In February, the gap between sellers and buyers reached a record high, with 46.3% more sellers than buyers, representing a gap of 629,808, according to Redfin data back to 2013. This figure represents a 30% increase compared to the previous year, when the difference was 449,409. Even in October, the difference was 528,769 people. According to Redfin, a buyer's market is defined as when there are more than 10% sellers than buyers, and, under this definition, buyers have had the advantage since May 2024.

This comes after the Federal Reserve's most aggressive rate-hiking cycle in four decades, sending mortgage rates higher as central bankers scrambled to bring down inflation. The result was a sharp unwinding of the seller's market that saw home prices and sales boom in the aftermath of the COVID pandemic.

Although the Fed began cutting rates two years ago, the housing market has largely frozen, as the "lock-in effect" prevented homeowners with low mortgage rates from putting their properties up for sale. Reduced supply also lifted home prices, adding to the spiraling housing affordability crisis. Fears that high oil prices will accelerate inflation, while increased defense spending widens the deficit, have sent Treasury yields soaring, raising borrowing costs throughout the economy.

This includes mortgage rates, which have risen to their highest levels since October. With homeownership now even more expensive, mortgage application volume plunged 10.5% last week from the previous week, which is a harbinger of the upcoming spring selling season.

"Of course, it's only a buyer's market for those who can afford to buy," Redfin noted. "High housing costs and economic uncertainty have caused many house hunters to retreat, creating an imbalance between buyers and sellers." The number of homebuyers fell 2.4% month-over-month in February, to about 1.36 million. Meanwhile, the number of sellers dipped just 0.4%, to an estimated 1.99 million.

The strongest buyer's market last month was Miami, where sellers outnumbered buyers by 163%. This was followed by Nashville (120%), Austin (112%), West Palm Beach (110%) and San Antonio (104%).

After many Sun Belt cities saw an influx of people during the remote work heyday of the pandemic, builders rushed to add more supply. But the affordability crisis has weighed on demand, leaving many cities with a hangover of excess supply. In another indication of how favorable the housing market is for buyers, a batch of Redfin data revealed that canceled contracts hit a record high in February.

More than 42,000 U.S. home-sale agreements fell through last month, or 13.7% of the homes that went under contract, marking the highest February share in records dating back to 2017. That's also up from 12.8% a year earlier.

Cancellations happen when buyers see better homes and back out during the inspection period or when they don't want to repair an issue that comes up after signing contracts. Other times, they just get cold feet and assume that an even more desirable property will become available. "House hunters are also feeling jittery because of economic and geopolitical uncertainty," Redfin said. "Many Americans are concerned about job security, inflation, the Iran war, and other world events that can make their finances shaky."