Redfin says buyers have more negotiating power, but high prices and mortgage rates are keeping many on the sidelines
For the first time in years, homebuyers may finally have the upper hand in the US housing market – at least by traditional metrics.
There were 3.7 months’ worth of for-sale supply in January, the highest level since early 2019 and an increase from 3.3 months a year ago, according to a new report from Redfin.
Historically, a buyer’s market is defined by four to six months of available housing supply. By that standard, the market is now leaning close to being in favor of buyers, particularly in Sun Belt states, where an oversupply of listings is creating opportunities for price negotiations.
However, for many buyers, the market still doesn’t feel much different.
“Many buyers don’t feel like they are in a buyer’s market, with home prices at near-record highs and mortgage rates elevated,” said Chen Zhao, Redfin’s economics research lead. “But we are more than halfway through the decade and this is the first time we can say that buyers have as much, if not more, power than sellers.”
Several key trends indicate that buyers may finally have more negotiating power. Pending home sales fell 6.3% in January, marking the lowest level since April 2020. Listings are also staying on the market longer, with the typical home sitting unsold for 56 days, the longest time since early 2020.
Additionally, home price growth has slowed to 4.1% year-over-year, and the average sale price in January was 1.8% below the final asking price, the biggest discount in nearly two years.
Redfin also reported that home purchase cancellations hit their highest January level since at least 2017. As affordability challenges persist, more buyers are walking away from deals before closing.
Even though the market is tilting in favor of buyers, Zhao said that the shift may not last. If more buyers start recognizing the increase in inventory, demand could quickly rebound, tightening supply and pushing prices back up.
Market conditions also vary widely across the country. The Sun Belt states, particularly Florida, have seen a flood of new listings, giving buyers more room for negotiation. Cape Coral, Fla., led the nation in January with 11.6 months of supply, up from 8.6 months a year ago. Miami followed with 11.4 months, while McAllen, Texas, recorded 10.5 months, Fort Lauderdale saw 10.3 months, and West Palm Beach had 9.6 months.
This surge in supply is partly due to a pandemic-driven construction boom that increased housing availability. At the same time, rising insurance costs linked to climate risks have dampened demand, leaving more homes on the market.
Read more: California insurance crisis set to intensify as LA wildfires blaze
“It’s 100% a buyer’s market right now,” said Bryan Carnaggio, a Redfin Premier agent in Jacksonville, Fla. “There’s a ton of inventory. Everywhere you go, there’s a house for sale.
“Most sellers here know the market is bad and it’s not advantageous to sell right now, but either they’re tired of waiting for things to improve, or they really have to sell because they are moving out of state. For buyers, this means there are more opportunities to negotiate on price and terms.”
Meanwhile, in the Northeast and parts of the Midwest, sellers continue to hold the advantage due to limited inventory and steady demand.
Redfin’s report showed that Rochester, NY, had just 1.1 months of supply in January, the lowest of any major metro area. Buffalo, NY, followed with 1.2 months, while Hartford, Conn., reported 1.4 months. Grand Rapids, MI, and Worcester, Mass., each had less than 1.6 months of available inventory.
"Rochester's seller's market is driven by a severe shortage of homes for sale, and few homeowners have chosen to list during this year's cold, snowy winter," said Kimberly Hogue, a Redfin Agent in Rochester. "Home listings that are in decent shape and in sought-after neighborhoods are met with a flurry of buyers. These homes typically go quickly and for well over list price."
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