The strongest buyers markets? Former pandemic boom towns
Buyers have the biggest advantage in Sun Belt cities that saw a surge in home construction during the first half of the decade.
Key points:
- In May, sellers outnumbered buyers by nearly 47% on a national basis, and 35 of the 50 largest U.S. metros were buyers markets, Redfin reported.
- Nashville, Miami and three Texas metros ranked as the strongest buyers markets, with Nashville also seeing the biggest monthly increase in its seller-buyer gap.
- Just seven metros favor sellers, and five are in the Northeast, led by Nassau County, New York. Two cities in other areas — Milwaukee and San Francisco — also made the list.
Nationally, there were nearly 47% more homesellers than buyers in the U.S. last month, or roughly half a million more active listings than closed transactions, according to new data from Redfin.
Buyers markets — defined in the report as those with at least 10% more sellers than buyers — have taken hold in a majority of large cities nationwide, with 35 out of the 50 most populous metro areas tilting in buyers' favor, Redfin found.
Some of the strongest buyers markets are in cities that saw a flurry of activity during the pandemic. Today's home sellers are now trying their luck in those areas as buyers cautiously wade in.
Sun Belt boom towns best for buyers
Nashville was the strongest buyers market in May with roughly 130% more sellers than buyers. That was followed by Miami (122% more sellers), Austin (+116%), Houston (+111%) and San Antonio (+108%).
During the pandemic, many of these markets saw an influx of buyers who were newly able to work remotely and wanted to relocate to more affordable markets with pleasant weather.
More incoming buyers led to a boom in new construction in the first half of the decade, but as mortgage rates, home insurance costs, HOA fees, and in some cases climate risk concerns rose, sales slowed, leaving a glut of new home inventory in some Sun Belt markets.
Advantage doesn't equal affordability
While buyers may have more room to negotiate when there's less competition for homes, that doesn't necessarily mean prices in those markets are affordable.
Housing costs continue to be high in many places, especially when mortgage rates and home insurance are factored in, Redfin noted. Those costs, plus economic uncertainty, have contributed to the current imbalance in many markets.
"While the gap between home buyers and sellers has narrowed slightly since the end of last year, house hunters still have far more negotiating power and less pressure to make rushed decisions," Redfin Senior Economist Asad Khan said in the report.
Even so, attractive homes in popular neighborhoods are still commanding multiple offers at times, Khan noted.
A growing divide
There were about 1.48 million sellers in the U.S. in May — up 0.4% from April, and the highest level since 2020 — while the number of buyers remained flat month-over-month at around 1.01 million.
Sellers are entering the market more quickly than buyers partially in response to the rise in demand that occurred in April as a result of a strong job market and a quick dip in mortgage rates. But since then, demand has tapered and mortgage rates have ticked back up, driven largely by war-related oil price fluctuations.
Twenty-three of the 35 buyers markets Redfin identified moved even further into buyer territory last month. Nashville's seller-buyer gap increased by 16 percentage points, rising from 114% more sellers than buyers in April to 130% more in May.
St. Louis, Missouri, saw a 15 point increase, shifting from a balanced market to one with 15% more sellers than buyers in May, while the gap in Oakland, Houston and Austin each increased by 10 percentage points on a monthly basis.
A handful of sellers markets
Just seven major metro areas analyzed by Redfin were considered sellers markets in May, which was unchanged from April, but that's still the highest number of sellers markets in the last nine months.
The strongest sellers market was Nassau County, New York, where there were 38% fewer sellers than buyers.
The other sellers markets included Milwaukee, Wisconsin (29% fewer sellers); Montgomery County, Pennsylvania (-25%); Newark, New Jersey (-21%); New Brunswick, New Jersey (-20%); Providence, Rhode Island (-19%); and San Francisco (-14%).
Unlike the buyer-leaning markets, these regions have limited new construction and fairly consistent demand since they're near job hubs, providing sellers with a steady stream of potential buyers.