If you’ve been following the housing market over the past few years, you’re likely aware that sellers have had the upper hand. But could that be changing as inventory begins to rise? Here’s what you need to know.

What Is a Balanced Market?
A balanced market typically refers to a market with about a five-to-seven-month supply of homes for sale. In this scenario, neither buyers nor sellers hold a distinct advantage. Prices tend to stabilize, and there are more options available for buyers. After years of a seller-dominated market, a shift toward balance would be a welcome change for those looking to buy. But is that really where the market is heading?

At the beginning of the year, the national housing market had a three-month supply of homes. This has since increased to four months. While this may not seem significant, it does indicate that the market is moving closer to balance, though it hasn’t quite reached that point yet. It’s crucial to understand that this increase in inventory does not signal an oversupply that could trigger a market crash. Despite recent growth, there’s still not nearly enough supply for that to happen.

The graph below, based on data from the National Association of Realtors (NAR), shows how inventory levels have fluctuated in the past and where they stand today:

For now, this is still seller’s market territory – it’s just not as frenzied of a seller’s market as it’s been over the past few years. As Mark Fleming, Chief Economist at First American, says:

“The faster housing supply increases, the more affordability improves and the strength of a seller’s market wanes.”

What This Means for You and Your Move

Here’s how this shift impacts you and the market conditions you’ll face when you move. Lawrence Yun, Chief Economist at NAR, explains:

“Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”

The graphs below use the latest data from NAR and Realtor.com to help show examples of these changes:

Homes Are Sitting on the Market Longer: Since more homes are on the market, they’re not selling quite as fast. For buyers, this means you may have more time to find the right home. For sellers, it’s important to price your house right if you want it to sell. If you don’t, buyers might choose better-priced options.

Sellers Are Receiving Fewer Offers: As a seller, you might need to be more flexible and willing to compromise on price or terms to close the deal. For buyers, you could start to face less intense competition since you have more options to choose from.

Fewer Buyers Are Waiving Inspections: As a buyer, you have more negotiation power now. And that’s why fewer buyers are waiving inspections. For sellers, this means you need to be ready to negotiate and address repair requests to keep the sale moving forward.

How a Real Estate Agent Can Help

But this is just the national picture. The type of market you’re in is going to vary a lot based on how much inventory is available. So, lean on a local real estate agent for insight into how your area stacks up.

Whether you’re buying or selling, understanding how the market is changing gives you a big advantage. Your agent has the latest data and local insights, so you know exactly what’s happening and how to navigate it.