Right now may be the best time for home buyers in 5 years

If you’ve been holding off on buying a home, the last few weeks of 2024 could be your moment.

Rising home prices, tight housing stock and relentless mortgage rates have created a tough real estate market.

But now, the tide is starting to turn and the end of the year is turning into the most buyer-friendly market we’ve seen in a long time.

Five years to be exact – before the COVID-19 pandemic turned the real estate market into a wild roller coaster ride that came to an abrupt halt when mortgage rates doubled.

So what has changed recently?

We break it down below so you can seize the moment before the balance tips.

The housing stock has grown a lot

The level of housing stock is one of the biggest indicators of what kind of housing market buyers and sellers are in.

And now, buyers have more housing choices than they’ve had since 2019.

There is approximately 4.3 months of inventory on the market, according to the most recent data from the National Association of Realtors®.

“This is the longest supply period of more than four months in five years,” says Hannah Jones, senior economic research analyst at Realtor.com®.

This is a big change from the conditions buyers have faced recently.

And while it’s true that the number of homes on the market is partly due to slower sales activity, there are plenty of new listings to choose from.

In fact, new listings were up 4.9% from a year ago.

Why is housing stock more important?

More homes for sale demonstrates a basic economic principle of supply and demand.

For the past few years, there have not been enough houses on the market to meet the pent-up desire for housing.

“Those days are over,” says real estate professional and attorney Bruce Ailion, of Re/Max Town & Country in Atlanta.

“For years, buyers have complained that there is no selection, inventory is so scarce that multiple offers above list price are the only way to get a home, and too often, they had to settle for just bought”, adds Ailion.

When inventory grows, buyers gain a tremendous advantage.

“More homes on the market means more choices, which is key to finding the right property with the features and amenities you want,” says Mike Wall, CEO of eXp Realty/EZ Sell Homebuyers in Dayton, OH.

A family he worked with recently had a specific wish list, including a large yard for their children, a home office and a finished basement.

“In a tighter market, they might have to compromise on one or more of those features,” Wall says.

“But with today’s higher inventory, they were able to visit multiple homes that met their criteria. Ultimately, they landed a property that checked every box – without going over their budget.”

More housing stock means more price cuts

An increase in housing stock puts pressure on sellers to lower prices to differentiate themselves in a crowded market.

The median home price in October fell to $424,950 — and with an increasing number of homes available, sellers need to drop prices even further to stay competitive.

“The percentage of homes on sale was 18.6%,” says Realtor.com Senior Economist Ralph McLaughlin in his latest analysis.

“Furthermore, the overall share of discounted inventory is 2.2% higher than the stock seen from October 2017 to October 2019.”

Wall recently worked with a buyer who had been looking at a house for weeks.

“The price was initially very high and as a result the property did not receive much interest”, he says.

“After two price cuts amounting to about 10%, my client came in and made an offer below the asking price, which the seller accepted without hesitation.”

The seller even agreed to cover a portion of the closing costs – a clear sign of their motivation.

Along with closing costs, other things sellers can be flexible about include “spot purchases, seller credits for repairs and improvements, and leasebacks if buyers aren’t quite ready to move in.”

Buyers have time to make offers

In addition to higher housing stock, there are other market trends favorable to buyers.

It’s now the “slowest seasonal market in five years,” according to Realtor.com economist Jiayi Xu.

The market is moving at a snail’s pace, with homes spending 58 days on the market in October – the slowest October since 2019.

An extra week to buy a home eases the pressure on buyers to make quick decisions.

Andrew Fortune, who runs the Great Colorado Homes real estate brokerage in Colorado, had a recent client who got burned in the 2020-22 market frenzy, losing out to cash buyers on several homes.

“This time, they were able to revisit a home multiple times, bring in a contractor to check for potential improvements, and even negotiate repairs—all because the seller was willing to wait for a solid offer,” Fortune says.

On the brink of a buyer’s market

While the data doesn’t yet justify a true “buyer’s market,” according to Jones, it suggests the market is balanced.

This means that “buyers are in a better position than they have been in years. “

If seller activity continues to outpace buyer activity and housing stock continues to rise, the market may finally begin to tilt more toward a buyer’s market, which would be music to homebuyers’ ears.

“For buyers who have been waiting on the sidelines, now could be the perfect time to make a move,” says Wall.