What condition typically creates a buyer's market?

A buyer's market is characterized by an excess supply of homes in relation to the number of potential buyers in the market. When there are more homes available for sale than there are buyers looking to purchase them, it leads to increased competition among sellers, often resulting in lower prices and more favorable terms for buyers.

In this scenario, sellers may find it challenging to sell their homes quickly or at their desired price, prompting them to offer incentives, negotiate more flexibly, or lower their asking prices in order to attract buyers. This creates a favorable environment for buyers, who have more options and can often secure better deals.

Other options highlight conditions that would typically lead to a seller's market rather than a buyer's market. For example, higher prices due to reduced supply or higher demand than available housing indicate a competitive environment, which is the opposite of what characterizes a buyer's market. Increased rental rates may suggest other economic conditions affecting the housing market but do not directly contribute to creating a buyer's market.