You know, it's no secret now that the real estate frenzy of the last few years is over. And does that mean though that a crash is coming? Is it suddenly a bad time to buy a house? It's kind of ironic because you know, maybe this market where we have some more supply, we have fewer bidding wars.
Maybe it's like actually getting close to finally being a good time to buy a house. Like we have less competition, fewer bidding wars, we have more selection for buyers. And aren't those exactly the conditions we've been desperately looking for over the past few years. So maybe we should be celebrating the new housing market conditions.
But of course, buyers and sellers need to know not just what's happening right now, but they have expectations for the future. We as professionals can see and help them see into the future. What does next year look like? And that's what we can focus on today.
We'll focus on what the fall looks like and what next year looks like. And then we'll dive into all the details and, you know, we'll have our current view as best we can.
Altos Research tracks every home for sale in the country, all the supply and demand. Every week we bubble up all those analytics so that you can see them before you see it in the traditional channels. The headlines are going crazy right now with the shift in the market. There's a lot of interesting demand happening. There's different shifts happening in different local markets.
I'm Mike Simonsen, I'm the CEO of Altos Research. And let's dive into what we're looking for at this webinar today. Middle of July, 2022.
The things we're going to cover today. So, you know, inventory's climbing, how much inventory are we going to get? Where is it going to stop? Where is it going to grow? We have the latest versions of our forecast of inventory for the year. And we can start looking to see where next year may present itself. We can look at each week through the rest of this year, what to expect with home prices.
So we can see home prices are still at record highs. And so we can look at that. We're going to look at some of the leading indicators to see whether we can see changes in home prices in the future. And next year we'll look at all the other leading indicators in the data. We're going to, as we like to do in these conversations, help frame the conversation so that buyers and sellers know what's happening right now, help them work through their fears, help them make good decisions right now with the data.
We'll take some time at the end to look at the local markets and do our deep dive there.
The first thing that's been on everybody's mind this year is the change in mortgage rates. The interest rates have climbed from their record low under three to, well over five, over six, a couple of weeks ago. And so we'd like to start the conversation with this chart. These are mortgage rates over the last decade, and each color here is a year, and you can see the last three years how low they were below that long term average.
And then the brown spike at the far right end of the chart here is this year. And obviously that spike in mortgage rates put the brakes on the frenzy. Buyers recognized it, they changed their behavior very quickly. Investors changed their behavior very quickly. And then the last few weeks we've actually had downtick in rates. So as of right now, rates are not continuing to spike. They maybe have reached a new normal.
And what that tells us is that the affordability changes that hit really dramatically from six months ago, at the beginning of the year, to now those affordability changes are not getting less affordable, like we've sort of hit a stable state now, and so that implies some interesting things for buyers like, do I need to rush, do I expect as a buyer rates to increase or decrease from here?
Because if I expect them to decrease from here, I can refinance in the future. If I expect to them to increase, it's a good time now to lock in. Those are the kind of perception that we can use with the change right now. And the change right now is it's like, have we achieved a sort of a new stable point for mortgage rates? Have we gone through that shift?
Now I am not a forecaster of mortgage rates. I don't have any particular insight of what happens. I do, however, talk to some really smart people about what might happen with mortgage rates and the rest of the housing market.
We talk about the data here with Altos every week. And we talk about you know, the real specifics, but there's a lot of other really interesting people who know a lot about the housing market. And I get to interview them on the Top of Mind podcast. This week I interviewed Len Kiefer from Freddie Mac, and he is a person who forecasts mortgage rates. And so the next week, the Top of Mind forecast will feature Len.
There's two types of interviews that I tend to be doing on Top of Mind. One is with housing market analysts, people who are really smart about the data and see a lot of data, sometimes different data than we do at Altos Research.
So for example, a couple of weeks ago we talked about a model for the future and all of the different macro variables.
But we also interview really smart people for real estate professionals. Jimmy Mackin is a CEO of Curaytor, a real estate marketing firm. And he is so good about how to talk to buyers and sellers right now. And Jimmy talks in that podcast about the questions that we're asking right now to help frame the conversation.
So it's both the data and the conversation, which is what we try to cover here, but this is how I get to be with many more smart people. So that's the Top of Mind podcast. We do three a month. So I hope you go and check that out wherever you get your podcast or on the Altos YouTube channel. Okay. Let's dive into some data.
