US homebuyers drop to record low shifting market to buyers’ favor

There were an estimated 51.3% more home sellers than buyers in the U.S. housing market in July, just shy of December’s peak of 51.8% and up from 47.9% the month before. That’s according to a new report from Redfin, the real estate brokerage powered by Rocket. 

Miami, Nashville and several parts of Texas are the nation’s strongest buyer’s markets, where sellers outnumber buyers by the widest margins. 

When sellers outnumber buyers, buyers typically have more negotiating power because they have options. That’s why a market with a lot more sellers than buyers is considered a buyer’s market. Redfin defines a market where there are over 10% more sellers than buyers as a buyer’s market and a market where there are over 10% fewer sellers than buyers as a seller’s market. A market where the gap is plus or minus 10% is considered a balanced market. 

It’s only a buyer’s market for people who can afford to buy. High housing costs and widespread economic uncertainty have caused many would-be buyers to back off in recent years, creating the imbalance of buyers and sellers we see today. 

“Buyers are dropping out faster than sellers, giving the buyers who remain more options and more negotiating power,” said Asad Khan, a senior economist at Redfin. “At the same time, uncertainty around whether the Fed will hike rates—and this summer’s rising mortgage rates—are keeping many would-be buyers on the sidelines. That makes the stretch between now and Labor Day a potential sweet spot for people who need to move: Buyers have leverage, while motivated sellers may be willing to negotiate before the early-fall rush brings some buyers back to the market. This could be the best chance for buyers and sellers to meet in the middle.” 

Homebuying Demand Dropped to Lowest Level on Record 

The number of homebuyers in the market fell to its lowest level on record in July. Nationwide, there were an estimated 966,752 buyers in the market, down 2.5% from the month before. 

Meanwhile, there were an estimated 1,462,921 home sellers in the market. That’s down 0.3% from a month earlier to the lowest level in a year—but there were still nearly half a million more sellers than buyers. 

The seller surplus jumped from June to July because while fewer sellers entered the market, way fewer buyers entered the market. This isn’t a story of surging supply so much as sluggish demand; buyers who can’t stomach today’s prices and mortgage rates are simply waiting on the sidelines, pushing most of the country into buyer’s-market territory. 

Homebuying demand fell in July largely because mortgage rates soared to their highest level in a year, straining affordability. Widespread economic and geopolitical uncertainty also deterred house hunters. Some prospective sellers pulled back as they took note of slow demand. 

Miami Is the Strongest Buyer’s Market, Followed By Nashville and Several Texas Metros 

More than three-quarters of U.S. housing markets—39 of the 49 U.S. metro areas Redfin analyzed—are buyer’s markets. Redfin analyzed the 50 most populous metros, and excluded Fort Lauderdale, FL due to insufficient data. 

Miami was the nation’s strongest buyer’s market in July, with an estimated 154% more sellers than buyers. Next came Nashville, TN (151%), Houston (130%), San Antonio (116%) and Austin, TX (112%). 

Miami, Nashville and Texas stand out because they combine the national affordability squeeze with local dynamics that have swelled seller ranks even further. Miami and Nashville saw a wave of new construction and investor activity during the pandemic boom, and that supply is now landing in a market where local buyers are increasingly priced out—particularly in Miami, where rising insurance costs, increasing HOA fees and climate risks have piled onto already-high prices. Houston, San Antonio and Austin, meanwhile, have some of the most active homebuilding pipelines in the country, and new-construction inventory continues to hit the market even as buyer demand cools, leaving sellers there with little leverage. 

In Nashville, local Redfin agent Kristin Sanchez says house hunters are breathing a sigh of relief as the buyer’s market continues through the summer. Buyers are able to take their time because they know they have the upper hand, and they’re often able to get a good deal because sellers are willing to negotiate, Sanchez says. Compare that to a few years ago, when buyers would have likely competed against multiple offers for homes that sold within days.