Record-Breaking Amount of Home Sellers in the Market: What That Means for Home Prices
The housing market is, much like the economy at large, a mercurial beast whose moves are impossible to predict with 100% accuracy. But, though we may not be able to say with certainty what will happen in the next few months, we can look at what's happening right now to get some hints of what's to come. And right now, we're seeing something pretty incredible: more homes for sale than buyers looking for homes.
On May 29, 2025, Redfin reported that there are 34% (500,000) more sellers in the market than buyers. We haven't seen sellers outnumber buyers to this degree since 2013. This time last year, sellers outnumbered buyers — but only by 6.5% — and in 2023, buyers outnumbered sellers.
Here's what this turn in the market means for home prices.
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Again, nothing about the future of the housing market can be said with 100% certainty, but this incredible disparity between buyers and sellers, where sellers vastly outnumber buyers, tells us that it would be very unlikely if home prices didn't drop as a result. Just as a shortage of inventory/supply makes prices surge along with demand, an excess of inventory paired with waning demand makes prices go down.
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So, if we have 34% more sellers than buyers, we should expect to see home prices drop something in the ballpark of 34%, right? No. Not even close. Redfin estimated that home prices will drop 1% year over year by the end of 2025. Why such a modest decrease?
When there are a lot of homes available for sale and not as many people looking to buy, those who are looking to buy have an upper hand in negotiating. A seller may be inclined to take a lower-than-asking price bid on their home than they would in a hot market where inventory is short.
But most sellers aren't going to do something akin to hosting a half-off, all-things-must-go sale with their house, unless it's in seriously horrible condition or about to be foreclosed. A seller will still look after their best interest and opt to let their home sit on Zillow for a while or list it in the future, during a seller's market.
During the Great Recession, the U.S. saw a flood of foreclosures. This is when the housing bubble burst and tons of indebted houses hit the market at low prices as banks/mortgage lenders were desperate to recoup their losses as best they could. But we're not seeing a lot of foreclosures lately. On Jan. 16, 2025, ATTOM, a curator of land, property data and real estate analytics, published findings that foreclosures in 2024 were down 13% from 2023 and down 75% from 2019. They were down 97% percent from 2010.
Foreclosures are down for a few reasons, with perhaps the biggest one being that we have a lot more regulations in place for buyers than we did in 2009. The mortgage lending process is far more scrupulous and demanding. Ultimately, you need a lot more money to buy a home in 2025 than you did in 2009. If we were seeing homes hit the market because of foreclosures, we could expect rock-bottom prices, but that's not what's happening.
One key reason there are more homes for sale than there are buyers is affordability. Most people cannot afford to buy a median-priced home in 2025. And sky-high interest rates that come with mortgage loans are another big hurdle. A $480,000 home with a 30-year fixed mortgage ends up costing $1.15 million once all is said and done.
So, can a 1% drop in home prices offset the expenses of putting down a down payment while taking on a costly mortgage? For many people, no. While we are shifting toward a buyer's market, the average middle-class earner is still not typically in the position to be a buyer.
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This article originally appeared on GOBankingRates.com: Record-Breaking Amount of Home Sellers in the Market: What That Means for Home Prices
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