So inventory, total inventory of available single family homes, unsold rose to 491,000 this week. It rose three and a quarter percent over the holiday week. The July 4th holiday week is last week. That's a pretty big rise for the holiday. You can see each year here, there's you know, the bump for each year and we're approaching late summer is when we get to our peak inventory most years. And there's often a dip during the 4th of July holiday this year. We're still on the up slope. We haven't turned the corner yet. And so we still have fair amount of inventory to build for the year.
And it'll be really interesting. Normally by mid late July, we've turned the corner and that us slope has started to curve. It has not started. Climate has not curved yet. And so you can see the far right side of the chart here. The slope is still up. That is more supply coming to the market.
It's pretty much across the country. It is in the markets that have been the hottest in the last two years, the places like Austin and Boise and Salt Lake City, some of the Florida markets, those are the ones that are gaining inventory most quickly right now. Much of the migration push has slowed down. The people leaving California and going to Phoenix. Those have slowed down significantly. And therefore sellers in those areas are the ones who are most surprised by the abrupt turn and inventory is building most quickly there.
You can see here that inventory at 491,000 is still basically half of what it was even in 2019. So even three years ago, the current available inventory is still basically half of what it is normal. And if you look back, you know, six or seven years ago, it's significantly fewer still. So we are not even yet back to normal levels of available in inventory.
That's rising quickly trying to normalize it, but we can see that it's got a long way to go. And there's really no wave of sellers that have to sell. There's no pressure selling because everybody who already owns has their mortgage locked in super cheap. There's nobody everybody has equity. There's no short sales because there's nobody in the country who's short on their mortgage, essentially. Nobody.
There are a few people who are at risk who bought right at the peak at, in the boom towns. And then if we roll into a big recession next year, a big job loss recession, some of those people would be at risk, but, in general, as very few people, you know, the country is so secure in their existing homes right now that it's unlikely to see any big wave. So then that asks, then the question is, where do we get to what's normal from now? And I'll show you a few examples of how we can project what'll happen for the rest of the year.
This is a view of new listings per week. So the homes that come out and get listed and then they're unsold. So you've heard me talk about immediate sales and the immediate sales are those that they get listed and they go into contract essentially immediately: hours or couple days after listing. And you can see here, the dark red and the light red line the last couple of years, see how they were lower than every, every other time. And that's because there were so many immediate sales that they're not on the market. They're essentially bypassing the active market altogether. But watch this dark red line here, it starts to climb in the last few weeks. We've had more listings unsold staying on the market than we have in any of those six, previous years in early July.
So a couple things you can see each year, there's a July 4th dip of new listings. This week, there wasn't that much of a dip. So there was still a lot of people. Some of that is these are sellers who were thinking of selling sometime this year, the supply is being pulled forward because sellers are worried about conditions deteriorating further from here. So if you were thinking about selling sometime this summer, a lot of those folks are rushing to list right now.
You can see that in the new listings each week. The other thing to notice here though, is this is not like skyrocketing. This is not, you know, the 120,000, 30% more than normal. This is a few thousand homes, more than normal, more than the last few years, it's a little bit more, it's noticeable. We can see that steep up slope in the total inventory curve, but it's not like shooting through the roof.
We'll see in the next few weeks, if it starts to tick down, you can see each year now, the later half of the year, the new listings start to decline a little bit. We start to get closer to school time, and you don't want to have your house on when you're trying to start school. Then we roll later in the year. Now it's the holidays. And so the market starts to slow down after the first week of July.
So next week will be really telling, does it go up from here? And that would be a sign that more sellers, more people are getting fewer buyers and the immediate sales, all of those signals could be happening. Or if next week we start to tick down a little bit more like this natural curve that would project what we're settling into a new normal level of inventory. So next week we'll keep our eye on this in the weekly video.
This is another way to look at that inventory. So each bar here is a week of the inventory change above that line is inventory grows for the week and below the line is a week when inventory shrink. And so you can see that each color is a year and the light blue in the middle is 2020.
Right at the end of March, people started buying everything and inventory shrink all year long, all the way through very late into 2021 before we started to get a little bit of summer inventory. And now the dark blue is this year. And so we had our biggest inventory gain was two weeks ago, 31,000 new homes came, inventory built. So that's new inventory and fewer sales, and that's the biggest week we'd had in a bunch of years.
