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TTOM's midyear review suggests that rising inventory could lead to a flattening or decline in home prices later this year, which would be a welcome boost for sales. After years of rising prices and slowing sales, the real estate market may shift in the second half of the year as pent-up demand overcomes headwinds.

    According to Altos Research Founder Mike Simonsen, home sales will increase as prices flatten or fall due to increased inventory allowing more sales to happen. As competition picks up, sellers are expected to offer discounts to get their homes sold. This trend has been delayed by high mortgage rates, but Simonsen expects rates to slowly decrease later this year.

    The key driver of the anticipated market shift is housing inventory, which is back to pre-pandemic levels and expected to continue climbing into the fall. This rise in inventory is already affecting home prices, with 11 states at or below 2024 prices and the Northeast region starting to see an increase in inventory.

    "We're probably back to a supply that's great enough for the story 'sales are down, prices are up' to invert for the rest of the year," Simonsen said. However, he doesn't expect significant price drops unless mortgage rates spike again like they did in the fall of 2022.

    Homeowners are staying put longer, with ATTOM data showing an average tenure of 8.1 years, the highest ever recorded. This trend reflects a homeownership population that's hesitant to move due to economic uncertainty, impacting inventory levels and market dynamics.