Is It a Real Estate Buyer's or Seller's Market? Key Indicators

Whether it’s a buyer’s or seller’s market can affect pricing and negotiation. A seller’s market means demand is high and inventory is low, often leading to higher prices and multiple offers. A buyer’s market means more homes are available than buyers, leading to longer sale times and lower prices. Market signals include inventory levels, days on market, pricing trends, interest rates and seasonal patterns.

A financial advisor can help you assess how current market conditions fit into your broader financial goals, including whether buying or selling aligns with your long-term plans.

How to Gauge Buyer’s vs. Seller’s Markets in Real Estate

Determining whether you’re in a buyer’s or seller’s market requires researching the market and analyzing several key factors that influence real estate dynamics. Start by examining the average days on market (DOM) for properties in your area. Homes that sell in under 30 days typically signal a seller’s market, while properties that stay listed for 60 days or more often suggest buyers have more leverage.

Local real estate data is important for an accurate assessment, as market conditions can vary widely by region and even neighborhood. Reviewing recent sales reports, talking to real estate professionals and attending open houses can all help you get a feel for the current climate. Real estate agents, in particular, can offer firsthand knowledge about what’s happening on the ground. These professionals can be valuable resources for anyone trying to determine if it’s a buyer’s or seller’s market.

Key Indicators for the Type of Real Estate Market

A homebuyer meeting with a real estate agent.

Several key indicators can help you determine the current market conditions and plan your buying or selling strategy accordingly:

Inventory levels: The number of homes available for sale relative to buyer demand is a fundamental indicator of market conditions. In a seller’s market, inventory is typically low with fewer than 3-4 months of supply, creating competition among buyers. Conversely, a buyer’s market usually has 6+ months of supply, giving purchasers more options and negotiating power.
Average days on market (DOM): This metric reveals how quickly homes are selling in your area. When properties sell within days of listing, often with multiple offers, you’re likely in a strong seller’s market. Homes that linger for months typically indicate a buyer’s market where purchasers can take their time making decisions.
Price trends: Consistent price increases often signal a seller’s market, while price reductions or stagnation may indicate a buyer’s market. Monitoring year-over-year price changes in your specific neighborhood provides insight into which way the market is trending and helps determine if it’s a real estate buyer’s or seller’s market.
Sale-to-list price ratio: This percentage shows how close homes are selling to their asking prices. Ratios above 100% mean buyers are paying over asking price—a clear seller’s market indicator. Ratios below 95% suggest buyers have leverage to negotiate discounts in a market that favors them.
Interest rates: Mortgage rates significantly impact buyers’ purchasing power. Rising rates can cool a hot seller’s market by reducing affordability, while falling rates might stimulate buying activity even in otherwise sluggish markets.

Best Time to Buy Real Estate

Timing is an important factor when considering the best time to buy or sell real estate. The real estate market typically moves in cycles, alternating between buyer’s and seller’s markets. Local real estate cycles may be driven by population growth or decline, shifts in homebuilding activity, employment market changes and similar factors.

Broader economic conditions can greatly influence real estate markets as well. Interest rates, employment rates, and overall economic stability all impact home prices and buyer affordability. When mortgage rates are low, buyers can often afford more expensive homes, which can drive up demand and prices. Monitoring these economic indicators can help you decide if it’s a good time to buy or sell.

Seasonality also plays a significant role in determining the best time to buy real estate. Historically, the spring and summer months see the highest activity, with more homes listed and more buyers searching. While this means more options, it can lead to bidding wars and higher prices. Fall and winter tend to be slower, which may translate to less competition and better deals for buyers.

Ultimately, the best time to buy real estate depends on a combination of market conditions, economic factors and your readiness. By staying informed and consulting a real estate professional, you can increase your chances of making a smart investment, regardless of whether it’s currently a buyer’s or seller’s market.

Best Time to Sell Real Estate

When considering the best time to sell real estate, timing can make a significant difference in both the speed of your sale and the price you ultimately receive. The real estate market is influenced by a variety of factors, including local supply and demand, interest rates and broader economic conditions. Sellers who pay attention to these indicators are better positioned to make informed decisions that maximize their returns.

One of the most important indicators to watch is inventory, or the number of homes available for sale in your area. A low inventory environment typically signals a seller’s market, where demand outpaces supply and sellers can command higher prices. Conversely, high inventory levels often mean more competition among sellers, which can drive prices down. Monitoring the average days on market for comparable properties is also crucial; shorter selling times usually indicate strong buyer demand.

Seasonality plays a notable role in real estate sales. Historically, spring and early summer are considered the best times to sell, as families prefer to move during school breaks and homes tend to show better with improved weather. However, local market dynamics can override these general trends, so it’s wise to consult recent sales data in your specific area. In some regions, fall or even winter may present unique opportunities, especially if there’s less competition from other sellers.

Ultimately, the best time to sell real estate depends on a combination of market indicators, seasonal trends and your personal circumstances. By staying informed and seeking professional guidance, you can navigate the market with confidence and achieve the best possible outcome for your sale.

Bottom Line

A "For Sale" that was tagged as "Sold" in front of a home.

By monitoring inventory levels, days on market, price trends, mortgage rates and other market data, you can gain valuable insights into local conditions. When inventory is low and homes sell quickly with multiple offers, sellers have the advantage. Conversely, high inventory and longer selling times signal a buyer’s market where negotiation power shifts to purchasers. Whether you’re buying or selling, recognizing these key indicators will help you develop effective strategies and set realistic expectations.

Real Estate Investment Tips

A financial advisor can help you determine whether a real estate investment makes sense for your portfolio. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
When you are making a real estate transaction, closing costs can be a significant consideration. SmartAsset’s closing costs calculator helps you estimate how much cash will change hands at closing.