• What's at Stake: Lenders face extended transaction timelines and rising contract cancellations as buyers gain leverage.
• Expert Quote: "The irony is that in terms of supply, these are some of the best conditions for buyers in many years, but they have arrived at a time when costs are so high that fewer people can afford to take advantage of them," — Asad Khan, Redfin.
• Supporting Data: There were 62.6% more home sellers than buyers recorded in the housing market last month.

Overview bullets generated by AI with editorial review.

Mortgage lenders should prepare for longer loan processing times and higher fallout as homebuyers hold negotiating power not seen in at least 13 years.

There were an estimated 62.6% more home sellers than buyers in the housing market last month, the biggest gap in records dating back to 2013, according to the latest report from Redfin. Buyers can afford to be particular if they choose, resulting in extended transaction timelines, renegotiations on purchase prices and an increased risk in contract cancellations.

The imbalance was largely driven by buyers being priced out due to high housing costs and economic uncertainty. Lenders who offer and market affordability products, such as temporary rate buydowns, adjustable-rate mortgages and down payment assistance, may be best positioned to secure the borrowers that remain.

September marked the fourth record-breaking month in a row, and the margin was up notably from 56.9% in August, the report showed.

"This is a buyer's market born out of caution, not strength," said Asad Khan, a senior economist at Redfin, in a press release Wednesday. "For house hunters who have the budget and job security to purchase a home in today's market, that creates a unique opportunity: They can be picky, negotiate and even walk away if the deal doesn't make sense financially or they find something they like better."

There were an estimated 928,892 homebuyers in the market last month. This marked the fifth straight monthly decline and was the lowest level in Redfin's records. It also was down 2.4% from August a year earlier.

Meanwhile, there were an estimated 1.5 million home sellers in the market, the most since March 2020 and up 1.2% month over month.

The housing supply rose largely because homes lingered without finding buyers. Many homeowners continued listing because they were tired of waiting after years of hoping rates would drop and demand would rebound. Some homeowners chose to list because they were concerned prices could drop in the future. Others are listing out of necessity, due to events like a new job, growing family, divorce or retirement, according to the report.

The median asking price of a home for sale fell 0.3% year over year during the four weeks ending Oct. 1, the first decline since March, a separate Redfin report showed.

"The irony is that in terms of supply, these are some of the best conditions for buyers in many years, but they have arrived at a time when costs are so high that fewer people can afford to take advantage of them," Khan said.

Buyer's markets

More than 80% of metro areas, 41 of the 50 Redfin analyzed, were buyer's markets, the most ever recorded in its records. Miami, Nashville, Tennessee, and Houston posted the largest surplus of sellers over buyers for the second consecutive month. There were twice as many sellers in 13 metros, all of which were located in the Sun Belt, largely because builders continue to add new homes to the market.

Four metros were considered balanced in September, while the other five, Nassau County, New York, Montgomery County, Pennsylvania, Newark, New Jersey, Milwaukee and San Francisco, all favored sellers, ranging from 10.6% to 28.6% more buyers, the report found.