U.S. housing inventory hit a five-year high in June, with active listings increasing 2.3% month over month. The 1.36 million homes for sale last month represents a 17.2% increase from a year ago and is the highest mark since November 2019, according to a Zillow report.
The Seattle-based real estate marketplace company sees current housing market conditions as being “neutral,” meaning the scales aren’t tipped strongly toward either buyers or sellers.
Buyers have more options to choose from and increased bargaining power. Zillow reports that 26.6% of listings had a price cut in June, which is the highest share for that month in the company’s records dating back to 2018. But affordability challenges for prospective homebuyers persist, including high mortgage costs.
“While negotiating power is more balanced, the affordability crisis remains a high barrier to entry, especially for first-time buyers,” Zillow Senior Economist Kara Ng said in a press release. “Until we see a more meaningful improvement in purchasing power, this newfound balance will primarily benefit more well-off buyers.”
Meanwhile, more would-be homebuyers are backing out of a home purchase than ever before, reports fellow Seattle-based real estate brokerage company Redfin.
More than 57,000 pending home purchases were canceled in June, according to a Redfin analysis. That 14.9% share of all homes that went under contract last month is the highest percentage for the month of June in the company’s records dating back to 2017.
Redfin disagrees with Zillow and believes it is clearly a buyer’s market, citing the surge in pending home sale cancellations as another example of that market shift.
“Buyers have room to be picky,” the Redfin analysis states. “They may back out during the inspection period if a better home comes up for sale or they discover an issue they don’t want to fix.”
But financial concerns are another reason for real estate deals falling through, according to Redfin.
“Some would-be buyers are canceling purchases when the reality of their monthly payment sets in,” the report notes. “Additionally, Redfin agents report that some buyers are canceling because they’re nervous about economic uncertainty surrounding things like tariffs, inflation and the possibility of a recession.”
Some relief may be coming in the form of lower home prices, as Redfin expects nationwide prices to decline 1% year over year by the end of 2025. But the real estate brokerage also sees the 30-year mortgage rate ending the year around 6.8%, which is roughly the same average rate reported by Freddie Mac last week.
