The real estate market is defined by the number of homes for sale.
Three months of inventory or less creates a Seller’s Market, meaning there are not enough homes to meet demand, Bidding wars can occur, and sellers generally will not accept home sale contingencies or delayed closing dates.
Four to five months of Inventory is considered a Balanced Market, with enough buyers to purchase the supply of homes flowing into the market. Bidding wars are rare and price negotiations are likely.
Over 6 months of inventory means it's a Buyer’s Market. Sellers are more likely to accept home sale contingencies, and well-priced homes in high demand areas will likely move quickly, while homes that are overpriced or in less desirable areas will linger on the market.
Whether you're in a Buyer’s or Seller’s Market can also depend on your price range. For instance, even in an overall Buyer’s Market, higher-priced homes may move slowly. Ask your agent for the Inventory Accumulation Rate that applies to your area and/or price range.