Lumber prices surged as much as 9% on Tuesday, extending a two-day rally to 18% at its high of $565 per thousand board feet.

The sudden spike comes after a relentless five-month sell-off that saw prices decline by as much as 65% as mortgage rates surged above 6% and concerns grew that demand for housing would plunge amid a real estate downturn.

But now signs are growing that the real estate market could be on the verge of sticking a “soft landing,” according to Altos Research CEO Mike Simonsen.

“Has the US real estate market managed to navigate a soft landing? It sure looks like that,” Simonsen said in a video to clients.

Simonsen pointed out that housing inventory growth, or the growth of single family homes available for sale, has started to slow in recent weeks, and its likely there will only be 535,000 homes for sale by year-end, if not less.

“Do we have to revise this forecast down?!” Simonsen said, noting that growth slowed even when accounting for a decent jump in inventory growth in early August. The lack of new home listing means “the voracious demand is gone,” Simonsen said. 

That “voracious demand” has sparked bidding wars among home buyers, quickened the time it took to sell a property, and has led some to make big cash offers for homes. A cooldown in buying activity could be welcomed as long as home prices hold up, which so far, so good.

Median home prices have hovered just under $450,000 over the past month while the price of new listings has declined to about $400,000, according to Simonsen. “The price of new listing shows us the most egregious overpricers are gone. But normal seasonal patterns look just fine,” Simonsen said.