In real estate, the balance of power constantly shifts between sellers and buyers. A buyer’s market in real estate occurs when there are more homes for sale than there are buyers. Supply exceeds demand, prices stagnate or decline, and sellers must offer concessions to attract buyers.

Contents:

  1. What Is a Buyer’s Market?
  2. Key Indicators of a Buyer’s Market
  3. Why Does a Buyer’s Market Happen?
  4. Buyer and Seller Behavior in a Buyer’s Market
  5. Real-World Example: The U.S. Housing Market
  6. How to Tell If Your City Is in a Buyer’s Market
  7. What Does a Buyer’s Market Mean for You?
    1. Key Takeaway

What Is a Buyer’s Market?

A buyer’s market describes a housing market where the number of available properties significantly outweighs the pool of active buyers. This often results in:

  • Home prices stagnating or decreasing.
  • Properties staying on the market longer.
  • Sellers making concessions such as price reductions, paying part of the buyer’s closing costs, or including extras like furniture or parking.

Key Indicators of a Buyer’s Market

Professionals rely on specific metrics to identify a buyer’s market:

  • MOI (months of inventory): if inventory exceeds 6–7 months, supply is outpacing demand.
  • DOM (days on market): a rising average time that homes remain unsold indicates weaker demand.
  • Discounts and incentives: an increasing share of listings with price cuts or added perks points to a market favoring buyers.

MOI shows how many months it would take to sell all active listings at the current sales pace. DOM measures the average number of days a property stays on the market before being sold or withdrawn.

Why Does a Buyer’s Market Happen?

Several factors can trigger a buyer’s market in housing:

  • Macroeconomic changes: rising mortgage rates, higher borrowing costs, declining household incomes, or unemployment growth.
  • Structural shifts: oversupply of new developments, demographic decline, or population outmigration to other regions.

Buyer and Seller Behavior in a Buyer’s Market

Buyers benefit from greater choice and stronger negotiating power. They compare more options, push for price reductions, and often request additional conditions such as repairs or tax coverage.

Sellers need to adapt by reducing prices, improving marketing strategies, preparing homes more carefully for sale, and offering incentives like flexible financing or covering closing costs.

Real-World Example: The U.S. Housing Market

In 2022–2023, the U.S. housing market shifted in many states:

  • MOI increased from 3.5 to 7.2 months.
  • The average seller discount rose from 1.5% to 4.8%.
  • DOM climbed by 20–30 days.

This transition clearly reflected a move toward a buyer’s market in several regions.

How to Tell If Your City Is in a Buyer’s Market

To evaluate whether your area is experiencing a buyer’s market, look at the following:

  1. MOI above 6–7 months — supply significantly exceeds demand.
  2. Rising DOM — homes are taking longer to sell.
  3. More price reductions — sellers are cutting prices or adding bonuses.
  4. Active listings are growing faster than sales — inventory is building up.

What Does a Buyer’s Market Mean for You?

For buyers: it’s the perfect time to negotiate. Discounts of 5–10% are common, and sellers may agree to pay part of the transaction costs or include furniture, appliances, or parking. Developers may offer favorable mortgage terms or installment plans.

For sellers: competition becomes tougher. To succeed, sellers must price realistically, stage properties properly, and consider offering incentives.

Key Takeaway

A buyer’s market in real estate occurs when housing supply outpaces demand, giving buyers the upper hand. Understanding key housing market trends such as MOI and DOM helps buyers, sellers, and investors make informed decisions and adapt to shifting conditions.