What does "seller's market" refer to?

In a seller's market, the demand for homes significantly exceeds the supply available, leading to competitive conditions favoring sellers. This situation often arises during periods of economic growth, low mortgage rates, or demographic trends driving more buyers into the market. As demand outstrips supply, sellers may receive multiple offers on their properties, thus driving prices upward and giving sellers more leverage over negotiations.

This dynamic contrasts sharply with what happens in other types of markets. For instance, a market characterized by an abundance of rental properties would suggest a surplus supply, which typically indicates more negotiating power for buyers rather than sellers. Similarly, a market where buyers have more negotiating power or where property values are consistently decreasing points to conditions more favorable to buyers, rather than the competitive advantages that come with a seller's market.