Inventory inches up while prices hold steady
I’ve
been
highly
tuned
in
looking
for
signals
that
the
housing
market
is
slowing.
By
now
everyone
knows
that
unsold
inventory
of
homes
on
the
market
is
climbing.
But
is
that
unsold
inventory
surging?
Is
it
getting
to
unsustainable
levels?
Are
home
prices
dropping?
As
the
economy
stays
surprisingly
strong,
mortgage
rates
have
stayed
higher
for
longer
than
anyone
expected.
That
keeps
homebuyers
on
the
sidelines.
Because
home
prices
are
high,
and
affordability
is
low,
it
is
always
legitimate
to
fear
a
potential
real
estate
market
crash.
But,
what
does
the
data
say?
No
need
to
fear,
a
housing
market
crash
is
not
imminent.
Inventory
is
up
this
week
There
are
now
621,000
single-family
homes
unsold
on
the
market
around
the
U.S.
That’s
an
increase
of
1.5%
for
the
week
and
38%
greater
than
this
time
last
year.
In
the
last
few
weeks,
Inventory
is
no
longer
growing
compared
to
last
year.
I’ve
mentioned
before
that
we
could
see
40%
inventory
growth
over
2023
this
summer.
We’re
almost
there.
But,
that
relative
level
has
compressed
for
two
weeks
in
a
row
now.
For
31
weeks,
inventory
has
been
expanding
compared
to
the
year
prior.
Now,
it
seems
that
trend
has
plateaued.
It
was
July
last
year
when
rates
climbed
over
7%,
and
they
haven’t
really
come
down
yet. Higher
rates
lead
to
more
inventory.
We’re
about
to
cross
the
threshold
where
rates
are
no
longer
higher
than
they
were
a
year
ago.
If
the
30-year
fixed-mortgage
rate
ticks
down
into
the
6s
over
the
next
few
weeks,
we
could
continue
to
see
inventory
growth
compress.
The
inventory
difference
from
last
year
peaked
two
weeks
ago
at
39%
more
homes
on
the
market
than
in
2023.
Now
there
are
37.6%
greater
than
last
year. This
is
a
subtle
change
but
it
means
that
inventory
growth
isn’t
accelerating.
Supply
is
not
running
away
from
demand.
These
are
signs
of
stabilization
in
the
residential
real
estate
market.
Isn’t
that
surprising?!
We
need
more
listings
There
were
71,000
new,
single-family
home
listings
unsold
this
week,
with
another
16,000
immediate
sales
for
a
total
of
87,000
sellers.
New
listings
data
isn’t
bad,
but
it’s
not
great.
If
you
only
have
87,000
sellers,
it’s
impossible
to
grow
total
sales
to
a
5
million
annual
pace.
There
just
aren’t
enough
homes
for
sale.
There
are
about
9%
more
sellers
each
week
than
last
year,
so
that’s
good.
That
growth
is
down
from
earlier
in
the
year.
This
is
another
indicator
that
inventory
growth
is
losing
some
momentum.
So
if
you’re
betting
on
a
crash,
like
expecting
a
big
flood
of
inventory
coming,
or
even
an
acceleration
of
inventory,
I
don’t
see
it
in
the
data
yet.
Pendings
are
barely
up
There
were
69,000
new
contracts
for
home
sales
this
week
—
2%
more
than
last
week.
So,
not
cratering,
but
not
showing
any
real
growth
either.
There
are
396,000
single-family
homes
in
contract.
That’s
a
couple
percent
more
than
last
year,
and
up
a
smidge
from
last
week.
Any
sales
volume
growth
we
saw
earlier
in
the
year
has
gone.
The
market
is
still
15%
smaller
than
it
was
two
years
ago.
We’re
over
two
years
into
the
era
of
higher
mortgage
rates.
If
we’re
lucky,
the
second
half
of
2024
will
see
Fed
rate
cuts
and
perhaps
slightly
declining
mortgage
rates.
That
would
be
the
opposite
pattern
from
each
of
the
last
two
years.
If
we
get
that,
expect
to
see
relatively
better
sales
volumes
in
late
summer
this
year.
Home
prices
are
level
When
we
look
at
the
price
of
the
homes
selling
each
week
we
can
also
see
the
abrupt
change
that
happened
in
late
2022.
Prices
dropped
in
June
and
prices
dropped
in
October.
Right
now
the
median
price
of
homes
going
into
contract
is
just
a
hair
under
$399,000.
Home
prices
have
been
at
this
level
for
a
couple
months.
Prices
are
now
3.7%
above
last
year
at
this
time.
I’d
expect
this
measure
of
home
prices
to
stay
right
about
$400,000
until
later
in
July
before
receding
in
the
fall.
The
median
price
of
all
the
homes
on
the
market
is
$455,400.
That’s
basically
unchanged
from
last
week.
If
you
walk
into
the
U.S.
housing
market
today,
you’ll
see
that
home
prices
are
unchanged
from
last
year
at
this
time
and
in
fact
1%
below
where
they
were
in
mid-June
2022.
Price
reductions
are
up
Price
reductions
are
the
leading
indicator
of
future
home
sales
prices.
The
percent
of
homes
on
the
market
that
have
taken
a
price
cut
from
the
original
list
price
is
now
36.4%.
That’s
up
70
basis
points
from
last
week
and
is
500
basis
points
more
than
a
year
ago.
Like
the
other
indicators,
price
reductions
shows
very
slow
demand.
It
shows
flat
at
best
for
future
home
sales
prices.
This
year
as
mortgage
rates
have
stayed
stubbornly
high,
price
reductions
have
been
growing
each
week.
We’re
on
our
way
to
40%
of
the
market
with
price
cuts
now,
that’s
notably
slow.
It’s
also
why
we
continue
to
expect
slowing
home
price
appreciation
for
the
second
half
of
2024.
Unsold
inventory
is
up,
but
growth
appears
to
have
plateaued.
New
listings
aren’t
great,
so
that
implies
future
inventory
growth
is
capped.
As
long
as
mortgage
rates
stay
elevated,
the
signals
are
for
home
prices
to
end
the
year
flat
with
little
or
no
home
price
appreciation
over
2023.
There’s
nothing
in
the
data
yet
that
looks
like
prices
dragging
notably
lower
across
the
country.
Mike
Simonsen
is
the
founder
of
Altos
Research.