Real estate expert advises monitoring these 4 signs to determine if a market is a buyer's market.

• The housing market is not yet affordable due to high prices and borrowing costs.
• Yet some signs are pointing toward a notable, buyer-friendly shift.

Despite home prices reaching unprecedented levels, experts predict that the housing market is improving for buyers in certain areas.

In June, the median cost of a single-family home in the U.S. reached a new all-time high of $426,900, while the number of homes sold decreased by 5.4% from May to about 3.89 million, according to the National Association of Realtors.

Although mortgage rates have decreased from their May high, borrowing costs remain expensive for homebuyers. The average 30-year fixed rate mortgage in the U.S. increased to 6.78% from 6.77% on Thursday, according to Freddie Mac data from the Federal Reserve.

Some indicators suggest that the housing market is moving away from a seller's market, despite the challenges.

"Defining a buyer's market can be challenging, as there are no clear-cut rules," said Chen Zhao, the economic research lead at Redfin.

"Zhao stated that the market is shifting more towards buyers, possibly bringing it into balance. Although things are improving, they are not yet excellent."

Orphe Divounguy, a senior economist at Zillow, agreed.

"Although we are still in a seller's market nationwide, there is good news for buyers in the near future."

4 signs of 'a more neutral market'

Despite the affordability challenge, buyers who can afford to purchase are realizing that the pendulum is swinging back slightly in their favor, as things are moving towards a more neutral market, according to Divounguy.

Four indicators that suggest the housing market in your area is leaning towards buyers are:

1. Homes are lingering on the market longer

Daryl Fairweather, Redfin's chief economist, previously stated on CNBC that as homes remain on the market for extended periods, buyers may have the chance to purchase a property below its listed price.

In June, 64.7% of homes listed on the market had been on the market for at least 30 days, an increase from 59.6% the previous year, according to Redfin. The reason for this is that mortgage rates and prices remain high for buyers, causing homes to sit on the market for slightly longer.

Down payment-assistance programs can aid in purchasing a home. Selling a house is difficult during hot weather. Some renters may be mortgage-ready without realizing it.

"Homes are remaining on the market for a longer period of time, according to Zillow data," said Divounguy.

2. Buyers are backing out

Some homebuyers are abandoning their home purchase at the last minute, even after reaching the closing stage.

Redfin found that approximately 56,000 home-purchase agreements were canceled in June. Some of these abandoned deals may be due to buyers reevaluating their budget and requirements.

"Julie Zubiate, a Redfin Premier real estate agent in the San Francisco Bay Area, stated in a Redfin report that buyers are becoming increasingly selective. They are backing out of deals due to minor issues because the monthly costs of buying a home today are too high to justify not getting everything on their must-have list."

"Selma Hepp, chief economist at CoreLogic, stated that people often do not consider insurance and taxes until they receive a lender's first estimate, at which point they may decide to withdraw from the transaction."

3. Sellers have more competition

As more listings become available in their area, buyers may become more selective.

The total housing inventory at the end of June was 1.32 million units, which is a 3.1% increase from May and a 23.4% increase from the previous year. The unsold inventory is currently at a 4.1-month supply, up from 3.7 months in May and 3.1 months in the previous year, as reported by NAR.

The South is experiencing the fastest easing of competition, with all major southern markets except Dallas and Raleigh being either neutral or buyer-friendly, according to the June 2024 Zillow Housing Market Report.

"Hepp stated that having more inventory does provide buyers with more options, but this is only applicable regionally. However, those with the most significant inventory increases are facing other challenges."

4. Sellers are cutting prices

For several years, home sellers have been able to sell their homes for more than they paid because home valuations have increased rapidly, and there has been a shortage of homes for sale.

"Divounguy stated that sellers are increasing their efforts to attract buyers, with one in four sellers cutting their prices by the most in the last six years."

In June 2021, approximately 19.8% of homes for sale experienced a price reduction, marking the highest percentage on record, according to Redfin. This represents an increase from 14.4% in June 2020.

Builders are increasing their efforts to attract buyers by cutting prices, with 31% of builders doing so in July 2024, up from 29% in June and 25% in May, according to a survey by the National Association of Home Builders.