The market is changing — and the industry's old rules are outdated 

While some analysts and corporate leaders say it's still too early to declare that the U.S. has entered a buyers market, recent reports and data illustrate that homebuyers are gaining more leverage than they've had in recent years — though affordability remains a major hurdle in many major metros.

With more inventory and negotiating power — and an economy that increasingly seems to be on the precipice of a recession — buyers are being discerning in their home purchase decisions.

So what does this shift favoring buyers mean for sellers and home builders? According to a pair of new reports, the many changes indicate that an entirely different kind of housing market is emerging — one in which the rules that the industry has operated with for years are growing outdated.

Buyers aren't afraid to wait — or back out

One trend on the rise in recent months has been the rise in buyers backing out of deals or putting their home search on pause. FOMO — the fear of missing out — no longer seems to be enough to keep buyers from finalizing a purchase they're not entirely in love with. Instead, buyers are prioritizing their needs — and economic security — before following through, a July report from Bright MLS and a separate July analysis from John Burns Research & Consulting (JBREC) suggest. 

A June survey of 1,288 U.S. homeowners and renters found that 37% of respondents believe the country is already in a recession, and nearly half are holding out on making large purchases — like buying a home — due to economic uncertainty, according to John Burns researchers Mikaela Arroyo and Jenni Nichols.

Bright MLS Chief Economist Lisa Sturtevant came to a similar conclusion in her July report, suggesting that it is "less about being frustrated at losing out on homes and more about general uncertainty" for buyers who pause their home search.

More buyers purchasing out of necessity

Amid ongoing economic uncertainty and the rise in inventory (much of which is stale), experts are finding that buyers are purchasing homes more out of necessity than an interest in upgrading or relocating for lifestyle reasons. Factors like family and career are more likely to drive home purchases in 2025 compared to last year, Sturtevant found. The desire to own a home seems to be factoring less into buyers' calculations this year — or, as John Burns researchers wrote, "People aren't just upgrading for fun. They're doing the math."

While 31.4% of people who purchased a home in the Bright MLS territory during the second quarter of 2024 did so because they either felt ready to own a home or no longer wanted to rent, that share dropped to 26.5% during the same time this year, Sturtevant wrote. Fewer people are buying vacation homes and second homes this year as well, according to the Bright MLS report.

Builders need to rethink new home designs

The typical seller isn't the only one being affected by the changing tides of the marketplace. Home builders should also be reconsidering their approach to developing and selling homes, John Burns researchers wrote.

As buyers seek affordable options, some are moving further from their metro areas or purchasing smaller homes, earlier reports found. But there are other factors that builders should reconsider, JBREC's Arroyo and Nichols suggested.

"Affordability is the filter through which many buyers are making decisions right now. But designing for simplicity doesn't mean designing for blandness," they wrote. "You don't need luxury upgrades to create impact."

When asked what they prioritize in a home, buyers "consistently prioritize practicality over polish" in both their residence and the wider community, Arroyo and Nichols noted. Builders should make decisions that prioritize buyers' shifting preferences in new construction. Trading luxuries for things like flex spaces or features that can serve multiple purposes go further in today's market.

"When every builder is pushing for price, the risk is a sea of sameness," they wrote. "And in that sea, the home that feels a little more human wins."