Buyer's market vs. seller's market: What does each mean for you?

The real estate market changes over time based on supply, demand, and other market factors like mortgage rates. When conditions are more favorable to buyers, it’s known as a buyer’s market. When sellers have an upper hand, it’s called a seller’s market. Below, we’ll take a closer look at what makes it a buyer’s or seller’s market, how to tell if it is a buyer’s or seller’s market right now.

What is a buyer’s market?

A buyer’s market is when there are more houses for sale than there are people looking to buy. As a result, buyers have leverage because there is less competition, and sellers are more willing to negotiate and concede to price reductions.

In a buyer’s market, real estate prices decrease, and homes linger on the market longer. This means that sellers must compete with each other in order to attract potential buyers. Shopping for a home in a buyer’s market gives buyers more choices in homes and better all-around deals.

Here are some factors that can lead to a buyer’s market:

• Struggling job market. When the job market is in rough shape and unemployment increases, there tend to be fewer prospective buyers.
• Recession. An economic recession can also reduce the amount of people looking to buy and force others to sell, increasing inventory.
• Increased real estate development. If more new houses are being built and inventory is increasing, there’s more competition amongst sellers.
• Interest rates. If interest rates drop, it becomes more affordable to buy a home, but it also means buyers face more competition.

When will it be a buyer’s market?

Whether or not it’s a buyer’s or seller’s market can depend on both national market trends and the local market where you’re looking to buy. While national inventory is down 15% since before the pandemic, there were 892,561 homes on the market in March of 2025 which was a 28% increase from the year prior. It’s difficult if not impossible to predict when it will be a buyer’s market but you can focus on building a solid credit history and saving for a down payment to move closer to your dream of homeownership.

What is a seller’s market?

A seller’s market arises when demand is high, but the real estate inventory is low. When there are fewer homes available, sellers are at an advantage.

In a seller’s market, homes sell faster and buyers face more competition. As a result, buyers become willing to spend more on a home than they would otherwise, so sellers can raise their asking prices. Heavy demand also means that buyers rarely have the power to negotiate and are more willing to accept properties as-is.

A seller’s market can often lead to bidding wars. This is when buyers will make competing offers and drive up the price, allowing a seller to land a sale price that exceeds what their initial listing price.

Here are some factors that can cause a seller’s market:

• Strong job market. If that job market is in a good place, more people can afford to buy a home.
• Population growth. When the population increases, so does the demand for housing, which gives sellers leverage.
• Low interest rates. When interest rates are low, more people can afford to buy a home.
• Less real estate development. The supply chain crisis made it more expensive to build new homes, putting a strain on the national housing inventory.

When will it be a seller’s market?

The national housing market has been a seller’s market as of late, due to low inventory and increasing home prices. Higher interest rates have made it a less ideal time to buy compared to the record low interest rates seen at the height of the pandemic. As result, many prospective buyers have been priced out of the market.

How can you tell if it’s a buyer’s or seller’s market?

If you’re trying to determine if it is a buyer’s or seller’s market in your area, there are certain indicators you can look to. The amount of available inventory, pricing, recent sales, market rates, and market trends can help you assess the current state of the housing market where you live.

Real estate inventory

Review the homes available on the market. The larger the inventory, the more likely it is that your local area is in the midst of a buyer’s market. If there seem to be a shortage of homes listed, then it’s likely a seller’s market.

New home construction can also impact the kind of market you see. When more new homes are built it can lessen shortages in a seller’s market or deepen a buyer’s market by possibly lowering prices due to larger home inventory.

Recent sales

Check the recent sales of properties comparable to your own or the one you’re interested in. Pay attention to homes with similar factors like age, size, region, neighborhood, and number of bedrooms. If you find that homes generally have been selling above their asking price, it’s a good indication that you’re in a seller’s market. If they’ve been selling below their asking price, signs point to a buyer’s market.

In additional to recent sales, you’ll also want to look at recent foreclosure rates. A market with a high number of foreclosures can create opportunities for buyers to get a better deal. Foreclosed homes tend to be priced below their market value, as lenders are looking to offload them.

Pricing

In a buyer’s market, sellers will be more likely to reduce their asking price to find a buyer. In a seller’s market, increased competition amongst buyers can lead to bidding wars. In these cases, home can sell for above the asking price. When looking at current listings, review the price history. If you see that the prices of a number of homes have been cut recently, you can assume that it’s a buyer’s market.

Be aware that sellers may have unrealistic expectations about their homes’ value, so make sure that what you’re noticing is a trend, not just a single occurrence.

Market rates

You can also monitor market indicators to determine if it is a buyer’s or seller’s market. You can also look at factors like the federal funds rate and the bonds rate if you want to understand more about mortgage rate trends.

Higher interest rates can cause people to get priced out of the real estate market. This makes it more expensive to buy a home but reduces competition amongst buyers. When interest rates are low, more people can afford to buy, which gives sellers an upper hand.

Time on market

The number of days that a home is on the market is another strong indication of housing conditions. Homes sell faster in a seller’s market and take more time to go under contract in a buyer’s market.

Market trends

Another indicator of whether it’s a buyer’s or seller’s market is whether home prices in in your areas have been rising or falling. The easiest way to gauge if housing prices are rising or falling is to look at market trend reports and housing market indicators.

