Sellers Are Losing Their Advantage—Here’s What That Means for the Housing Market

Zillow recently reported that sellers are “losing their advantage” as the housing market moved into neutral territory this past July, marking the first time that’s happened in five years. In 2022 and 2023, that shift toward neutrality didn’t occur until October. So, what exactly does this mean for sellers and buyers? We spoke to two real estate professionals to better understand this change. 

It appears as though sellers are more hesitant to sell their properties, but recent drops in mortgage rates could make the market more competitive in the coming months.

“If this relief from mortgage rates continues, we should see more buyers restarting their hunt for a home,” Zillow Chief Economist Skylar Olsen said in the press release. “But although rate lock among homeowners is easing, they probably won’t be as motivated to jump back into the market and sell. With housing inventory still scarce, this improved affordability picture could reignite competition and sales as we head into the fall, or at least delay the usual post-summer cooldown.”

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There are a few reasons for this cooldown, according to Lindsey Harn, a residential real estate agent and owner of Lindsey Harn Group in San Luis Obispo, California.

“There are fewer qualified buyers actively shopping for a home, and they do have more choices, so the process from viewing the house to an accepted offer has slowed,” Harn says. “Buyers feel as if they have more time to be a tad more selective, so the process is less rushed.”

Harn adds that buyers may feel more empowered to negotiate home costs a bit more and ask for more repairs, credits, and other perks (like including furniture in the sale). By that same token, Harn’s also noticed that sellers are considering sale contingency offers again, allowing for longer escrows and more investigation time. “Two years ago, sellers weren’t really entertaining these offers,” she says. “The market was so hot, sellers were only accepting cash or offers from pre-approved buyers.”

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Harrison White of Mason Taylor Associates in Newport Beach, California suspects that the upcoming election and recent NAR settlement could give potential buyers pause.

“It’s also a mix of buyers hoping that interest rates come down quite a bit more, which they should by the end of September,” he says.

For western states like California, Harn remains confident that potential sellers will have more of an advantage in the near future.

“We anticipate when rates decrease enough, the market will become a bit more seller-friendly again, as the demand for housing in California remains so strong,” she says.