Rick ShargaMay 16, 2025 at 6:56 AMKey takeawaysSellers have had the advantage in the housing market for several years, largely due to low levels of available homes.However, many experts see market conditions starting to shift in buyers’ favor.Whether conditions favor buyers or sellers may depend on individual local market dynamics.Homebuyers, it seems, haven’t been able to catch a break. Market conditions have favored sellers for most of the past five years — sometimes dramatically so — but there are signs that the tide may finally be turning. Do these signs point toward a shift from a seller’s market to a buyer’s market? The answer may depend on where you look.What defines a seller’s market?Strong homebuyer demand coupled with too little supply is the basis for a seller’s market, in which home sellers have the upper hand and buyers must compete with each other for the limited inventory.Sellers have had a distinct advantage in the housing market lately for a few reasons. First, there simply haven’t been many homes available to buy: After peaking at over 1.2 million in 2016, the inventory of homes for sale declined steadily through early 2020, and then plummeted in the post-COVID period, when home sales far outpaced supply, according to data from Altos Research. Inventory bottomed out under 250,000 units in early 2022.This low inventory was due in part to homes selling more quickly than usual; according to Redfin, the median number of days on market dipped as low as 19 in the spring of 2022. Meanwhile, demographic trends suggested that demand was increasing and was likely to grow even stronger in the next few years. In fact, data from John Burns Research shows that over 13,000 people are now reaching the prime homebuying age of 35 every day, and that this trend will continue for at least the next decade.Mortgage rates and home pricesRising home prices are another attribute of a seller’s market. Typically, high prices make affordability a challenge for prospective homebuyers. But in recent years, as the Federal Reserve drastically reduced interest rates to prevent a COVID-driven economic meltdown, mortgage rates dipped to historic lows — Bankrate data shows that the average 30-year fixed rate in 2021 was just 3.15 percent. This phenomenon made these more expensive homes relatively affordable.But the Fed reversed course in mid-2022, dramatically raising interest rates in an effort to get inflation under control. By 2023, the average 30-year fixed rate had shot up to 7.0 percent, more than doubling in a few short months.This created two problems for homebuyers: First, it made affordability considerably worse — homes were still expensive, and now financing was twice as expensive as it had been. Second, millions of homeowners had refinanced into those much lower mortgage rates and now simply couldn’t afford to sell their home and buy a new one with a much pricier loan. So these owners opted to not list their home, making the supply and demand imbalance even more pronounced.Prices, meanwhile, continued to rise, increasing by almost 22 percent from March 2021 to March 2025 per Redfin data. Unsurprisingly, this combination of low inventory, high pri …
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