Recent reports reveal some encouraging signs in the U.S. housing market, suggesting that hopeful buyers may finally find suitable options in the near future.

However, the data still presents a rather bleak picture. According to the National Association of Realtors, sales of existing homes showed minimal progress, increasing by only 1.3% in July and remaining close to levels seen during the worst of the subprime mortgage crisis. Additionally, while mortgage rates dipped slightly from last week, they remain higher than the rates for home loans held by nearly 90% of Americans.

Despite these challenges, Danielle Hale, chief economist for Realtor.com, noted that both metrics are heading in a positive direction.

“It’s encouraging to see an uptick in existing-home sales,” Hale remarked.

Hale was particularly pleased with the rise in the number of homes available for sale. Current inventory sits at 1.3 million units, nearly a one-third decrease from pre-pandemic levels. Yet, this marks a 20% increase compared to last year. With fewer homes being sold, buyers currently have access to about four months’ worth of housing supply, which is close to the historical average.

“If mortgage rates continue to fall, we could see an uptick in sales,” Hale informed YSL News. “At the moment, the housing market feels more balanced, which should create a better environment for both buyers and sellers.”

This past week, Freddie Mac reported a slight decrease in mortgage rates, with the average rate for a 30-year fixed mortgage falling to 6.46%. This means that a mortgage payment for a home priced at the national median of $422,600 would be $2,128, down from $2,302 last year, when rates were at 7.23%.

However, Freddie’s chief economist, Sam Khater, believes that rates need to decrease further to entice potential buyers.

“Earlier this month, rates dropped significantly and are currently just below 6.5%, but that hasn’t been sufficient to draw in prospective homebuyers,” Khater explained. “We anticipate that rates will need to decrease by another percentage point to boost buyer interest.”

Many analysts expect rates to lower even further as the Federal Reserve prepares to lower benchmark interest rates, potentially as soon as its meeting in September.

As the fall approaches, there will be less competition for buyers with the flexibility to shop outside of the traditional “spring selling season,” according to Realtor.com’s Hale.

At present, there is more variation in the national housing market than in recent years, Hale noted. This implies that buyers who remain flexible regarding location and property condition might discover great deals.