That's a significant inventory increase it's across the country. And especially in those hottest markets the brown is the weeks as we forecast each year going forward for the rest of the year. And so I expect next week, we'll have a big, a pretty big week maybe 27,000 more that's that little spike in the brown and then each week down declining into August. And then, at the holidays, we start declining to reset for the following year.
Fewer people sell their homes over the holidays. And so the next big holiday will be Labor Day and Labor Day being in September. And so they'll be fewer of those, and that's also like the start of school, and then we'll have a little bit of stabilization in September, October, and then you start to get to the November, December holidays, and then inventory drops really quickly.
So that's what we're looking at for the rest of the year. And assuming it follows those patterns based on where we are now this is the forecast for where we will end the year with active single family homes unsold on the market looks like about 450,000. That's the dotted line here, and you can see how the curve is going to continue to grow through July, August, and September, and even into October, beginning of October's probably the peak and then start to decline a little bit for the year. And so dramatically bigger than the year before, not quite double, but almost double, which is a significantly more than where we ended 2021 but also significantly fewer than most recent years. So even fewer than we started 2020.
What that tells us is that next year because supply will be reasonably tight will have a market that resets into a sort of a normal space. I use as a rule of thumb year over year inventory gains. Right now we have 31% more homes on the market. This is where the solid dark red line ends, 31% more homes on the market than we did last year at this time. And that year over year gain in inventory, more supply, less demand that tells us where prices will be about a year in the future out. So next year it really looks like we are probably at a 0%, essentially zero home price gain in 2023, over 2022.
Most of the price gains are baked in the first quarter and early second quarter. So this year, you know, we had that super strong up slope, and we could already see that 2022 would be a 10% to 12% home price gain for the year. And that's really what it's looking like.
But next year's looking at like about zero, about flat. So that has implications for investors, especially fix and flip investors. There isn't any signal yet in the data that I see that would imply home price falling next year. But there are some places that we'll keep our eyes open. If, for example, inflation gets worse or recession hits or some of these other big macro changes which are not in the data yet. But if big recession hits like that would adjust the forecast, it adjusts where prices may go, but in the data right now, that's what it looks like. Expect essentially no home price gain next year. Let's do a quick view of local inventory.
So this is the Altos advanced analytics platform. This is the in beta. A few of our customers are in beta right now. And so what I have in the platform right now is I have all 50 states ranked by inventory. And I look at this all the time each week because I am watching this up slope, how steep is the up slope in each state? So for example, in Texas, right now, 52,000 single family homes, and you can see the little slope is ticking up each week, pretty dramatically, but still only half of the homes that were on the market, even in 2019. So we're going to expect this guy to keep climbing nicely for the rest of the year, but not get close to the old normal California has been climbing quickly. but is also is about two thirds of where it normally is.
So California is going to keep that, but is not actually climbing. Texas and Florida are climbing more steeply on a percentage basis. They're trying to get back to normal much more quickly all the hot markets. Here's Arizona: look at the steepness on this curve here in the last few months in Arizona from beginning of April. And so Arizona is climbing much faster than the country as a whole. And you can really see how it stands out there in this comparison. Washington is a big destination for California migration. You can see how that inventory is building very quickly. Seattle's been among the hottest. Here's Colorado. So like all of the places that have been the hottest markets around the country, you can see inventory building most quickly.
Look how steep Nevada is. And Nevada at 8,000, you know, three years ago was at 11,000. So Nevada's going to get pretty close to normal, but even a few years before that in available single family homes in Nevada was easily 15,000. When the bubble burst it was like 25,000. Like it's significantly fewer than it was, but rising very, very quickly.
Here's Utah. So Salt Lake City has been among the biggest migration destinations here. And here's Idaho, Idaho may be the steepest here, and you can see from 1,800 homes to almost 7,000 this week. That's a big change. Idaho is about where it was three years ago. So Idaho is really one of the few places that we've maybe gotten back to normal levels of inventory and you can just see across the country, the ones that have lower upticks here are places like Connecticut.
So these are a lot of the Northeast markets or Midwest markets that there's not significant inbound migration, you know, much slower to change markets. So you could see like slope on Connecticut is significantly lower and still way below where it might be normally. So that's a quick look and we're going to dive in later into in the presentation to look at some of the local markets, it's some of the more details there.