Tips for a buyer’s market

Whether you’re looking to buy a home or sell your existing home, here are some tips on how to navigate a buyer’s market.

Buying

A buyer’s market is the ideal time to purchase a new home because prices are lower and there are fewer buyers to compete with. Here are some ways a buyer can negotiate a deal to get the best possible terms on a home:

• Take your time. The lower demand for homes means you’ll likely face little competition for the homes you’re interested in. This gives you the ability to take the time you want to find the right home without feeling like you have to rush to put in an offer.
• Understand the available inventory. Tour as many properties as possible before making an offer. Understanding what’s available on the market helps you find the home that the best fit for your needs and can help you negotiate price.
• Analyze comparable properties. Comparable properties – commonly known as “comps” - on the market can help you negotiate effectively. If similar properties have sold for less than the seller is asking, you may be able to get them to reduce their price. Your real estate agent can help you find and analyze comps on the multiple listing service (MLS).
• Consider how long a home has been on the market. The longer a home has been available, the more power you’ll have negotiating for a lower price.
• Seek concessions from sellers. Even if you don’t ask for a significantly lower price, you can still negotiate for contingencies, seller concessions, and repairs. Consider offering a lower price for the house or ask for the seller to pay for closing costs.

Selling

If you find yourself selling your home during a buyer’s market, here are some ways you can help your house stand out to buyers.

• Make necessary repairs. Before putting your home on the market, you’ll want to make any needed repairs and consider making minor improvements. Buyers with more options will likely request you to complete these repairs before the sale, and you’ll want to stand out amongst the competition.
• Clean and depersonalize your home. If buyers can’t envision themselves living in your home, they won’t make offers. Hire a professional deep cleaner, get rid of any clutter, and touch up your landscaping in preparation.
• Market it like a pro. Marketing matters more in a buyer’s market, so make sure you have stellar, professional photos taken of your property. If your home will be vacant or your decor is dated, hire a stager to make the home look more polished.
• Price it competitively. Survey similar homes on the market to see what they’re asking and make sure your list price is either on par with or lower than those.
• Be prepared to negotiate. Since you have less negotiating power, consider offering to pay a portion of the closing costs and for any repairs requested.

Tips for a seller’s market

A seller’s market has different ramifications for those trying to buy or sell a home. Here are some strategies for buyers and sellers in a seller’s market.

Buying 

If you need to buy a home and it’s a seller’s market, you’ll be facing competition from the other buyers, and the seller has the upper hand. However, it’s important to not rush into buying the wrong house or overpay.

• Act fast. If you find your dream home during a seller’s market, get an offer in quickly. If you wait too long, it may no longer be available. Understand how to get your initial mortgage approval ahead of time so your financing is in order when you need it.
• Accept that you’re at a disadvantage. In a seller’s market, buyers don’t have much leverage. This isn’t the time to try to push contingencies, concessions, specific closing dates, or repairs. If there are certain stipulations you want written into the contract, think hard about whether they’re worth potentially losing the property over.
• Consider an all-cash offer if you can.  Sellers prefer buyers who are willing to buy the house with cash because they don’t have to worry about the deal falling through due to financing issues. Most people can’t buy a home in all-cash, but you can also make a larger earnest money deposit to show the seller how serious you are about buying.
• Be patient. During a seller’s market, sometimes buyers lose out on homes they’re interested in. Inexperienced buyers caught up in bidding wars might offer more money than a home is actually worth - or that they can afford- in order to get the home they want.
• Don’t settle. On the flip side, some buyers will end up making offers on homes they otherwise wouldn’t be interested in because they’re tired of losing out. Buying any property is a huge investment and financial commitment. Unless you have to move immediately, it’s better to wait it out than buy something you don’t want or can’t afford. 

Selling

Selling in a seller’s market gives you the upper hand, so here’s are some ways you can make the most of it.

• Clean and organize your home. Make sure that your home is in good condition and has been thoroughly cleaned and decluttered before you show the property.
• Give your home a fair price. Even though homes tend to sell for more money in a seller’s market, it still helps to price your home fairly. Some sellers list their homes for slightly less than the assessed fair market value in order to encourage a bidding war.
• Consider your offers carefully. Just because buyers say they’ll pay the highest bid for your home doesn’t guarantee they’ll be able to obtain those funds. The last thing you want is to accept an unrealistic offer and be forced to put your home back on the market when the deal falls through.
• Make sure your potential buyer has their mortgage approved early on. Require buyers who need financing have their initial mortgage approval before you accept their offer. This initial approval requires that their finances and credit history are verified.
• Be aware of contingencies. Offers that include contingencies enable buyers to back out of sales contracts if certain conditions aren’t met. In a seller’s market, the seller can limit the number of contingencies they’re willing to accept.

The bottom line: Understanding your local market 

When buying or selling property, it helps to know where the market stands. While it’s most beneficial to purchase a home in a buyer’s market, buying in a seller's market can still be worthwhile if you’re strategic. If you’re selling a home, you’ll hope for a seller’s market so there are fewer properties and competitive buyers.

To be prepared, buyers can start the initial mortgage approval today to land your dream home sooner than later.