What is the effect of a buyer’s market on home prices?

In a buyer’s market, there are generally more homes available for sale than there are buyers looking to purchase them, leading to an excess inventory. This oversupply means that sellers may need to lower their prices in order to attract buyers, as competition increases among sellers to make their properties more appealing. Therefore, home prices typically decrease to achieve sales in a buyer's market.

The dynamics of supply and demand play a crucial role here; with higher inventory, buyers have more options and can negotiate better deals, which ultimately drives prices down. In contrast, other scenarios like a seller's market, where demand exceeds supply, often results in rising home prices.