Okay. Let's talk pricing. The median price of single family homes in the us right now is $450,000. That ticked down a little bit last from last week. It's totally normal to tick down this time of year. You can see each year has a summer plateau. It really hits that plateau the beginning of June and typically turns flat, and then starts to tick back in the fall, as the best inventory gets consumed.
And as you list in the fall, you do so with a little bit of a discount so that you can make sure it moves. So that's the curve here. The leading indicator. The dark red line here is a leading indicator of transactions that will complete in the future. Houses are on the market. Now they get an offer in August that closes in September or October. And then that data starts to hit the headlines in November and December and January. And you can really see it now.
The traditional headlines, the Case-Schiller index, and some of those indicators are still going to be very, very positive through the whole year, even as even as the inventory has climbed, as we've been showing now, the light red line here is the new listings each week.
And that's a leading indicator because this is where if you go to sell your house during the 4th of July holiday week, you are very sensitive to how many people are down the street at the open house. How many offers? Did they get multiple offers? Are there any offers at all? And what you choose to do is if those multiple offers are drying up, you list a little bit lower to make sure that you don't get stuck on the market. You're looking to create your offers.
If everybody's doing that, then the light red line ticks down. The light red line did tick down this week to 405 from 420 last, week's pretty big move. 4th of July is not uncommon to have that move. Last year you could see there was a down tick from like 369 to 350. It's not uncommon for that to happen during the holiday week.
What we want to keep our eye on is does that keep going further? Does it keep adjusting further? And it's going to adjust down like most years in the second half of the year, the price of the new listings gets cheaper because people discount a little bit as we're later in the year. It hasn't yet adjusted dramatically. And that's an indication that, you know, the right homes are selling. The right homes, priced properly, are selling and some of them are still selling very quickly.
That indicates that even though there's inventory building up, it's not a lot. There's still buyers. They've been planning to buy for two years and finally getting their opportunity. Those kind of things are happening and that's keeping our prices at essentially almost record high levels. Last week was 455,000. Probably the last time we've seen that number, maybe for two years. It'll be really interesting to see if next summer we cross over and prices move higher than 455. But it might be two years before we break that record high. Again, something to keep your eye on. On the other side of pricing are the demand indicators.
If you've watched this or any of the videos, you know, that we like to track the percentage homes on the market that have taken price reductions. And you can see that the market turned very abruptly starting in March and price reductions this week, 31.7% of the homes, single family homes on the market in the US have taken a price cut, and that's a totally normal range.
But you could see the slope of that curve. The dark red curve is climbing faster than normal. So that's implying going from record hot, slowing down rapidly to normal. I expect to see us climb over in August to 40% of the homes on the market. If we got to 45 or something like that would be pretty bearish for prices during in the next year. But I think we're going to see our curve start.
It's going to be the highest, most price reductions we've seen in many years by the end of third and fourth quarter.
But my suspicion is that we're going to get our seasonal curve here and then adjust back down for the holidays, which would set us up for a flat year over year, 2023. No price appreciation next year. That's where we can start to see it in the data right now.
If price reductions continue to skyrocket well into September, that's going to be a leading indicator for the following year. So keep your eyes on that price reductions number. Normally 30% of the market, about a third, 30%, 33%, 35%, take a price cut before they sell.
Sometimes that is strategic, intentional. We're going to overprice, and then we're going to see what happens. And then we're going to take our best bidder. Sometimes it's accidental. And like it's a seller who wants to try the market and see, and then they don't get offers. And now they have to take a price cut. But about a third in some local markets like Arizona, Phoenix, for example 40% is much more common than than a third, but that's like related to having a lot of investors, a lot of flips, a lot of things like a lot more inventory per capita than say the California market.
So we'll look at the local levels and the normal levels there, but across the country about a third is normal. And, you know, we're right about normal right now. It just feels wild because it's been so hot that normal feels cold.
Here's another leading indicator for demand that is going to be very important to watch for the rest of the summer. And as we go into next year and it hasn't been, it's been sort of in a normal range lately. So it hasn't been very interesting until right now. This is the percent of homes on the market that have been delisted. They went into contract and the contract fell through and there were no backup offers. So now the house is back on the market or there's no bidders at all. And now it sits on the market for a couple of months and now it looks stale.
