The real estate market is constantly shifting and understanding whether it favors buyers or sellers is important for real estate agents and mortgage professionals alike.

Knowing the key indicators that signal a buyer’s market or a seller’s market allows you to guide clients with confidence, helping them make informed decisions that align with their homeownership goals. 

So, how do you determine which way the market is leaning? Here are the essential metrics every agent should track to assess market conditions and provide the best advice to their clients.

1. Inventory Levels and Months of Supply

One of the most reliable indicators of market conditions is housing inventory—specifically, the months of supply available. A low supply typically signals a seller’s market, while a higher supply suggests more opportunities for buyers, helping clients strategize effectively.

• Seller’s Market: When inventory is low (typically less than six months of supply), there are fewer homes available, leading to more competition among buyers. This often results in bidding wars, rising home prices, and sellers having the upper hand in negotiations. 

• Buyer’s Market: When inventory is high (six months or more of supply), buyers have more choices and negotiating power. Prices may stabilize or decrease as sellers compete for fewer buyers. 

Tracking inventory levels in your local market can help you advise clients on pricing strategies and timing their transactions effectively. 

2. Days on Market (DOM)

The average number of days a home stays on the market before going under contract is a key indicator of demand. A lower DOM suggests high demand and a competitive market, while a higher DOM may signal more opportunities for buyers.

• Low DOM: In a seller’s market, homes sell quickly—often within days or weeks—because demand is high. Multiple offers and above-asking-price sales are common. 

• High DOM: In a buyer’s market, homes take longer to sell, signaling lower demand. Sellers may need to lower their asking prices or offer incentives to attract buyers. 

Encouraging sellers to price competitively or advising buyers to move quickly on desirable homes can be a strategic advantage based on the DOM trends in your area. 

3. Home Price Trends

Watching the trajectory of home prices helps determine whether the market favors buyers or sellers. Tracking home price trends is essential because it provides valuable insights into market dynamics, helping buyers and sellers make informed decisions.

• Rising Prices: If home prices are steadily increasing, it indicates strong demand and a seller’s market. Home appreciation is high, and buyers may need to act quickly before prices rise further. 

• Declining Prices: If prices are dropping, it suggests a shift toward a buyer’s market, where sellers may be willing to negotiate on price, closing costs, or other concessions. 

Monitoring local price trends helps agents guide both buyers and sellers in setting realistic expectations.

4. Mortgage Interest Rates

Mortgage rates significantly impact buying power, making them a crucial factor in market conditions. As rates fluctuate, they can either expand or limit what buyers are able to afford, directly affecting their ability to compete in the market.

• Low Interest Rates: Lower rates increase affordability, allowing buyers to qualify for larger loan amounts. This can drive demand, contributing to a seller’s market. 

• High Interest Rates: Higher rates reduce affordability, potentially slowing demand and creating more favorable conditions for buyers who can afford to stay in the market. 

Agents should stay informed on rate trends and educate clients on how interest rates affect their purchasing power.

5. Buyer Demand vs. Seller Activity

The balance between buyer demand and seller activity determines whether competition is high or low. Real estate professionals can track demand through showing activity, mortgage applications, and pending home sales reports to understand the market’s momentum. 

• High Buyer Demand, Low Seller Inventory: This creates a strong seller’s market, with multiple offers and rising prices. 

• Low Buyer Demand, High Seller Inventory: This results in a buyer’s market, where sellers may need to offer discounts or incentives to attract offers. 

6. New Construction Trends

The availability of newly built homes affects housing supply and market conditions. Agents should monitor local builder activity and trends in permits and housing starts to anticipate changes in supply. 

• Increase in New Construction: If more new homes are being built, buyers have more options, which can ease inventory shortages and shift the market in their favor. 

• Slowdown in Construction: When new home construction declines, inventory tightens, often leading to increased competition among buyers.

7. Economic Factors and Employment Trends

The overall health of the economy plays a major role in real estate market conditions. Economic stability or growth can increase consumer confidence, while uncertainty or downturns can have the opposite effect, influencing both demand and pricing in the housing market.

• Strong Job Growth & Wage Increases: A robust job market leads to higher consumer confidence and more home purchases, fueling a seller’s market. 

• Job Losses & Economic Uncertainty: High unemployment or economic downturns reduce buyer demand, shifting conditions toward a buyer’s market. 

Keeping an eye on employment data and economic reports can provide insights into future market trends.

8. Seasonal Market Patterns

Real estate markets fluctuate seasonally, and understanding these cycles helps agents and buyers make strategic decisions. Advising clients on timing their home purchase or sale based on seasonal trends can give them an advantage. 

• Spring and Summer: Typically more competitive, favoring sellers due to higher buyer activity. 

• Fall and Winter: Usually slower, favoring buyers as sellers become more motivated to close deals.

9. Investor Activity

Investors can influence housing demand, particularly in certain markets. Watching investor trends, such as institutional buying or short-term rental demand, can help agents anticipate shifts in local markets. 

• High Investor Activity: Increases competition, reducing inventory for traditional homebuyers and driving up prices. 

• Low Investor Activity: Leaves more opportunities for primary homebuyers to negotiate better deals.

10. How Agents Can Use Market Indicators to Guide Clients

Understanding whether it’s a buyer’s or seller’s market is just the first step. The key is translating this knowledge into actionable advice for clients. 

• For Sellers: In a seller’s market, advise pricing strategies that maximize profits while ensuring the home is still competitively priced. In a buyer’s market, help sellers understand the need for competitive pricing, staging, and potential concessions. 

• For Buyers: In a buyer’s market, encourage them to negotiate for lower prices and better terms. In a seller’s market, stress the importance of acting quickly and making strong, well-prepared offers. 

• For Investors: Provide insights on whether it’s a good time to buy, sell, or hold based on market conditions and economic trends.

Navigating Market Trends with Confidence and Expertise

Whether the market favors buyers or sellers, being proactive and knowledgeable about key indicators helps agents provide the best guidance. By tracking inventory levels, home prices, interest rates, and economic trends, real estate professionals can position their clients for success—no matter the market conditions. 

At Mutual of Omaha Mortgage, we’re committed to helping agents and their clients navigate the real estate landscape with expert insights and competitive loan solutions. If your clients are looking for financing options in today’s market, contact us today to explore their mortgage opportunities.