This week the available inventory of homes for sale inched down across the country. It was a lead up to the holiday weekend, so that’s not uncommon. But it is indicative that we’re roughly at the peak of inventory for the summer. We may have a few more weeks of inventory gains, but the long stretch where inventory has been growing compared to a year ago is now over.

But while falling interest rates are putting a floor on demand, there’s still no sign of any rush of buyers.

Will homebuyers come back this fall, or will we have to wait until spring?

Last week, I mentioned that Texas and Florida inventory had ticked down. Both of those states ticked up this week with more unsold homes on the market than a week prior. I mention this because it’s what I expect for the whole country for the next several weeks. A little up, maybe a little down week to week. I expect that we won’t see consistently shrinking inventory until later in October. 

Let’s look at the details of the U.S. real estate market as we roll into September 2024.

Inventory lower than last week

There are 704,000 single-family homes unsold on the market across the country now. That’s a fraction fewer than a week prior. This was the lead up to the Labor Day holiday, so it’s totally common for a dip in inventory.

Mortgage rates have eased down in anticipation of the Federal Reserve’s meeting in a couple weeks. It’s widely expected that the Fed will cut short-term interest rates at that meeting. It’s important to note that the markets could react opposite of what we expect. Mortgage markets could cause mortgage rates to jump even if the Fed cuts. If that were to happen, all these comments about peak inventory for the season are out the window.

New listing numbers are low

There were just 59,000 new listings unsold this week for single-family homes. There were another 10,000 new listings that immediately sold. Both of those numbers are very low. This week saw 6% fewer sellers than even last year which was already super low.

Since the immediate sales number was only 10,000 that’s an indication of continued weak demand. We haven’t seen any uptick in buyer urgency, as measured by immediate sales. The best homes at the right price still get offers immediately after they’re listed for sale. During the pandemic, when Americans were in a home-buying frenzy, there were 25,000 or 30,000 immediate sales per week.

Next year, a healthier housing market will see that number climb over 70,000 per week to maybe 80,000 sellers per week. 

Pending home sales stay the same

There were 64,000 new contracts pending this week for single-family homes. That level of sales continues to be just about the same as last year. There were another 12,000 condo sales started. 76,000 total sales this week is 2.5% fewer than a week ago. It’s the lead up to the holiday weekend so that always ticks down.

We’re looking at roughly the same level of sales as last year, with slightly fewer sellers, that’s why inventory is probably around its seasonal peak and the annual gains in inventory compared to last year are compressing. 

September and October are going to be fascinating to watch the sales rates. Each of the last two years September and October were brutal for interest rates and for buyer demand. We’re on the opposite side of the cycle now so we are looking for any relative strength in buyers this year?

Home prices remain unchanged

The median price of U.S. single-family homes this week is $449,000 — unchanged for the week. The median price of the new listings is $399,999, also unchanged for the week. These prices are just barely above a year ago. This is consistent with the concept of flat home sales prices for the year. 

The median price of the new contracts pending this week is $387,000. This is the price point where people are buying homes. That ticked up for the week and is still almost 5% above last year at this time. 

This price of the new contracts is a pretty clear proxy for home sales. These are the offers being made each week. It takes a little over 30 days to close the transaction, so these sales will mostly happen in September. By this measure home prices have been hovering in this 3% to 5% annual appreciation range for most of the year. 

If you follow home price indices like the Case Shiller Index, which was released last week for April, May, June, that is still showing 5.4% home price gains over 2023. So the current sales pace that we’re illustrating here is showing 3% to 5% gains over 2023. There’s nothing in the data now that shows price declines like we had at two points in 2022. I

Price reductions shows weak demand 

The price reduction data continues to tell the story of weak demand. I don’t see any evidence of buyers accelerating now — even along with recently lower mortgage rates. This is late in the season, so it’s easier to see a slowdown than speed up effects with homebuyers. In other words, since we’re not yet at the seasonal peak of price reductions.

Homes that are still on the market in September and October are more likely to take a price cut to attract buyers before the holidays. As we get closer to the holidays, homes are more likely to be withdrawn so they’re not sitting on the market with price cuts. We get the seasonal peak in price cuts every year in the fall. 

So we will be able to see the slowdown impact very quickly if rates were to rise from here. We saw that happen in each of the last two years in September. Rising rates added to the seasonal slowdown. Falling rates now won’t deter the seasonal slowdown like they did in 2020. We’re just looking for the market to behave a little better than last year. 

The takeaway here with the price reductions data is that this fall, price reductions will continue to inch up each week. It’s that time of year. We’ll end the year with fewer price reductions than when we ended 2022.  And that will set us up to see if buyers in the spring of 2025 are ready to embrace lower rates — assuming mortgage rates are indeed lower by then. 

The big trends from earlier in the year are shifting now. And that’s why we do this data work each week. If buyers finally start moving, we’ll see it in the data quickly. Maybe mortgage rates have finally turned the corner? For buyers and sellers, these conditions can change fast and it can be very impactful for smart decision making.

Mike Simonsen is the founder of Altos Research.