Understanding a Buyer's Market
A buyer’s market in the real estate sector occurs when the supply of homes for sale exceeds the demand from prospective buyers. In this environment, conditions favor purchasers, leading to softer home prices, increased negotiation power, and more options for buyers. Several factors contribute to a buyer’s market, including higher mortgage interest rates, economic slowdowns, shifting demographic patterns, and local or regional overbuilding.
When the housing market enters a buyer’s phase, sellers often face longer listing times and may need to adjust pricing expectations or offer concessions. This can include price reductions, assistance with closing costs, home warranties, or allowances for repairs. According to the National Association of Realtors' 2024 Residential Real Estate Market Snapshot Report, the median time on market has increased notably in several regions compared to 2022, signaling a shift toward buyer-favorable conditions in parts of the country.
Economists monitor key indicators to determine market balance. One common measure is months of inventory, with six months often cited as the threshold between a seller’s and buyer’s market. Recent data from CBRE’s U.S. Real Estate Market Outlook 2024 shows inventory growth in suburban and secondary markets as rising interest rates slowed buyer demand, creating opportunities for more negotiation flexibility. Additionally, the Zillow Consumer Housing Trends Report 2024 indicates that sellers nationwide have shown greater willingness to negotiate on price and contingencies compared to earlier, more competitive cycles.
Recent academic studies also shed light on external pressures influencing housing market dynamics. A 2025 study by Hahn, Omerovic, and Waltl emphasizes that external shocks, such as rapid interest rate adjustments or global economic uncertainty, can destabilize housing demand faster than supply can adjust, leading to localized buyer’s markets. Similarly, research by Zha et al. in 2022, which examined home showing activity as a predictor of market trends, found that declining home showing volumes are an early signal of reduced buyer urgency, often preceding price softening by several months.
In the current environment, both traditional homeowners and institutional players such as iBuyers are reacting differently compared to previous cycles. Seiler and Yang’s 2023 study on iBuyers noted that these technology-driven companies are more sensitive to market slowdowns, pulling back inventory purchases quickly to mitigate risk, which can amplify available inventory and strengthen buyer leverage in affected areas.
For buyers, today's market offers valuable opportunities, but strategic preparation remains crucial. Buyers still need to obtain pre-approval for financing, thoroughly research local markets, and partner with experienced agents to identify properties that offer genuine value. Although inventory has increased in many areas, well-located and competitively priced homes can still attract multiple offers, even within a broader buyer’s market.
It is also important to note that shifts toward a buyer's market are often regional. Some metropolitan areas experiencing significant price appreciation during the 2020-2022 boom, such as parts of the western United States, have seen more rapid corrections, while others with persistent supply shortages remain more balanced. The uneven nature of these transitions highlights the complexity of today’s housing landscape.
Ultimately, a buyer’s market provides more options and better negotiating power for purchasers but still requires diligence, patience, and informed decision-making. Understanding the broader economic forces and local market nuances is key to maximizing the advantages offered by this phase of the real estate cycle.
Works Cited
CBRE Research. U.S. Real Estate Market Outlook 2024. CBRE, 2024.
Glaeser, Edward L., and Joseph Gyourko. The Impact of Building Restrictions on Housing Affordability. Federal Reserve Bank of New York Economic Policy Review, vol. 9, no. 2, 2003, pp. 21–39.
Hahn, Anja, Sanela Omerovic, and Sofie Waltl. "A Framework to Monitor the Effects of External Shocks on Housing Markets." arXiv preprint arXiv:2502.03012 (2025).
National Association of Realtors. Residential Real Estate Market Snapshot Report. National Association of Realtors, October 2024.
Seiler, Michael J., and Liuming Yang. "The Burgeoning Role of iBuyers in the Housing Market." Real Estate Economics(2023).
Wachter, Susan M., and Adam J. Levitin. The Great American Housing Bubble: What Went Wrong and How We Can Protect Ourselves in the Future. Harvard University Press, 2020.
Zha, Yuanyuan, Susan T. Parker, James J. Foster, and Vadim Sokolov. "Housing Market Forecasting Using Home Showing Events." arXiv preprint arXiv:2201.04003 (2022).
Zillow Research. "Buyers: Results from the Zillow Consumer Housing Trends Report 2024." Zillow, November 2024.
