In 8 states, inventory is now above pre-pandemic levels 

While inventory has been building all year, it's still below pre-pandemic levels in much of the country. But more states are now crossing that threshold and seeing their housing supply reach — or exceed — levels from five years ago. And it's happening at a time when expected interest rate cuts could bring out homebuyers this fall.

Eight states had more unsold inventory this week compared to the same week in 2019, reported Altos Research founder Mike Simsonsen, who posted the data on the social media site X. 

Where inventory has risen: The neighboring states of Oklahoma, which has 19.8% more inventory than in 2019, and Texas (up 18.9%) topped the list of the biggest gainers.

Idaho — which boomed during the pandemic but then saw its market cool considerably — was up 17.1%, while Florida has seen inventory rise 8.5% since 2019. Other states with 5-year gains are Arkansas (up 4.2%), Alabama (up 1.6%), Tennessee (up 0.9%) and Utah (0.5%).

Most of the country hasn't caught up: Inventory in the rest of the states is still below 2019 levels, and in some cases well below. The biggest gaps are in Connecticut (down 74.5% compared to 2019) and Illinois (down 73.4%). In most states, inventory levels are down by double digits percentage-wise compared to 2019.

Is inventory peaking early?: In his weekly report, Simonsen said inventory appears to have peaked in Texas and Florida and may start to decline in those states a little earlier than the rest of the country. Generally, rising mortgage rates lead to more inventory, something that was seen a year ago. 

With rates continuing to slowly decline, inventory may stabilize around these levels and then decline nationally this fall as seasonal factors kick in.

"Inventory growth is slower than last year, so this has implications for pricing, for buyer competition and for transaction volume into the fourth quarter and early 2025," Simonsen said.

Mortgage rates: What the Federal Reserve does in the next few weeks will also influence the housing market this fall and winter. The expectation is that the Fed will begin cutting rates in September, with the possibility of several more cuts to follow in 2025.