There are 33 percent more used homes on the market right now than there were a year ago.
In some neighborhoods there's more than one house up for sale, creating a mini-price war among neighbors.
A couple in Virginia lowered the price of their house and offered to throw in a brand-new car, just to make their home more attractive than the rest.
After several years of a seller's market, it's finally a buyer's paradise in Phoenix, Ariz., where new-home builders are trying to attract prospective homeowners with high-end appliances, swanky countertops and fancy floors.
"Builders are offering incentives because they have an overabundance of inventory," said Ed Maddox, a Phoenix real estate agent.
Homeowners trying to sell are in the same boat.
Higher Mortgage Rates One Reason
The market has gone cool in places where it was once the hottest -- California, Arizona, South Florida and the Northeast.
Around the country, houses that used to sell in days are now sitting on the market for months.
In Danbury, Conn., the Bates family is hoping to cash in on an older home.
"You see a different couple of houses and don't feel like you're under pressure," Markus Bates said.
Why is it suddenly a buyer's market? One reason is higher mortgage rates. The average 30-year fixed rate is up more than a point in the last year to around 6.7 percent.
"People are going to have to come to the reality that if they want to sell their house they're going to have to lower the price," said Ivy Zelman, a real estate analyst.
With a record glut of unsold new homes for buyers to choose from, 75 percent of builders are now offering extravagant incentives to close a deal: everything from free swimming pools to first-class tickets to Hawaii are being offered.
"I have builders right now who are advertising, 'Make me an offer,' which is definitely scary," Zelman said.
Dan Glasser is trying to sell his Phoenix home. He's lowered the price twice in the 90 days it's been on the market and is anxious to sell, but he's in no hurry to buy another home.
"If somebody doesn't have exactly what I want, there's five other houses to choose from," Glasser said.
So now that the tables have turned how can buyers take advantage?
Take your time. Shop around. With more homes on the market you can afford to take your time and you should. Shopping around gives you a feel for fair prices in different neighborhoods.
Hire a buyer's agent. Make sure you hire a buyer's agent who only represents you, and does not have any connection or obligation to the seller.
A builder cannot force its lender on you. If you're buying a brand-new house, keep in mind, the builder cannot force you to go with its preferred lender. Get quotes from outside lenders, too.
"Free" incentives may cost you. If the builder is offering lots of free incentives, scrutinize the deal, because those expenses may be tucked in somewhere else, like in your closing costs.