Is it a buyer’s or seller’s market? The Seattle-based real estate brokerage Redfin says conditions are clearly favoring buyers right now, citing stale housing inventory and the fact that sellers outnumber buyers by nearly 500,000.

But fellow Seattle-based real estate marketplace company Zillow says that “buyers don’t quite have the upper hand” in what it thinks is currently a neutral housing market.

“Homebuyers today have a few factors in their favor: Rates are lower than last year, they have more homes to choose from, and sellers are cutting prices at record rates,” Zillow Senior Economist Kara Ng notes in the company’s May housing market report. “But they still face major obstacles, particularly saving up enough for a downpayment and finding a home within their budget. Many families looking to upsize are realizing it’s cheaper to rent a starter home than to buy one.” 

On the plus side for buyers, Zillow reports that the number of homes for sale in the U.S. rose to 1.3 million in May, the most in the company’s records since July 2020. Additionally, sellers slashed prices on about 26% of listings nationwide last month — a record percentage for May, per Zillow data.

Mortgage rates, while stuck in a narrow range for the past two months, are lower than last spring. The 30-year fixed-rate mortgage averaged 6.84% last week compared to 6.95% a year ago, according to Freddie Mac.

But affordability concerns continue to tamp down demand, Ng observes, with many prospective homebuyers choosing to remain renters for the time being.

“Rent for a typical single-family home is roughly $100 cheaper per month than the mortgage payment on the typical U.S. home, even after a 10% downpayment,” Ng says. “Six years ago, renting was $373 more expensive than buying. This shift helps explain why housing demand continues to bounce along the bottom.”

There are signs that the market is beginning to turn, however. Newly pending home sales rose 3.5% in May month over month and 0.9% year over year. And the typical mortgage payment is down 1.7% from last year, according to Zillow.

Currently, the strongest buyer’s markets among individual cities are concentrated in the South region, particularly in Florida, according to Zillow’s Market Heat Index. The Northeast has the strongest seller’s markets, with the upstate New York cities of Rochester, Buffalo and Syracuse leading the way.