Is it darkest before the dawn? If we look at the housing market right now, sales are down, new listings are down and prices are decelerating. But if we look at the data right now, things look the most bullish they’ve been all year.

Good inflation data came in last week, the bond market rallied and mortgage rates took a notable dip below 7% for the first time in months. Maybe we’re finally past the peak of mortgage rates? If so, how should we expect the housing market to react? We’ll dive into those questions when we look at this week’s latest numbers.

Inventory dipped during the week, which included the long July 4 holiday weekend. Home prices and new listings dipped too. This is totally normal for the long holiday weekend. The market is slow but doesn’t appear to be grinding to a halt. Contrast this week to 2022, when inventory rose by 3% during the holiday week. That was a notable change.

On the pricing side, last week had the first negative print on year-over-year price for new listings. The newly listed homes for sale were priced 1% less than last year at this time.

Let’s look at the details of the U.S. real estate market as we’re now in the second half of 2024.

Inventory is slightly down

There are currently 651,000 single-family homes unsold on the market around the country. That’s actually just a fraction of a percent fewer than a week ago. Inventory is 38.5% more than a year ago. Still, there are 32% fewer homes on the market now unsold than in 2019. Inventory is growing in every state across the country. However, most of the U..S has still fewer homes for sale now than pre-pandemic. Only a few places, Florida, Texas, Oklahoma, Arkansas, and Idaho have more homes on the market now than the pre-pandemic levels of 2019. 

The pattern to watch for in the second half of the year is whether inventory keeps rising like it did late last year or whether it plateaus like it normally would in the summer.

New listings also down

Last week included the long holiday weekend, so new listings are obviously down. Only 57,000 new listings unsold for single-family homes this week with another 11,000 immediate sales. That’s a very small number of new listings that took offers and went into contract immediately. I like that “immediate sales” number as a gauge of organic levels of demand. The more people waiting to buy the right place; the more who jump on a deal when they see it. Only 16% of the listings were immediate sales this week. That’s super low and has been declining since May. The 68,000 total new listings is actually 6% fewer sellers than last year. 

These numbers will rebound this coming week. It feels like sellers are pulling back now and that will keep a lid on inventory growth for the rest of the year.

New pendings down due to holiday

Sales are down the holiday weekend too. There were 58,000 new contracts this week — about the same level as the last two years over the holiday.  

There are 382,000 total single-family homes in contract now. That’s unchanged from last week and just 1% more than a year ago. We are not seeing any sales growth.

What I’m looking for in the pendings data, if rates fall in the rest of July and August for example – then we should see the new pendings pick up from 65,000 each week to about 70,000 each week. That would be a slight lift in sales, maybe 8%, if mortgage rates dip below 6.75 and stay there. 

Prices are a smidge down

The median price of all the listings is $450,000 now. That’s down 1% from last week and unchanged from a year ago. 

The median price of the new listings is $404,900 this week. That’s a big drop for the week, but, again, it’s the holiday. By this measure, tracking all the new listings in a given week, the prices came in below the same week a year ago — 1% lower. 

That’s the first negative print on the price of new listings for over a year. Now, this is one week, and it’s a holiday week, so prices will probably jump next week. It is notable that the noise didn’t push the other direction. The price of the new listings has been running about 3% more than a year ago. That’s compressing as the year goes on and demand wanes with higher mortgage rates. Having one negative print is part of that compression. 

The median price of the newly pending contracts is $393,000 across the country this week. That’s down 1.5% for the week. Prices always notch down after the holiday. These pending contracts are the proxy for what’s selling. These are homes that are not yet sold, but they’re the ones that started the sales process this week. These prices are running 3.1% more expensive than a year ago. Just like on the listing side, that spread is compressing. It was in the 4-5% YoY range for most of the year. In the coming months, home prices will generally decline since we’re past the peak buying season. We’ll keep watching for this compression too. I expect that compression to continue so we end the year in the 0-3% range.

If we’re past the peak of mortgage rates, and demand picks up, it’s not clear to me how quickly we’ll see the spread increase again. But we’ll watch for it, because that is a potential outcome.

Price reductions decelerates

One of the reasons I continue to expect home price appreciation to decelerate is this price reductions leading indicator. Some 38.3% of the nation’s listings have taken a price cut from the original list price. That’s more price cuts than any recent July. 

Again, so much of the nuance moves reflect consumers reacting to changes in mortgage rates. If we get lucky and mortgage rates ease from here on out for the rest of the year, then one place we’ll measure a rebound in demand will be fewer price cuts. When you list your home, if you don’t get the offers, you cut your price. But when a few more offers are made by newly affordably mortgages for buyers, then this stat will plateau and even tick down. 

In the last two Septembers 2022 and 2023, we saw big jumps in mortgage rates that made homebuyers back off, and we could see jumps in price reductions at that time. Those two jumps in price cuts happened pretty much to the day of the mortgage spikes.

Mortgage rates stayed higher for longer than anyone anticipated this year. It’s not clear that we’ve yet turned the corner. But maybe?

Mike Simonsen is the founder of Altos Research.