Sellers Outnumber Prospective Homebuyers: What It Means for the Housing Market
A Shifting Landscape in Real Estate
LOS ANGELES — The U.S. housing market has experienced a seismic shift, with homeowners eager to sell facing a daunting reality: they may have to wait longer than they anticipated for buyers to come knocking. As of April, experts report that there are nearly 34% more sellers than buyers in the market, according to an insightful analysis by Redfin.
Historical Context: A Market Perspective
This trend is notable, as April 2020, marked by the pandemic, was the last time the market saw such a significant drop in prospective buyers. Historically, records dating back to 2013 show that this is one of the lowest points for buyer activity.
Buyers Hold the Power
The current landscape is promising news for home shoppers — assuming they can navigate the high mortgage rates and rising prices that have become prevalent. In the face of a decreased number of buyers, sellers are feeling the pressure to reconsider their asking prices and extend concessions to ensure a deal gets done. This stands in stark contrast to just a few years ago when it was common for homeowners to receive multiple offers that exceeded their asking prices.
Insights from Industry Experts
Asad Khan, a senior economist at Redfin, notes, "The balance of power in the U.S. housing market has shifted toward buyers, but many sellers have yet to recognize or accept this reality."
Trends and Statistics
This imbalance is evident in the slumping home sales numbers that have persisted since 2022, following the rise in mortgage rates. Last year saw previously occupied U.S. homes selling at their slowest pace in nearly three decades, with sales dropping to their lowest level for an April since 2009.
Sellers began to outnumber buyers back in November 2023, when the average 30-year mortgage rate soared to nearly 8% — the highest in 23 years. As of this week, the average rate stands at 6.89%, maintaining a level not seen since early February.
Statistical Breakdown
- In April, there were 1.9 million sellers compared to 1.5 million potential homebuyers — a deficit of 490,041 individuals shopping for homes.
- Just a year prior, the difference was a mere 6.5%, and two years ago, buyers actually outnumbered sellers by 5.3%.
Actions by Sellers
Faced with dwindling buyer interest, many sellers are adjusting strategies, lowering prices or offering sales incentives like covering buyer’s closing costs. In fact, according to Realtor.com, nearly 20% of home listings had their prices reduced last month.
Price Predictions and Trends
The current dynamics suggest that U.S. home prices may decline by about 1% by the year’s end, as projected by Redfin. Certain metro areas are already witnessing price drops — between late March and late April, home prices fell in 11 of the top 50 U.S. metro areas, including popular locations such as Dallas, Oakland, and Jacksonville.
Regional Market Differences
Among the metro areas, Miami exhibits the most significant gap, with sellers outnumbering buyers by 3 to 1. Conversely, Newark, New Jersey, is currently the strongest seller’s market, with a notable 47.1% fewer sellers than buyers.
Affordability Issues Persist
Despite the changing dynamics, the housing market remains unaffordable for many Americans. Over the past six years, the median U.S. home sales price has jumped 53%, far outpacing wage growth.
Even though the inventory of previously occupied homes has increased to levels not seen since September 2020, it’s still lagging behind pre-pandemic figures and lacks properties that fit within the budgets of average buyers.
The Affordability Gap
Before the pandemic, households earning $75,000 could afford approximately half of all homes on the market. As of March, only 21.2% of listings are deemed affordable, according to a recent analysis by the National Association of Realtors (NAR). A home is classified as affordable when monthly payments do not exceed 30% of household income.
Conclusions and Future Prospects
Without a significant increase in housing inventory at price points below $260,000, the dream of homeownership will remain elusive for millions of Americans who wish to make a purchase. As the market continues to evolve, both buyers and sellers must stay informed and adaptable to navigate these challenging waters.
For further insights on navigating the housing market, consider checking out publications like Redfin and the National Association of Realtors.
