Whether you’ve been eagerly watching for changes in the housing market for years or you’re just beginning to think seriously about looking for your dream retirement home, you’ve probably heard about the importance of a buyers’ vs sellers’ market. Understanding whether the current market favors buyers or sellers can help you make informed decisions when buying or selling a home. Yet, accurately naming which side the market leans toward depends on several factors.
While the market has favored sellers for years, gradual changes are easing the imbalance. However, most economists agree that it’s still too early to call the environment a buyers’ market. So, how does the current market affect you?
We’re here to describe the differences between a buyer’s and seller’s market, explore the current market status, and offer tips on how both buyers and sellers can adapt. No matter who the market favors, buyers and sellers have options to prepare for the future.
What Is a Buyers’ Market?
A buyer’s market in real estate is one in which supply outweighs demand. When more houses are available, buyers have more choices and negotiating power. Signs of a buyer’s market include:
- High inventory of homes: More homes on the market allow buyers to be pickier and ask more from sellers.
- Longer time on the market: Higher inventory usually means homes stay on the market longer, which can lead to discounts and price drops.
- Stable or falling house prices: Increased inventory and longer time on the market can stabilize or even lower prices.
- Increased negotiating power: When buyers aren’t competing for homes, sellers are often more flexible and willing to negotiate.
In a buyer’s market, you’ll have more options to choose from and be more likely to nab a home for a lower price. With a surplus of sellers looking to attract buyers, you may also be able to negotiate a better deal. For example, a seller may agree to make repairs or pay closing costs to make a sale.
What is a Sellers’ Market?
A seller’s market is an environment where demand is higher than supply. With fewer homes available, sellers can list higher asking prices and expect faster sales. Signs of a seller’s market include:
- Low inventory of homes: Fewer homes on the market give buyers fewer choices, putting the power in sellers’ hands.
- Quick sales: Low inventory means homes spend less time on the market, and sellers may get offers above asking price.
- Increased buyer competition: When demand outweighs supply, buyers are more likely to compete with each other.
- Price hikes and bidding wars: Increased competition can lead to bidding wars among eager buyers, driving up prices.
In a seller’s market, buyers have fewer choices and usually face higher prices. Sellers can expect homes to spend less time on the market and net higher prices.
The Current Market Status
After years of sky-high prices and elevated mortgage rates, the housing market is shifting. Supply has improved, and homes are spending more time on the market. Price reductions have become common in some locations, but overall, the U.S. market still favors sellers.
An Ongoing Housing Shortage
While home inventory has increased steadily throughout 2025, the current housing shortage remains at about 2.8 million units. In a market struggling to rebound from historic lows, small gains take longer to make an impact. On top of the slow recovery, borrowers enjoying sub-4% mortgage rates have little incentive to sell and take on a new mortgage with substantially higher rates. However, the shortage isn’t uniform across the nation, giving buyers more options in middle America than in coastal cities.
The Affordability Gap
Nationally, housing inventory has increased YOY for 25 straight months. However, for many buyers, inventory doesn’t equal availability. U.S. households earning $75,000 a year can only afford 21.2% of home listings, and families earning $50,000 annually can only afford 8.7% of home listings. The affordability gap divides buyers into groups, increasing competition among buyers in different price categories and giving sellers more power.
Stubbornly High Mortgage Rates
Three consecutive Federal Reserve meetings have resulted in a quarter percentage rate cut, easing mortgage rates to their lowest point this year. However, with rates hovering around 6.18% for a 30-year fixed mortgage, many buyers are hesitant to get off the sidelines and seriously consider a purchase. High mortgage rates are also a factor in constrained home inventory, as many would-be sellers are currently “locked-in” with a lower rate than what is available today.
Inflation and Fluctuating Economic Factors
Inflation increases the cost of living, directly impacting housing costs. While inflation is cooling dramatically in comparison to the peak in 2022, many Americans still struggle to make ends meet. Home price growth is slowing, but the impact of price hikes over the past several years continues to affect affordability for many prospective buyers. When the average cost of a home is $415,000, sellers can post high listing prices and expect minimal resistance. However, on the flip side, overpriced homes can linger longer on the market, diminishing seller power.
How Buyers and Sellers Should Adapt
While the market still favors sellers in most locations, it is shifting to become more buyer-friendly. In a changing market, both buyers and sellers often have to alter their behavior to adapt. The right strategies can help buyers make the most of their budget and help sellers avoid mistakes that can slow sales.
Options for Buyers in a Sellers’ Market
In a market that favors sellers, buyers need to be prepared to make the most of their budget and get the best conditions available. What does that look like in the real world? These tips can help buyers prepare for the competitive housing market.