So sellers pull it off the market. Maybe they throw a coat of paint on it and then put it back on. And so these relists are a real sign of the organic levels of demand out there. You can see each year, there's always some that fall through, 1% or 2%, it spikes at the beginning of the year because stuff gets pulled over the holidays and then relisted.
The last few years didn't spike over the holidays. You could see the dark red line, didn't spike this January because we didn't have to pull things over the holidays. Things were being sold. But what we're seeing right now is each of the last four weeks has been trending higher than previous years. So right now 1.7% of the active market was on the market, then off the market, and is now back on.
And we saw an uptick this week. It's not a frightening amount, just like our new listings. It's more than it has been. And it is signs of the market rapidly normalizing if this climbs that implies contracts falling through, it implies no backup offers, it implies financing that is getting more suspect, tougher underwriting or appraisals not making it. And in the last few years, if you missed your appraisal, people were compensating for that with more cash. And they may choose not to do that right now.
So the relist is a leading indicator of demand so we can see it's decreasing. And then the question is, does it get higher? Does it go higher from here? Does it go significantly higher?
When the bubble burst in 2006, and we just started Altos Research and we could watch homes in Silicon Valley at that time. If the house was on the market for more than 30 days, it was stale and people didn't want to buy it. They thought something was wrong with it. So sellers and listing agents would pull the house off the market. And then relist it as a new listing. Maybe they'd keep it off for 31 days and then relist it. At that time we watched relistings climb to 30% of the market in some parts of Silicon Valley. And that wasn't abrupt change, right?
We're at 1.7% nationally, right now some local markets are higher. And that depends on a lot of local factors. But at that moment in Silicon Valley, the relists climbed. So that was a real strong leading indicator. And that was 2006. That was a real strong indicator of what was going to come in 2007 and 2008. So keep your eye on the relist rate.
As we go forward we've been talking about the demand side. This week 23,000 homes still went into contract essentially immediately after listing. The biggest thing here is that's growing fewer percentage each week and it's staying actually higher than I expected.
There are parts of the country and homes that are good properties and priced well that are still going into contract very quickly. The most notable thing on this chart though is how the holiday week didn't take a week off last year. You can see there's a dip in new listing inventory and fewer sales.
And then this year though, they're like, we're going to list them now. And like I said before, that looks to me like inventory supply being pulled forward from later in the year, people worrying that they need to rush to market now and not wanting to miss even a week. So we're going to keep watching this as the light portion of the bar shrinks each week.
That is, those are the immediate sales and the dark portion is each week's new listings that stay on the market. And so we're going to watch that shrink towards the end of the year, as this stays at least a little bit stronger. That's a bullish sign for me. And one of the signals that I'm looking at that says, you know, yes, inventory is climbing, but it's actually like, there's no catastrophe happening anywhere out there.
A third of the homes were going into contract immediately earlier in the year, and now that's dropped way down and we'll watch that continue to get down probably closer to 10% by the end of the year.
Currently about 20% though, still going into contract very quickly after selling. Those are the ones that are priced right, the good homes, you know. That's a real powerful message for buyers and sellers. Is this market completely tanking? Well, if you're priced right, there's still buyers who've been trying to buy for two years.
Alright. And then one more thing on the on the supply and demand we'll switch gears and then we're going to do some local stuff.
The this is the pendings, in pending contract, versus the active inventory. The notable thing in the last couple of weeks is that the active inventory has finally climbed back above the number of homes that are in contract.
It's been really wild for the last two years of pandemic frenzy market. There's actually been at any given time more homes under contract than were on the market. The inventory was so tight that there were more that were sitting there pending than you could actually buy. If you ever compare the Altos Research inventory numbers to things like the NAR inventory numbers, because NAR will report last month and they'll report pendings in the active inventory. And so their number will be a lot bigger than the Altos number because they include pendings in it. But what we've noticed is in the last few weeks, the number of pendings is finally falling off. And the active inventory is climbing. This is a much more normal scenario.
Normally there'd be maybe three or four times more active than pending. So we're finally getting back to normal, but that transition points finally come. And it's been a couple of years since that case.
If you've been watching investors, you may have a question: do investors get cold feet and want to sell? As mortgage rates climb, as demand is obviously cooling? One way to keep track of that is via rents. So rents have elevated, gotten really high dramatic change over the last year.
