A seller’s market happens when there are more buyers than available homes for sale. This imbalance gives sellers the upper hand, often leading to faster sales, bidding wars, and higher prices.
If that sounds familiar, it’s because most of the country has been in a seller’s market since the early 2010s. After the 2008 financial crisis, new-home construction slowed dramatically and never fully caught up with demand, creating a long-standing shortage that still shapes the market today.
Then, during the early COVID-19 pandemic years, low mortgage rates brought a flood of new buyers into the market, worsening that imbalance and pushing much of the country into an extreme seller’s market.
Given how unusual those conditions were, it can be hard to put today’s market shifts into context for the simple fact that many places no longer fit neatly into a straightforward seller’s-market or buyer’s-market binary.
That gray area is exactly what the Market Clock is designed to clarify. It places markets on a 12-hour clockface that runs from peak seller’s market at 12 o’clock to peak buyer’s market at 6 o’clock, with balanced conditions in between.
Just as important, it shows direction. A market at 3 o’clock may be balanced but moving toward buyers, while a market at 9 o’clock may also look balanced but be tightening back toward sellers.
What Drives A Seller’s Market
At its core, whether a market favors sellers or buyers comes down to supply and demand. But in practice, that balance is shaped by a range of factors, like those explained below.
Low Inventory
When there aren’t enough homes for sale relative to all the buyers looking for one, sellers gain leverage.
The national housing market is currently short 4.03 million homes, and that gap has been a major driver of the listing shortage that has helped keep sellers in control for much of the past two decades.
Even so, buyers are starting to get a bit more breathing room here. Active listings rose 8.1% year over year in March, loosening sellers’ grip as buyers gained more choices.
That being said, inventory remains down almost 14% compared to 2017–19 levels, keeping sellers largely in charge.
Faster Sales
When buyers compete for a limited number of homes, they rush to offer the best and fastest terms. As a result, properties spend fewer days on the market, adding to seller power as buyers have less time to shop and negotiate.
At the national level, the typical home spent 57 days on the market in March, up four days from a year earlier, and time on the market increased in 43 of the 50 largest metros—in a sign that many markets are becoming less frenzied, even if some still clearly favor sellers.
Higher Prices
When sellers have the advantage, they usually have more power to hold firm on price or even sell above it.
While much of the pandemic-era frenzy was marked by this kind of bidding war activity, that kind of leverage appears to be softening—at least at the national level, according to the March Monthly Housing Report from Realtor.com.
As many as 16% of active listings nationwide had a price cut. That was 1.2 percentage points lower than a year earlier, but still high enough to show that many sellers are having to adjust to softer conditions.
Courtesy of Realtor.com