What are the Signs of a Buyer’s Market?

A pendulum shift in the U.S. housing market is unfolding in real time. A key indicator of a buyer’s market is when there are more sellers than buyers. According to the most recent NHR (as of August 2025) some cities may be seeing a shift to a buyer’s market. Markets like Miami, FL and Bozeman, Montana are seeing an influx of homes on the market, signaling that there may be more homes on the market in these areas than buyers. 

Meanwhile, in May 2025, new single-family home sales declined* by nearly 14 per cent from the previous month and are down approximately six per cent year over year. The inventory of unsold new homes now stands at approximately 507,000 units, representing a 9.8‑month supply. This is well above the typical six-month threshold that would be normal in a buyer’s market.

Prices Staying High

While home prices remain historically high, the pace of growth has slowed dramatically. Across the country, the typical sale price is about seven per cent below the listing price. Once again, this is in sharp contrast with the post‑crisis boom when most homes sold above asking, driven by bidding wars, blind bidding, and other facets of a red-hot housing market. Another emerging trend is that homes are staying on the housing market longer in 2025.

Indeed, homes sit unsold for weeks, which is different from before, providing buyers the opportunity to think things through, compare various options, and then make a purchasing decision. They can also include inspection or financial clauses, another indicator that the market is in favor of the buyer. Pending sales rose* at a tepid pace of 1.1 per cent in May compared to the same time a year ago after falling close to 3 per cent in the previous month. Additionally, fewer listings (37.6 per cent) are going under contract within two weeks, the first time since 2020. Builders are responding too: more than one-third (37 per cent) of them cut new‑build prices in June, the most since 2022, with an average discount of five per cent, often accompanied by incentives such as mortgage‑rate buy‑downs.

Challenges Persist for Homebuyers

At the same time, numerous challenges persist for prospective homebuyers. Interest rates on a 30-year fixed-rate mortgage remain close to seven per cent and remain high compared to the low rates of the early 2020s. The mortgage market typically tracks the U.S. Treasury market, and yields on the benchmark ten-year yield have eased in recent weeks, so there could be relief on the way. While consumer and business sentiment has improved since the height of uncertainty in April, risks of recession and global economic uncertainty, particularly in light of recent White House trade policies, are keeping buyers cautious.

Greg McBride, the chief financial analyst at Bankrate, forecasts mortgage rates to remain mainly in the six per cent range, with inventory slowly rising toward the five to six-month balance but still supporting a buyer’s edge in many areas.

“The average 30-year fixed mortgage rate will spend most of the year in the 6s, with a short-lived spike above 7 per cent, but never getting below 6 per cent,” McBride said. “Continued economic growth and worries about inflation and government debt will keep mortgage rates elevated.”

Still, the housing market may be signaling that homebuyers are gaining the upper hand. This may mean less risk of bidding wars, more price reductions, and sellers offering a wide array of incentives, such as flexible move-in schedules. Suffice it to say, seller behavior has shifted, and instead of demanding above-market prices, they have had to offer lower prices, concessions, and repair offers to close deals.

However, housing affordability remains a challenge, with households struggling to cope with elevated home prices and sky-high mortgage rates amid a housing shortage—experts estimate that the United States is facing a shortage of approximately three to seven million homes.

Equal Footing

For now, the U.S. housing market has taken a breather, with soaring inventories, softening sales, and increasing buyer discounts. In other words, there is more of an equal footing. The housing market is not perfect, and not every family will realize the American Dream of a white picket fence. For the first time in several years, there is an opening to achieving homeownership.

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