LOS ANGELES (AP) — As the 2023 spring homebuying season unfolds, it appears to be shaping up to be more advantageous for potential home shoppers compared to recent years, provided they are financially equipped to enter the market. Several factors are contributing to this shift, including a slower rate of home price increases, a slight easing of mortgage rates, and a significant uptick in available homes for sale.

Home prices, while still on an upward trajectory, are rising at a considerably slower pace than in previous years. This moderation in price growth is a welcome change for many prospective buyers who have faced soaring costs in recent times. Furthermore, while mortgage rates remain elevated, they have shown signs of easing. Economic analysts suggest that these rates could possibly decline even further if the economic landscape deteriorates due to the ongoing trade tariffs imposed by the Trump administration, which have led to increased volatility in financial markets and heightened recession fears.

The most notable shift in this market is a dramatic increase in the inventory of homes available for purchase. Although the total number of homes for sale nationally remains low by historical standards, active listings — which include all homes on the market except those that are under contract — have surged by an impressive 28.5% from the same time last year, according to data from Realtor.com. In several major metropolitan areas, the increase is even more pronounced, with listings rising between 44% and 68%, particularly in cities like San Diego, Las Vegas, Atlanta, and Washington D.C.

As homes take longer to sell, it has become apparent that prices are beginning to dip in various markets. Notably, the median listing price decreased last month compared to a year prior in most of the largest 50 metropolitan areas across the country. For instance, cities such as Austin, Miami, and Kansas City experienced drops exceeding 6% in their median listing prices.

This evolving landscape should empower prospective homebuyers with more negotiating power when it comes to dealings with sellers this spring. However, for many hopeful homeowners who have been priced out of the market due to years of escalating prices, these developments may not serve as a complete game-changer.

Joel Berner, a senior economist at Realtor.com, emphasized the changing dynamics, stating, “It’s a little hard to say that it’s a buyer’s market, but I’d call it a much more balanced market than it’s been in the last couple of years, where it’s really been a predominantly seller’s market.”

The housing market\'s trajectory is further illustrated through the experiences of Ryan Vasko and his wife, Whitney, who recently transitioned from Oregon to Colorado. In December, they sold their three-bedroom, one-bath home in Portland for $505,000, which was $10,000 below their initial asking price. Nevertheless, they successfully exceeded their minimum expected sale price of $500,000.

Simultaneously, the couple set out to find a home in the Denver metro area, which has experienced one of the largest increases in available homes this year, with active listings soaring 67.3% in March compared to the previous year. Consequently, the median listing price in that area fell by 5.6% to $585,000.

Last month, the Vaskos sealed the deal on a four-bedroom, three-bathroom property located in Littleton, Colorado, approximately 10 miles south of Denver. They managed to get under contract by the end of the first week of house hunting, discovered they were expecting a baby the following week, and made an offer on the house in just three weeks. They purchased the home for $680,000, which was $5,000 over the list price. In a beneficial arrangement, the seller agreed to cover the costs associated with lowering the couple’s mortgage rate from 6.9% to 4.9% and 5.9% for the first two years of the loan.

“It gives us a little wiggle room, if we need it,” Vasko noted, sharing plans to eventually refinance to a more favorable fixed rate.

The overall U.S. housing market has been experiencing a slump since 2022, primarily due to rising mortgage rates that climbed from record lows seen during the pandemic. Last year, sales of previously occupied homes plummeted to their lowest level in nearly three decades. However, easing mortgage rates, combined with an increase in available homes, contributed to a rise in sales in February, despite still being lower year-over-year.

The past year saw high mortgage rates negatively impacting the start of the spring homebuying season. Currently, the average rate on a 30-year mortgage has decreased to 6.6%, down from just above 7% in mid-January, although this remains high relative to the two-year low of approximately 6% reached in September.

Another positive aspect for buyers is the decline in prices. The median listing price dropped in March compared to a year earlier in 32 of the top 50 metropolitan areas, including notable cities such as Kansas City, San Francisco, Miami, and San Diego. The national median price stood at $424,900 last month, unchanged from a year prior, as reported by Realtor.com.

This market shift could grant home shoppers additional leverage when negotiating with sellers, especially in instances where sellers previously required buyers to waive home inspections. Sellers may also become more amenable to covering closing costs, contributing cash for repairs, or making other concessions, as indicated by real estate agents.

Afton Hartmann, a Redfin agent based in Denver, remarked, “Pretty much every buyer is asking for concessions, unless they know that they are in a multiple offer situation.” While competitive bidding scenarios still exist, they are less frequent than in previous years.

For instance, Gilad Hoffman, the executive director at a synagogue, recognized that his home search had culminated when he found a four-bedroom, 2.5-bath house listed for sale in Escondido, 30 miles northeast of San Diego. Hoffman perceived the property, which was listed by the estate of its late owner for $1.079 million, as being “severely underpriced.”

In February, Hoffman successfully purchased the home for $13,000 above the asking price, successfully countering offers from three other potential buyers, one of whom was prepared to pay in cash. Despite the elevated mortgage rates, he opted for a 7% rate, in exchange for a credit from his lender to offset closing costs.

“My philosophy going into the whole thing was: get into something now that you can afford with these high interest rates,” said Hoffman. “Hopefully in two years, they’ll come down, and then you can refinance. And that’s still my intention.”

Nonetheless, affordability and uncertainty continue to pose significant challenges for many Americans, particularly first-time buyers who lack the equity necessary for a down payment on a new home. Although the growth in home prices has decelerated, the declines are minimal compared to the staggering 47% increase seen over the last five years.

Even though more homes are entering the market, a more substantial increase is needed to create a more balanced environment for both buyers and sellers. As of late February, there were 1.24 million unsold homes available, which marked a 17% increase from the previous year; however, this figure still falls about 44% short of the 2.21 million average seen monthly since 1999, according to data from the National Association of Realtors.

In January, a household earning the median U.S. annual income of $79,223 would need to allocate 47% of that income to cover mortgage payments on a home priced at the median level of $390,333. This percentage matches the highest recorded since 2005, as per the Federal Reserve Bank of Atlanta. The Department of Housing and Urban Development considers housing costs exceeding 30% of median household income to be unaffordable.

If the downward trend in mortgage rates continues in the coming months, it could significantly enhance homebuyers’ purchasing power. Economic predictions suggest that the average rate on a 30-year mortgage will hover around 6.5% throughout the year, although these forecasts may need adjustment.

A sharp decline in the 10-year Treasury yield last week, prompted by bond investors reacting to escalating trade tensions between the U.S. and other nations, suggests that mortgage rates may trend lower. The yield on the 10-year Treasury note, viewed as a barometer for home loan pricing, fell to 4.01% on Friday, reaching its lowest level since October. However, while tariffs typically lead to inflationary pressures, they can cause the 10-year Treasury yield to rise based on expectations of increased inflation, which may keep mortgage rates stable or even push them higher.

Should fears surrounding the trade war lead to further reductions in mortgage rates, “those lower rates may be cold comfort to prospective buyers who are increasingly worried about job security and inflation,” cautioned Lisa Sturtevant, chief economist at Bright MLS.