The once red-hot US housing market is undergoing a dramatic reversal — and for the first time in years it’s buyers who hold the upper hand.

Nearly 2 million homes are for sale across the country, but only about 1.5 million active homebuyers are looking. 

That 500,000 gap marks the largest imbalance ever recorded, according to the real estate firm Redfin. 

At the same time the total value of homes on the market has hit a record-shattering $698 billion, up more than 20 percent from this time last year. 

But with far fewer buyers in the game, sellers are being forced to slash prices.  

‘The power balance in the United States housing market has shifted in favor of buyers,’ the Daily Mail was informed by Redfin senior economist Asad Khan. ‘However, many sellers have not yet recognized or embraced this new reality.’

In Sonoma, California, a luxurious three-bedroom, four-bathroom property that was initially priced at over $3.5 million during the Covid-19 surge recently fetched $1.86 million — a remarkable 47 percent reduction.

In Dallas a more modest property listed at $375,000 was cut by $25,000 after sitting on the market for 70 days. 

The combined value of homes on the market is currently $698 billion, a record high 

Redfin senior economist Asad Khan says it is a good time to buy a home

With mortgage rates staying high and affordability declining, experts predict that this discrepancy between buyers and sellers could widen further, paving the way for even more substantial price reductions in the upcoming summer months.

Buyers are still dealing with sky-high mortgage rates, but with dwindling competition and a surplus of inventory, some may find it is time to make an offer.

Plus, prices are falling. Though home values rose 3.9 percent year-over-year in February, slightly down from January’s 4.1 percent, they are expected to come down in the coming weeks.

During the peak of the pandemic housing frenzy, low mortgage rates and record-low inventory sparked aggressive bidding wars across the US. That is no longer the case, said Khan.

‘Buyers who are currently on the market are having an easier time due to growing inventory and fewer other buyers to compete with, which increases their bargaining power,’ he told the Daily Mail.

‘The pool of buyers is small because many are staying on the sidelines due to high mortgage rates and economic uncertainty.

‘Sellers are growing in number as life events encourage homeowners to move and they’re finally willing to give up their low pandemic-era mortgage rates.’ 

But too many homes on the market are making it hard for sellers. 

In Sonoma, California, there are huge markdowns on homes that sellers want to unload

Experts say that as mortgage rates remain elevated and affordability worsens, the buyer-seller gap could grow wider — setting the stage for even deeper price cuts over the summer

Meanwhile, some sellers are slow to catch on and many have not lowered their prices yet.

‘It takes time for sellers to recognize whether and how the market has shifted,’ said Khan. 

‘Usually this happens as they get fewer buyers touring their home or making offers, and their home sits on the market longer than expected.

‘So we anticipate more price cuts and sellers accepting more offers at or below list price over the coming months.’

Agents say stubborn pricing remains a key hurdle.

‘A lot of the people selling right now bought in 2021 or 2022, when home prices were near their height,’ said Corey Stambaugh, a Redfin premier agent in North Carolina.

‘Even though we advise them to list at today’s market value, a lot of them decide to list high to recoup their money.’

Homes that linger on the market also raise buyer suspicion and lose leverage fast.

‘People who bought in the frenzy of 2021 or 2022 are having a hard time letting go of peak prices,’ said Corey Stambaugh, a Redfin agent based in North Carolina

Dallas has seen too many sellers flood the market, meaning many have to slash prices

Home prices will drop by 1 percent by the end of the year, according to Redfin, marking the end of more than a decade of almost uninterrupted price hikes 

‘The buyer’s market should last until we see buyers return to the market the same way we are already seeing sellers return,’ Khan explained.

‘But as long as mortgage rates and home prices remain elevated, many potential buyers will remain on the sidelines.’

Texas in particular has been hit hard with too much inventory on the market. 

Supply just keeps growing while demand is receding for homes in the once-scorching housing market.

The Lone Star State has been building more new homes than almost every other state over the past few years, and the market has finally hit a breaking point.

The explosion in housing inventory amid dwindling sales has put Dallas, one of the hottest housing markets during the pandemic, on orbit to crash.

Redfin predicts home prices will drop overall by 1 percent by the end of the year.

With so many options, house hunters are negotiating lower prices, getting their HOA fees paid in advance, asking for repairs (and getting them paid for), and demanding mortgage-rate buydowns.

Plus, nearly half of all sellers are now throwing in concessions, according to Redfin.