In May, median list prices dropped 2.4% year over year, marking the steepest decline in Realtor.com® data since 2017. This occurred as pending sales rose for a sixth straight month, with pending listings up 4.3% year over year and contract signings up 2.6% year over year.
This presents a critical disconnect: median list prices are falling, but pending sales and contract signings are simultaneously rising. More homes are going under contract, yet these transactions happen at significantly lower price points than sellers initially sought.
The current real estate market appears to be in a complex rebalancing. Affordability challenges meet persistent demand, suggesting a nuanced environment rather than a clear shift to a dominant buyer's or seller's market.
What Are Seller's and Buyer's Markets?
Understanding fundamental real estate market characteristics is crucial for navigating current conditions. In a seller's market, prices are higher due to increased demand, homes sell quickly, and multiple offers are common, according to RBC Royal Bank. This environment favors sellers, giving them greater negotiation leverage.
Conversely, a buyer's market features lower prices, increased supply, and homes that sit unsold. This allows buyers more choices and negotiation power, RBC Royal Bank states. These dynamics, driven by supply and demand, differentiate market conditions and set the stage for understanding current complexities.
Key Differences That Define Each Market
| Characteristic | Seller's Market | Buyer's Market |
|---|---|---|
| Price Trend | Houses often sell for more than asking price | Prices tend to fall |
| Sales Speed | Homes sell quickly; inventory doesn't linger | Homes are more likely to sit unsold for extended periods |
| Negotiation Leverage | Little to no room for price negotiations | Buyers have significant leverage for negotiation |
| Inventory Level | Low supply of available homes | High supply of available homes |
| Time on Market | Days or weeks | Often more than six months |
