Buyer’s Market: In a buyer’s market, there are more homes for sale than there are buyers. This abundance of inventory gives buyers more negotiating power, often leading to lower home prices and favorable terms. Buyers may find themselves in a strong position to request concessions from sellers, such as repairs or closing cost assistance.

Interest rates play a critical role in the affordability of a home. When rates are low, borrowing costs decrease, making mortgages more affordable and allowing buyers to potentially afford more expensive homes. Conversely, when interest rates rise, monthly mortgage payments increase, reducing the purchasing power of buyers. Even a small increase in interest rates can significantly impact the long-term cost of a home.

Broader economic conditions, such as employment rates, inflation, and consumer confidence, also affect the home-buying process. A strong economy with low unemployment and rising wages can boost buyer confidence and increase demand for homes. On the other hand, during economic downturns, uncertainty can lead to a decrease in buyer activity, stagnation in home prices, and more cautious lending practices by banks.