady and interest rates are low, more people are willing to buy — and vice versa.

How can I find out the current market status in my area?

Research your local market and look for patterns in home sales and prices. You can use homebuying websites to see what listings are available in your area, as well as those that have recently sold. You can also check the typical home values on homebuying websites to see how yours compares.

It helps to have a real estate agent on your side as well. They can do a comparative market analysis to help you set your home’s price based on similar properties in your area. Or you can check your county’s website to search real estate sales comparable to your own property. 

Can I benefit from buying in a seller's market?

Although seller’s markets largely benefit the person selling their home, buyers can sometimes benefit as well. For example, if you make an all-cash offer, you could snatch up an opportunity before the competition. Getting pre-approved could also help you stand out from the crowd.

Can I benefit from selling in a buyer's market?

Yes, but you’ll want to plan ahead. One way to boost your chances of getting more — and potentially better — offers is to make some cosmetic updates to your home before listing it for sale. You may also want to get an inspection done to uncover any issues that you can address ahead of time. If you’re willing to go a little below asking price, you might also be able to sell your home more quickly since there are more prospective buyers.