T
he housing market is showing signs of improvement as inventory levels are increasing in several states across the country. According to recent data from Altos Research, eight states have seen an increase in unsold inventory compared to the same week in 2019. The neighboring states of Oklahoma and Texas are leading the way with a significant increase of 19.8% and 18.9% respectively in their housing inventory compared to five years ago. Idaho, which experienced a boom during the pandemic but then saw its market cool down, has seen an increase of 17.1% in its inventory since 2019. Florida has also seen an increase of 8.5% in its housing inventory over the same period. Other states like Arkansas (up 4.2%), Alabama (up 1.6%), Tennessee (up 0.9%) and Utah (up 0.5%) have also seen an increase in their housing inventory over the past five years.

    However, despite these positive trends, inventory levels in most states are still below pre-pandemic levels. The biggest gaps are seen in Connecticut (down 74.5% compared to 2019) and Illinois (down 73.4%). In most states, inventory levels are down by double digits compared to 2019.

    The trend of rising mortgage rates leading to more inventory has been observed in many states, including Texas and Florida, where inventory appears to have peaked and may start declining earlier than in other parts of the country. With mortgage rates slowly declining, inventory may stabilize at these levels before declining nationally this fall as seasonal factors kick in.

    The Federal Reserve's actions in the coming weeks will also have a significant impact on the housing market this fall and winter. The expectation is that the Fed will begin cutting interest rates in September, with several more cuts expected in 2025. These developments could have implications for pricing, buyer competition, and transaction volume in the fourth quarter of 2025 and early 2026.