As of right now, there's no sign of rents ticking down. So single family homes, median rent around the country is 2300 bucks. And that implies that if I own my house, if I own a rental property, and I have it financed at 30 years with a cheap mortgage, I'm making record levels of revenue on it.
And there's no sign yet of that subsiding that also by the way it implies because these rents are higher and ticking higher. When you look at inflation numbers, like the inflation headlines, like we had the CPI last week yesterday at 9.1%. The housing portions of that CPI are really data from six months ago. And so as rents were rising dramatically through the year and home prices, that now shows up in the CPI numbers. So it's just a little a little interesting tidbit.
I was discussing that with Len Kiefer in the Top of Mind podcast, that'll come out next week. You can if you're curious about how rents and home prices work into the inflation numbers, Len gives us a nice little conversation there.
Price increases is really an indication of things like investor flips. So a house is on the market, it got bought, it goes into contract. Now it comes back on the market with a higher price in like a short period of time, like 120 days. We've gone to the lowest level of price increases in many years, probably the least opportunity for quick fix and flips that we've had in a long time.
The investors know in aggregate that next year does not look like a good time to be flipping properties. And therefore they're not doing that move right now. And this is an indicator demand, you could see earlier in the year, and last year we had these record levels and super unhealthy, lots of speculation. Those where the dark red line and the light red line in the last couple of years were so high.
We definitely don't want that in the market. Those are the types of things that led to the bust. Now, those are gone very rapidly. That's a much more healthy space to be right now. It just points out that there are investor buyers in particular that are not leaning into demand. That's why we can see supply increasing. There's fewer of those buyers to try to do things like flip homes.
And you can see the slope of that line has started to turn the corner. So it's not falling through the floor. That's encouraging, like there's always some of that happening.
Days on market market is ticking up. Still less than a month across the country, but we can see it ticking up this week. It normally happens in July, you know, the peak demand time in the fastest market time is in the second quarter. This is all very normal. Normally though two months might be much more normal for July market time. But we're really under one month right now. And then market time will increase to the end of the year.
You know, hopefully we get back to maybe where we were in 2019 because that would imply more opportunity for buyers, less competition, more opportunity for first time home buyers, all of those things.
But that's going to feel really, really slow to sellers who are who are not dialed into this shift yet. And so, as you're informing your sellers you'll want to point out a bunch of these indicators, the price reductions number, the days on market number ticking up, the market action index, which will show you in a second. To help them know they should price it right, right now, so that their house will move.
We like to look at all the Altos data in price range segments for price range quartiles. The high end of the market may be behaving very differently from the low end and a couple of things you can see right here, the middle of the market, 21 days, you can see exactly where people are buying.
But you can see over a million bucks the days is starting to climb. It's starting to climb pretty quickly. And the stuff at the very low end is typically poor quality, older. Those are also taking up in market time. So you can see where the market is slowing most quickly. You know, that over a million, those are like the super high end homes in places like Austin and Seattle that had been moving super quick and now slowing down.
By the way, I cover a lot of data and a lot of how we talk about the data. If you're new to Altos make sure you read our ebook, "How to Use Market Data to Build Your Real Estate Business." So this is where we talk about a lot of the things I've been talking about: the price range, segments, how to frame price reductions, what that means for buyers and sellers, scripts to use.
The ebook is free. It helps you look at the data that we're looking at right now. So in particular things like the price range segments are really powerful. When you're talking with clients, this is your price range. Use the ebook to learn how to have that conversation.
Let's do market action index, and then we're going to go do a couple of local markets real quick. The market action index for the us is a 58 right now. That is still a seller's market. And we know that because inventory is still half of what it would normally be. We also can see the difference between the gray and the red is that's last month versus this right now.
And it's definitely ticking down. One of the scripts to learn when you work with clients with your Altos reports is you say, "While we have your house listed, I'm going to put this report in your inbox every Monday. And I want you to look at this one number. I want you to keep your eye on this market action index. This thing is falling while we have your house listed, that's the market giving us a signal that things are cooling even further from here. And that might be the market telling us that we want to make sure our price is right to get ahead of the curve."
So market is ticking down, it will continue to tick down and I'm going to show you another. So this is the speedometer you'll see on every Altos report. A
There's a 90 day rolling average, which is the dark line here. And the light red line is the weekly measure. And that can have some noise and it can bounce around a little bit. So that speedometer is showing that the dark red line, the smooth trend, but what we can see in the light red, each of the weekly readings is dropping very quickly.