- Be financially prepared: Financial preparedness is key to accessing the best loan terms and being able to take advantage of opportunities when they arise. Buyers with a strong credit score and a sizable down payment will stand out in a competitive market. Sellers expect buyers to be pre-qualified when they make an offer and may avoid situations that slow the timeline to closing.
- Make competitive offers: When multiple buyers are interested in a limited number of properties, price does matter. A competitive offer will make you stand out, and adding an escalation clause will help you compete with other bidders as your budget allows.
- Consider different locations: Not all homebuyers are in a position to change locations for a favorable cost of living. However, many retirees aren’t restricted to a specific city or state. Housing inventory and prices vary considerably by region. You may be able to get more house for your money by choosing a city or state with similar amenities but a lower cost of living.
- Explore unique opportunities: Thinking outside the box can give you access to more housing options. For example, 55+ communities limit competition with age restrictions. You may also be able to find homes or condos for prices lower than the typical average in some cities.
Options for Sellers in a Buyers’ Market
While most regions in the U.S. aren’t considered a buyer’s market, the future could produce a more favorable environment. When the market favors buyers, sellers must consider ways to attract buyers and meet their expectations. These tips can help sellers succeed in a buyer-friendly housing market.
- Smart pricing strategies: Realistic pricing is key to attracting buyers and ensuring your property doesn’t linger on the market. Work with a real estate agent to set a fair price for your home without underpricing. Getting the price right the first time can help you eliminate potential doubts related to price drips and discounts.
- Enhance property appeal: Buyers want to see the best version of your home and an environment where they can imagine themselves living. Adding plants to the front yard or having your home professionally staged is a small investment that could offer a big payoff in the form of a prompt sale or a higher asking price.
- Embrace flexibility in negotiations: Patience is necessary to navigate a buyer’s market. It could take time to find the right buyer, and you may need to be more flexible to close the sale. For example, you may need to agree to complete repairs or accept other contingencies.
Preparing for Housing Market Expectations in 2026
2025 brought none of the volatile changes to the housing market that buyers and sellers either hoped for or dreaded. Instead, we saw a modest rebalancing with some much-needed stabilization. So, what can we expect in 2026?
According to economists and market professionals, gradual changes are expected to continue throughout 2026. Rate cuts may be even more scarce than in 2025, but increased market stability could lead to more inventory and more options for buyers.
Mortgage Rates
After three consecutive rate cuts, the Federal Reserve is projecting only one rate cut in 2026. However, this prediction is significantly more conservative than economists expected and is not set in stone. Further weakening of the labor market could lead to another cut, but increased inflation could stall decreases or even lead to increased rates.
Economic Factors
Home inventory has increased throughout 2025, but slowed toward the year’s end. Despite slowing inventory growth, NAR Chief Economist Lawrence Yun forecasts an increase in home sales in 2026. Predictions of increased sales suggest housing inventory will continue to grow in the coming year. More inventory could continue to tip the market in favor of buyers.
FAQ: Buyer’s Market vs. Seller’s Market
What is the difference between a buyer’s market and a seller’s market?
A buyer’s market occurs when there are more homes for sale than buyers, while a seller’s market happens when buyer demand exceeds available inventory.
How can you tell if the housing market favors buyers or sellers?
Key indicators include housing inventory levels, average days on market, home price trends, and the frequency of bidding wars.
Is the housing market currently a buyer’s market or a seller’s market?
Nationally, the market still leans toward sellers, but conditions vary by region, price range, and local inventory.
Are home prices lower in a buyer’s market?
Home prices are typically more stable or may decline in a buyer’s market due to increased competition among sellers.
Do homes sell faster in a seller’s market?
Yes. Homes often sell quickly in a seller’s market, sometimes within days, due to strong buyer competition.
Is it better to buy a home in a buyer’s market?
Buying in a buyer’s market can offer advantages such as lower prices, more negotiating power, and flexible contract terms.
Is it better to sell a home in a seller’s market?
Selling in a seller’s market often leads to higher sale prices, quicker closings, and fewer seller concessions.
How do mortgage rates affect buyer’s and seller’s markets?
Higher mortgage rates tend to cool buyer demand, while lower rates can increase competition and favor sellers.
How should buyers adjust their strategy in a seller’s market?
Buyers may need to act quickly, make competitive offers, secure financing early, and remain flexible on location or home features.
How should sellers adapt in a buyer’s market?
Sellers should price competitively, enhance curb appeal, be open to negotiations, and work closely with an experienced agent.
Get Professional Guidance from 55places to Navigate Any Housing Market
The real estate market is shaped by seasonal changes and economic influences, leading to frequent changes on the national and local levels. Whether you’re planning to buy, sell, or both, it’s important to keep up with shifting market trends. 55places has the professional guidance to help you make informed real estate decisions. Contact us today to learn how we can help with every step of your homebuying journey.
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