After years of bidding wars and climbing home prices, the balance of power in the housing market may finally be shifting.
Home sellers now vastly outnumber buyers in the US, according to an analysis released Thursday from real estate company Redfin. The report found that there were nearly 500,000 more home sellers in the market than buyers as of April, the largest gap between the two groups since Redfin began compiling the data in 2013.
The data is an early indication that the US housing market may be experiencing a slowdown — not because home prices nationally are becoming more affordable, but because there are fewer buyers. It’s the latest sign that a long-building affordability crisis, now compounded by trade tensions and recession fears, may be finally catching up with the housing market.
Despite the recent drop-off in demand for new homes, prices have continued to rise. The median existing home sales price rose 1.8% year-over-year in April to $414,000, according to data released by the National Association of Realtors last week. That’s an all-time high for the month of April and the 22nd consecutive month of year-over-year price increases.
At the same time, elevated mortgage rates are contributing to the monthly expenses that new borrowers incur when purchasing a new home. The average rate on a standard 30-year fixed mortgage, the most popular type of home loan, is currently hovering just under 7% and threatens to go even higher amid unrest in the bond market.
In addition to the high cost of purchasing a new home, consumers are grappling with rising economic uncertainty, which is fueled in part by swings in the stock and bond markets and the threat of tariff-induced inflation. As a result, home shoppers are even more cautious this spring, during what is usually the peak demand season in the real estate world.
According to a survey released Wednesday by Bank of America, 75% of prospective homebuyers are waiting for home prices and interest rates to fall.
According to Redfin, there haven’t been this many homes for sale since March 2020. And there haven’t been so few buyers at any point since Redfin began keeping track in 2013 – with the exception of April 2020, when the housing market ground to a halt at the start of the pandemic.
To estimate the number of buyers, Redfin created a model using internal data on pending home sales and the average time it takes from a buyer’s first tour to when they purchase a home.
Karen Pohl, a real estate agent in Las Vegas, told CNN that she has felt the market shift in favor of buyers in recent months.
“Based upon previous spring selling seasons, I have noticed a lot of listings are sitting longer on the marketplace (this year),” Pohl said. “I think there are a lot of sellers who still have really ambitious pricing for their homes, and it may be time to get realistic with their pricing in order to be competitive in the marketplace.”
Pohl said she has started to see more sellers offering concessions or price cuts on their homes.
The days of multiple offers above a home’s asking price and rapidly rising home prices that defined the post-pandemic housing demand boom may now be in the rearview mirror for many cities across the US. Although home prices are still climbing, Redfin’s head of economics research, Chen Zhao, told CNN that the company estimates a 1% drop in home prices by the end of this year.
“Generally, the ratio of sellers to buyers seems to be a predictor for home price growth, but with a lag of about three to six months,” Zhao said.
“The reason we think home prices will fall by 1% and not something larger is because it’s actually very hard for home prices to fall, unless sellers have to sell,” she added. “Sellers can always decide they don’t like the prices that are currently in the market and decide to stay in their home.”
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