The weekly data is actually showing us that next month that the speedometer is going to be lower next month on the market action index nationally. And you can already see it there. You could see it at the beginning of this year, where January is that low point and then big spike up. And that told us exactly what was coming for prices the rest of the first and second quarter.
You could see it in that beginning of the year. You could see it in 2021 as well, big spike up. And you can see in 2020, there was a dip for the beginning of the pandemic, and then big spike up again. So all of those indicators really help buyers and sellers know what's coming in the future months.
Okay. Let's switch to local markets, and then we will wrap up.
I've mentioned Austin a few times today. Austin was one of the hottest markets the last few years. You can see in the market action index in Austin, it's actually still a seller's market because we don't have as many homes as we normally do. Contracts are still going through. We can see relists are climbing to 4% in Austin. And you can see that a pretty big move, month to month, in that market action index here.
So that is a real shift that buyers and sellers both see in Austin. And so sellers who are listing now will obviously want to keep their eye on the market action index while they have their house listed.
Here I have the price reductions in Austin pulled up and we can see this weekly line. So Austin is normally in the 40%, 45% range. And a year ago, only 6% of homes had to take a price cut. So 40% are thinking they're over priced, but only 6% had to take a price cut. Like that was remarkable. This year not quite as frenzied. It had already started to shift by March in Austin and then experienced a really dramatic climb.
And so we're going to see Austin climb up here over 50%. And these are the homes that were overpriced. They were going to try to get what they could get, and they didn't get their offers. And there are fewer people moving in from California and those homes are going to have to take their price cuts. So those sellers, if you're listening, now you should know exactly what you're looking for there. We can see that for the expensive stuff in Austin days on market is starting to climb.
Let's look at Orlando. The affordable Florida markets have grown significantly less affordable during the pandemic. And so we can now see the shift here, and this is the market action index. See the big move from last month to this month on the market action index in Orlando.
Prices are still at their record high, but look at the market action. And so next month is going to be significantly lower. We're going to get back down here into the balanced area, and it looks like we'll get back to a much more balanced market in Orlando, very very soon. And so we can, but we can watch that. And we can look at the price decreases in Orlando climbing from 18, a few months ago, up to 38, like that's climbing very quickly.
Take a look at Charlotte. Charlotte's another one that is you know, big inbound migration. Charlotte has a lot of New York migration. Charlotte's also one that typically has 40% to 50% price reductions. And this spring we were at 16% price reductions, climbing very rapidly, 40% now. And maybe turning the corner here.
Let's look at inventory. You know, we can see that inventory is climbing, but still half of where it normally is this time of year. And 2019 was pretty pretty low already. So still lots of room to grow there. You can see in Charlotte under 500,000 still has a lot of demand. You know exactly where the people are buying.
I'm going to do Nashville. And then we will wrap up. Nashville inventory is climbing. But, you know, from just a couple of hundred homes where normally we might have 1500 homes. We had a couple of hundred earlier in the year. We're now up to 600 or 700 in Nashville right now. So significantly more, but still not many.
And so while we can see in Nashville that like just everywhere, the market action index is ticking down week to week, it's not ticking down nearly as dramatically as for example, Austin or Orlando. It's a much more stable market.
The further north and east go, the markets are more stable and slower, and therefore are not adjusting nearly as rapidly as a lot of the south and west markets are.
All right? So that's all the data we have time for today.
If you need to have this conversation with your clients, if you have buyers and sellers who are trying to figure out what's happening right now, make sure you go to altosresearch.com and book the free consult with our team click getting started right now.
You can get the data to your customers today so that they know how to make that decision. That they can see as the market continues to shift, they can be in front of that. They can help make more informed decisions about whether they want to list now, because they're afraid the market's going to get worse in the fall.
Or if there's more opportunity in the buyer's side do they need to make an offer super quickly? Do they need to overbid? All of these answers we can start to see in the data and they need to hear it. They see it from you and see it from you every week, because it's changing so rapidly. So go to altosresearch.com and book that free consult.
More data next week and we'll do another webinar next month. Thank you all for joining us. I appreciate you. The team will stick around in the chat and answer a few questions.